[Federal Register Volume 77, Number 53 (Monday, March 19, 2012)]
[Rules and Regulations]
[Pages 15933-15939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-6558]
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DEPARTMENT OF AGRICULTURE
Farm Service Agency
7 CFR Parts 761, 762, 764, 765, and 766
RIN 0560-AI04
Conservation Loan Program
AGENCY: Farm Service Agency, USDA.
ACTION: Final rule.
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SUMMARY: In September 2010, the Farm Service Agency (FSA) implemented
the new Conservation Loan (CL) Program authorized by the Food,
Conservation, and Energy Act of 2008 (the 2008 Farm Bill). FSA added
the CL Program provisions to the existing direct and guaranteed loan
regulations. The provisions provide CL program eligibility and
servicing options for the direct and guaranteed loans made through the
CL Program. FSA is amending the Farm Loan Programs (FLP) direct and
guaranteed loan regulations for the CL Program based on public comments
received on the interim rule.
DATES: Effective Date: This rule is effective May 18, 2012.
FOR FURTHER INFORMATION CONTACT: Connie Holman; telephone: (202) 690-
0756. 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
Section 5002 of the 2008 Farm Bill (Pub. L. 110-246) authorized the
establishment of the CL Program by amending section 304 of the
Consolidated Farm and Rural Development Act (CONACT, 7 U.S.C. 1924). CL
loan funds may be used to finance the cost of carrying out a qualified
conservation project. FSA published an interim rule (75 FR 54005-54016)
on September 3, 2010, to add CL loan making and servicing provisions to
the existing direct and guaranteed loan regulations. The regulations in
7 CFR parts 761, 762, 764, 765, and 766 were amended. Those changes to
the regulation were effective on September 3, 2010.
Subsequently, on May 13, 2011, FSA published a notice in the
Federal Register (76 FR 27986) announcing that FSA was no longer
accepting direct or guaranteed applications for the CL Program because
of a lack of funding. On March 7, 2012, FSA published another notice in
the Federal Register (77 FR 13530-13531) announcing that we are now
accepting guaranteed loan applications. However, due to a lack of
program funding, direct CL applications are not being accepted at this
time.
In this final rule, FSA addresses the comments received on the
interim rule and the changes being made in response to those comments.
The amended regulations will be used to service outstanding direct and
guaranteed CLs and to process any new loan applications, subject to the
availability of funding.
Fifteen commenters submitted comments on the interim rule during
the 60-day comment period. Comments were received from the Independent
Community Bankers of America, National Sustainable Agriculture
Coalition, Forestry Service Division of Oklahoma Department of
Agriculture Food and Forestry, Natural Resources Conservation Service
(NRCS), American Farmland Trust, the general public, and FSA employees.
This rule was also included in the Joint Regional Tribal Consultation
Strategy facilitated by USDA in seven regional consultation meetings
from November 2010 through January 2011.
The comments addressed multiple provisions of the rule. Many of the
comments received during the comment period were supportive. The
commenters supported many of the CL provisions such as the eligible
uses for CL loan funds, the requirement for applicants to obtain an
approved NRCS conservation plan, the exemption of ``test for credit''
and ``graduation'' requirements from the program, loan limits, the
streamlined CL application process, and the targeting of direct and
guaranteed loan funds for certain producer types.
A number of issues raised in the comments resulted in changes to
the regulations. The overall changes are summarized below followed by a
discussion of the individual comment issues and the responses.
Summary of Amendments to the Regulations
Part 761 provides the general and administrative regulations for
both direct and guaranteed loans. The regulation in 7 CFR part 762
specifies requirements and procedures that apply to making and
servicing Guaranteed Loans. The regulation in 7 CFR part 763 specifies
the requirements and procedures for direct loan making. FSA is making
several amendments to these regulations based on the comments.
FSA is making a minor amendment to the definition of ``Conservation
Practice'' to coincide with the definition in NRCS regulations. FSA
will add a definition of ``Forest Stewardship Management Plan,'' make a
minor amendment to the definition of ``Conservation Project'' to add a
provision to allow conservation
[[Page 15934]]
measures that are included in a Forest Stewardship Management Plan
approved by the USDA Forest Service to be considered eligible uses of
CL loan funds. Also, FSA is making conforming changes to the
regulations to allow for the inclusion of a Forest Stewardship
Management Plan.
FSA is changing the length of the repayment period to specify that
guaranteed CLs may be scheduled over a repayment period not to exceed
30 years. This is a change from the interim rule, which limited the
repayment term of guaranteed CLs to 20 years, the same repayment term
as direct CLs making guaranteed CLs slightly more advantageous than
direct CLs and thus reducing the potential competition between
commercial lenders and FSA.
FSA is also clarifying the guaranteed loan restructuring
requirement to state that lenders must ensure that the borrower remains
in compliance with the approved conservation plan or the Forest
Stewardship Management Plan.
FSA is making a change to specify that CLs made to purchase
equipment or for real estate purposes of $25,000 or less may be secured
by a lien on chattels. This is a change from the interim rule that
required FSA to take real estate as security, regardless of the loan
purpose or amount, as first priority if real estate security was
available. FSA further specifies that FSA may accept the best lien
obtainable on real estate, without title clearance or legal service, on
loans of $25,000 or less. However, if FSA is uncertain of the record
owner or debts against real estate, a title search will be required.
This change reflects the reduced risk of loss with these small loans.
Discussion of Comments and Responses
The following provides a summary of the comments received and FSA's
response, including changes we are making to the regulations based on
the comments.
Definitions
Comment: FSA should acknowledge the role of Forest Stewardship
Management Plans in the CL Program to clarify that Nonindustrial
Private Forest (NIPF) landowners are excluded from eligibility, even
though forestry practices are included in 7 CFR 762.121 and 764.231 as
an authorized loan purpose or use. FSA should include a specific
reference to NIPF landowners.
Response: FSA is amending the regulations by adding a definition in
Sec. 761.2 of ``Forest Stewardship Management Plan'' and providing
that any conservation practice included in the Forest Stewardship
Management Plan will be an eligible use of CL funds under Sec. Sec.
762.121 and 764.131.
Comment: The definition of ``Conservation Practice'' should be
amended to coincide with the definition in NRCS regulations.
Response: FSA is amending the definition in Sec. 761.2(b) of
``Conservation Practice'' based on the NRCS regulation.
Eligibility, Graduation, and Market Placement
Comment: Regardless of Section 304 of the CONACT, special notice
must be made of the exception of the test for credit, family farm, and
graduation requirements for the CL Program. FSA is straying from their
original purpose of providing credit to those who are unable to obtain
credit through other sources.
Response: FSA disagrees with the comment. Section 304 of the CONACT
explicitly eliminates the test for credit and does not require that a
family sized farm be involved to qualify for the CL Program. By
eliminating these requirements it is evident that the objective of the
CL Program is to encourage all farmers to implement conservation
practices and not for the program to serve as a safety net for farmers
who cannot obtain credit elsewhere. No changes have been made in
response to this comment.
Comment: FSA did not have a sufficient excuse to implement a new
program that will benefit farmers beyond the traditional FSA customer
base.
Response: Inclusion of the CL Program in the CONACT and the
subsequent allotment of funds by Congress clearly demonstrates
Congressional intent to have this program implemented as authorized in
the legislation.
Comment: Direct loans should only be made to family sized farms.
This would maximize the number of participants in the CL Program.
Response: Section 304 of the CONTACT does not limit direct loans
based on the size of the farm; therefore, no change is being made to
this policy.
Comment: Add the following statement from the interim rule preamble
that ``This will facilitate timely implementation of conservation
practices that would otherwise be postponed due to lack of monetary
resources'' to the final rule eligibility requirements requiring that
applicants ``must demonstrate to the satisfaction of the Agency that
the CL is needed to facilitate the timely implementation of
conservation activities that would otherwise be postponed due to lack
of monetary resources.''
Response: The purpose of the CL Program is to enhance the
environment by facilitating implementation of conservation measures.
Section 304 of the CONACT explicitly eliminates the test for credit and
does not require a family sized farm for the CL Program. By excluding
these requirements from the qualifications for a CL, it is clear that
the CL Program is to serve as an inducement for implementation of
conservation practices. Requiring every applicant to demonstrate need
would undermine the intended purpose of the CL Program and be in
conflict with the authorizing statute. Therefore, FSA is not making
this change.
Comment: The blanket exemption that allows CL funds to be used to
support non-eligible enterprises is a mismatch, enabling non-farm
facilities to qualify for a conservation loan without a conservation
plan approved by a competent official.
Response: The intent of the CL Program is to provide loans to allow
farmers to address conservation needs on their land. In the interim
rule, in Sec. 764.232, FSA included language that requires CL Program
participants who operate non-eligible enterprises to also be involved
in agricultural production in order to be qualified for the CL Program.
Program provisions also require that CL Program participants have an
NRCS approved conservation plan or Forest Stewardship Management Plan
to meet eligibility requirements. This eliminates the possibility of
non-farm facilities without an approved conservation plan or Forest
Stewardship Management Plan qualifying for the CL Program. Therefore,
FSA is not making a change in response to this comment.
Comment: FSA should limit the number of CLs awarded to applicants
who are eligible for, and able to obtain, credit from a production
credit association, a Federal Land Bank, or other cooperative or
private sources.
Response: FSA is not making the suggested change. As authorized,
the purpose of the CL Program is to encourage farmers to implement
conservation measures and does not include the traditional Farm Loan
Programs provision that limits eligibility to those farmers who cannot
obtain credit from commercial lenders. If FSA limited the number of CLs
awarded, FSA would undermine the intent of the CL provisions and
purpose of the CL Program, which is to fund conservation projects.
Comment: In the absence of the family-farm eligibility requirement,
FSA should require that non-family farm applicants have at least 75
percent of their assets involved in agricultural
[[Page 15935]]
production and earn at least 75 percent of their income from
agricultural activities.
Response: The exclusion of the test for credit and family farm size
as eligibility requirement for the CL Program demonstrates that the
purpose of the program is to fund conservation practices. Establishing
a minimum asset or income level requirement would impose restrictions
that are not authorized because it could be seen as a test for credit
that does not apply to the CL Program. Therefore, FSA is not making the
change.
Comment: Do not amend 7 CFR 762.110 to specify that market
placement will not be applicable to the CL Program.
Response: Market placement is used to assist qualified existing
direct loan borrowers and new direct loan applicants in obtaining a
guaranteed farm loan from a commercial lender. Utilization of the
Market Placement Program means the borrower or applicant may be able to
obtain credit elsewhere. The CONACT exempts CL Program from the
``credit elsewhere'' requirement. Because FSA will not be making a
``credit elsewhere'' eligibility determination, there would be no
reason to determine if a CL applicant or existing CL borrower should be
considered for market placement. Therefore, FSA is not making the
change.
Comment: FSA should not have changed the ``graduation'' definition
in the interim rule because the 2008 Farm Bill does not prohibit FSA
from requesting CL borrowers to graduate, but rather only prohibits FSA
from requiring CL borrowers to refinance. Remove the change from the
regulation and make all necessary conforming changes.
Response: FSA will not be making the change. Section 304(g) of the
CONACT exempts the CL Program from graduation requirements established
in section 333(3) of the CONACT. A CL borrower does not have to agree
to obtain a loan from a commercial lender; therefore, graduation does
not apply to the CL Program. Prior to the interim rule, FSA's
definition of graduation encompassed all FLP loans. To implement this
exemption, CL had to be excluded from the definition. However,
excluding CL from the graduation definition does not prohibit a CL
borrower from paying the loan in full prior to the maturity date.
Funding
Comment: The final rule should make clear that CL funding is
provided to FSA separately and that funds for the CL Program will not
attach to funding for other FLP programs as the other FLP programs are
solely aimed at farmers and ranchers who cannot obtain credit elsewhere
and who are no larger than family sized farms.
Response: No change will be made for this comment. Each year funds
are appropriated to each specific loan program. Previous appropriations
bills have been worded such that funds can be transferred between
programs with the Secretary's approval and Congressional notification.
While this has been done in the past, it has only been done towards the
end of the fiscal year and only in cases where resources will be unused
and where there are shortfalls in other programs.
Comment: FSA should target 50 percent of direct and guaranteed CL
funds for beginning and socially disadvantaged farmers, owner or
tenants who use loans to convert to sustainable or organic agriculture
production systems, and producers who use loans to build conservation
structures or establish conservation practices to comply with highly
erodible land conservation exemptions.
Response: FSA will not make this change. FSA is targeting 35
percent of direct and guaranteed CL funds to the priorities listed in 7
CFR 761.210, which includes all the groups listed in the comment. An
additional 15 percent of direct CL funds are targeted for SDA
participation rates in accordance with section 355 of the CONACT. The
15 percent is based on an estimated national average of the county wide
percentages. The allocation is being kept at a national level given the
small amount of funding for the Program. This gives a total of 50
percent of CL funding targeted to the various groups as specified by
the 2008 Farm Bill and section 304 of the CONACT.
Comment: Given ``limited funding,'' a determination should be
required that the conservation practice(s) would not be able to be
completed without the CL loan being extended.
Response: FSA is not making the suggested change. Implementing
eligibility restrictions on the financial condition of an operation is
in contradiction to the intent of the CL Program, which is to encourage
all farmers to implement beneficial conservation practices.
Comment: As part of FSA's effort to prioritize CL funding for
beginning farmers, FSA should send CL Program informational materials
to producers enrolled in the Conservation Reserve Program Transition
Incentives Program.
Response: This is an outreach issue, and it is not necessary to
make a change in the final rule. FSA will continue to utilize all
available opportunities to market the CL Program.
Application Requirements
Comment: Amend 7 CFR 761.210 to require that the conservation plan
demonstrate NRCS Field Office Technical Guide quality criteria for at
least three resource concerns are or will be exceeded. The language in
7 CFR 761.210 establishing the priority for CL funding is ambiguous and
highly problematic and the requirements for priority funding should be
more explicit.
Response: The conservation plan on which the priority funding
determination is based on is a product of NRCS. FSA recognizes the
expertise of NRCS in this area and believes that NRCS is better
equipped to make the determination as to whether the conservation
practices being implemented constitute ``moving toward'' sustainable
agriculture. FSA will, therefore, not be making the change.
Terms
Comment: There is nothing to distinguish or explain why or when a
borrower would seek a guaranteed loan versus a direct loan and FSA
should allow a longer term for guaranteed loans than for direct loans.
Response: FSA will make a change to the rule in Sec. Sec. 762.124
and 762.145 to allow guaranteed CLs to be scheduled for repayment over
a period not to exceed 30 years from the date of the note or a shorter
period if necessary to assure that the loan will be adequately secured.
The change will make guaranteed CLs slightly more advantageous and
thereby reduce the potential competition between commercial lenders and
FSA.
Streamlined CLs
Comment: The USDA Economic Research Service (ERS) reported that
farm business' debt-to-asset ratio was expected to decline to 11.2
percent and debt-to-equity was expected to decline to 12.5 percent.
FSA's 40 percent debt-to-asset ratio is too high and FSA should be more
flexible and reserve the 40 percent ratio for family sized farms while
requiring a lower ratio for larger than family sized farms.
Response: The 11.2 percent debt to asset ratio (D/A) mentioned in
the comment represents all US farm debt divided by all US farm assets
and is not a true representation of the median US farm's D/A ratio. A
University of Minnesota study showed that 39 percent of Minnesota farms
had a D/A ratio of
[[Page 15936]]
greater than 60 percent. ERS defines a favorable financial position as
positive cash flow with D/A less than or equal to 40 percent and
marginal solvency as positive cash flow with D/A of greater than 40
percent, making 40 percent a reasonable parameter. FSA believes that by
tying D/A ratio to the size of the farm could increase confusion and
present more instances for inconsistency in interpretation. Since the
40 percent D/A ratio discussed is simply the threshold permitting
reduced loan application paperwork and not for loan qualification, FSA
is not making the change.
Comment: For streamlined CL eligibility, FSA should require not
only a majority of the members of an entity have a FICO score of 700,
but that those members represent a majority of the ownership of the
entity. This would ensure that these members would be the individuals
truly responsible for key decision making for the entity and could be
the ones making the important decisions regarding repayment of the
loan.
Response: FSA will not make this change. Members with the majority
ownership of the entity are not always the decision makers, and there
is no way to insure that in every case the decision makers of the
entity are also the members that have the required FICO score. Tying
FICO scores to the percentage of ownership could increase confusion and
present more instances for inconsistency in interpretation.
Direct CLs
Comment: FSA should consider adding a requirement that an applicant
for a direct loan must provide evidence that they cannot complete the
conservation practice with a guaranteed loan in lieu of a direct loan.
Response: Section 304(g) of the CONACT explicitly exempts the
program in FSA from the requirement of ``credit elsewhere.'' By
excluding this requirement from the qualifications for a CL, Congress
clearly signaled the intent that the CL Program serves as an inducement
for implementation of conservation practices. Adopting this suggestion
would undermine the purpose of the CL Program, so FSA will not make the
change.
Comment: If the CL funding is being awarded to a project for which
Federal, State, or local permits must be obtained, then FSA should not
release CL funding until the applicant has secured all necessary
permits.
Response: This change is not necessary. FSA regulation 7 CFR
1940.309 deals with environmental due diligence and addresses the
requirement for applicants to obtain permits when required by local and
State laws. In addition, 7 CFR 761.10(c)(2) requires that applicants
obtain required State and local construction approvals and permits
prior to loan closing when developing real estate.
Guaranteed CLs
Comment: The guarantee to lenders should be 90 percent because
otherwise there would be diminishing incentives to utilize the
guaranteed loan program and greater incentives to utilize the
government funded direct loan program.
Response: FSA will not make this change since Section 304(e) of the
CONACT mandates the 75 percent guarantee.
Comment: The requirement that lenders certify that a CL borrower is
in compliance with the conservation plan when restructuring should be
modified to require ``the lender or appropriate USDA office at the
discretion of the lender.'' USDA officials may be in the best position
to determine compliance with conservation plans. Also, USDA officials
should be required to make the determination in an expedited manner.
Response: FSA reworded the text in Sec. 762.145 to provide that
for CLs the lender will ``ensure that the borrower is maintaining the
practice for which the CL was made,'' rather than ``certify'' the
borrower is in compliance with the approved conservation or Forest
Stewardship Management Plan. This also will be included in the FSA
administrative handbook to clarify the requirement.
Security and Title Clearance
Comment: As published in the interim rule, 7 CFR 764.235 was added
to provide that direct CLs will be secured in accordance with 7 CFR
764.103 through 764.106. Furthermore, CLs are required to be secured
first by a lien on real estate, if available and then by chattels if
determined acceptable by FSA. The requirement to require real estate as
security priority is too restrictive when the loan funds will be used
to purchase chattels or for lower loan amounts. The requirement of
taking real estate as priority also increases the closing cost expenses
to borrowers when the loan amount may be relatively small and
consideration should be given to the fact that many of these loans will
receive significant cost share payments from NRCS that will result in
very small net loan amounts. Security requirements could be met by
either real estate or chattels depending on the use of loan funds much
like FSA's direct Operating Loan (OL). Loans up to $25,000 should be
secured first by chattels, with real estate taken as additional
security if available.
Response: FSA will make changes to this security requirement in
Sec. 764.235 based on this comment. A lien on chattel security will be
acceptable for all loans made to purchase equipment or for loans of
less than $25,000. A lien on real estate will still be required for all
loans of $25,000 or greater when funds are used for real estate
purposes.
Comment: For CLs of $25,000 or less, FSA should be able to accept
the best lien obtainable without title clearance or legal service.
Response: FSA will make the change in Sec. 764.235 to provide that
for CLs of $25,000 or less, when real estate is taken as security only
a certification of ownership in real estate is required. For loans
greater than $25,000 title clearance will still be required. As a
result, real estate title clearance requirements for CLs will mirror
that of the Emergency Loan Program.
General Program
Comment: FSA should work with NRCS to ensure that producers seeking
assistance for implementing conservation projects are fully aware of
the availability of the funds through FSA's CL Program.
Response: FSA is presently working with NRCS to market the CL
Program and will continue to utilize all available opportunities to
market the CL Program.
Comment: There is no need to establish a new program. FSA should
simply revise the existing Farm Ownership (FO) regulations to add
projects eligible to be financed with FO funds.
Response: While both FO and Farm Operating (OL) loan funds may be
used for conservations purposes, the requirements for these programs
are more restrictive than those authorized for the CL Program. FO and
OL eligibility require that applicants be unable to obtain sufficient
credit elsewhere at reasonable rates and terms and be the operator of a
family farm after the loan is closed. Furthermore, recipients of FO and
OL direct loan assistance must agree to graduate when credit is
available from other sources at reasonable rates and terms. Revising
the existing FO or OL regulations would eliminate the accessibility to
credit for conservation projects for FSA's non-traditional customers
and, therefore, undermine the purpose of the CL Program. FSA is not
making this change.
Comment: FSA should have issued the rule as a proposed rule instead
of an interim rule. The objective of the CL Program did not necessitate
an interim
[[Page 15937]]
rule implementing the program immediately in lieu of a proposed rule.
Response: Many farmers who need and want to implement conservation
measures on their land, often do not have the ``up front'' funds
available to pay out-of-pocket costs not covered by many USDA
conservation programs that provide only cost share assistance after the
project is completed. While these conservation projects are
environmentally valuable, they often contribute very little to the
economic productivity of the farming operation providing little
incentive for private sector lending institutions to provide financing.
This often means implementation of vital conservation measures must be
postponed. This is particularly true for farmers in the livestock
sector who often experience dramatic swings in profitability but may
also have the most critical need to implement conservation practices.
In keeping with the Presidential initiatives such as ``A 21st Century
Strategy for America's Great Outdoors,'' USDA determined that there was
good cause to announce the new Conservation Loan and Loan Guarantee
Program by publishing an interim rule that became effective immediately
upon publication to allow FSA to make loans with fiscal year 2010
funds. By implementing the CL and Loan Guarantee Program this way FSA
allowed the public the opportunity to comment and was also able to fund
several conservation projects with fiscal year 2010 funds.
Executive Order 12866 and 13563
Executive Order 12866, ``Regulatory Planning and Review,'' and
Executive Order 13563, ``Improving Regulation and Regulatory Review,''
direct agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). Executive Order 13563 emphasized the importance
of quantifying both costs and benefits, of reducing costs, of
harmonizing rules, and of promoting flexibility.
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.
Environmental Evaluation
The requirements found in 7 CFR part 1940, subpart G, must be met
for the CL Program consistent with the existing direct and guaranteed
loan regulations.
Executive Order 12372
Executive Order 12372, ``Intergovernmental Review of Federal
Programs,'' requires consultation with State and local officials. The
objectives of the Executive Order are to foster an intergovernmental
partnership and a strengthened Federalism, by relying on State and
local processes for State and local government coordination and review
of proposed Federal Financial assistance and direct Federal
development. For reasons set forth in the Notice to 7 CFR part 3015,
subpart V (48 FR 29115, June 24, 1983), the programs and activities
within this rule are excluded from the scope of Executive Order 12372.
Executive Order 12988
This rule has been reviewed in accordance with Executive Order
12988, ``Civil Justice Reform.'' This rule preempts State and local
laws, regulations, or policies that are in conflict with this rule.
This rule will not have retroactive effect. Before any judicial action
may be brought regarding the provisions of this rule, all
administrative remedies in accordance with 7 CFR parts 11 and 780 must
be exhausted.
Executive Order 13132
This rule has been reviewed under Executive Order 13132,
``Federalism.'' The policies contained in this rule do not have any
substantial direct effect on States, the relationship between the
Federal 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.
Executive Order 13175
This rule has been reviewed for compliance with Executive Order
13175, ``Consultation and Coordination with Indian Tribal
Governments.'' This Executive Order imposes requirements on the
development of regulatory policies that have tribal implications or
preempt tribal laws. The USDA Office of Tribal Relations has concluded
that the policies contained in this rule do not have Tribal
implications that preempt Tribal law. This rule was included in the
Joint Regional Consultation Strategy facilitated by USDA from November
2010 through January 2011. This consolidated consultation efforts of 70
rules from the 2008 Farm Bill. USDA sent senior level agency staff to
seven regional locations and consulted with Tribal leadership in each
region on the rules. Once consultation meetings were completed, USDA
analyzed the feedback and incorporated any appropriate changes into the
regulations through rulemaking procedures. There were no comments about
this rulemaking during the Tribal Consultation.
USDA will respond in a timely and meaningful manner to all Tribal
government requests for consultation concerning this rule and will
provide additional venues, such as webinars and teleconferences, to
periodically host collaborative conversations with Tribal leaders and
their representatives concerning ways to improve this rule in Indian
country.
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, or Tribal governments or the
private sector. Agencies generally must prepare a written statement,
including a cost benefit analysis, for final rules with Federal
mandates that may result in expenditures of $100 million or more in any
1 year 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 objective of the rule. This rule contains
no Federal mandates as defined by Title II of UMRA for State, local, or
Tribal governments or for the private sector. 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 program as listed
in the Catalog of Federal Domestic Assistance:
10.099 Conservation Loans
Paperwork Reduction Act
This final rule requires no changes or adds new collection to the
currently approved information collections by OMB under the control
numbers of 0560-0155, 0560-0233, 0560-0236, 0560-0237, 0560-0238, and
0560-0230.
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.
[[Page 15938]]
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 765
Agriculture, Credit, Loan programs-Agriculture.
7 CFR Part 766
Agriculture, Agricultural commodities, Credit, Livestock, Loan
programs -Agriculture.
Accordingly, the interim rule amending 7 CFR parts 761, 762, 764,
765, and 766, which was published at 75 FR 54005-54016 on September 3,
2010, is adopted as a final rule with the following changes:
PART 761--FARM LOAN PROGRAMS; 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(b) as follows:
0
a. Revise the definitions of ``conservation practice'' and
``conservation project'' to read as set forth below, and
0
b. Add the definition, in alphabetical order, for ``Forest Stewardship
Management Plan'' to read as set forth below.
Sec. 761.2 Abbreviations and definitions.
* * * * *
(b) * * *
Conservation practice means a specific treatment, such as a
structural or vegetative measure, or management technique, commonly
used to meet specific needs in planning and implementing conservation,
for which standards and specifications have been developed.
Conservation practices are contained in the appropriate NRCS Field
Office Technical Guide (FOTG), which is based on the National Handbook
of Conservation Practices (NHCP).
Conservation project means conservation measures that address
provisions of a conservation plan or Forest Stewardship Management
Plan.
* * * * *
Forest Stewardship Management Plan means a property-specific, long-
term, multi-resource plan that addresses private landowner objectives
while recommending a set and schedule of management practices designed
to achieve a desired future forest condition developed and approved
through the USDA Forest Service or its agent.
* * * * *
PART 762--GUARANTEED FARM LOANS
0
3. The authority citation for part 762 continues to read as follows:
Authority: 5 U.S.C. 301, and 7 U.S.C. 1989.
0
4. Revise Sec. 762.110(a)(1)(vii) and (c)(3) to read as follows:
Sec. 762.110 Loan application.
(a) * * *
(1) * * *
(vii) For CL guarantees, a copy of the conservation plan or Forest
Stewardship Management Plan;
* * * * *
(c) * * *
(3) For CL guarantees, a copy of the conservation plan or Forest
Stewardship Management Plan;
* * * * *
0
5. Revise Sec. 762.121(c) introductory text to read as follows:
Sec. 762.121 Loan purposes.
* * * * *
(c) CL purposes. Loan funds disbursed under a CL guarantee may be
used for any conservation activities included in a conservation plan or
Forestry Stewardship Management Plan including, but not limited to:
* * * * *
0
6. Revise Sec. 762.124(d) to read as follows:
Sec. 762.124 Interest rates, terms, charges, and fees.
* * * * *
(d) CL terms. Each loan must be scheduled for repayment over a
period not to exceed 30 years from the date of the note or such shorter
period as may be necessary to assure that the loan will be adequately
secured, taking into account the probable depreciation of the security.
* * * * *
0
7. Amend Sec. 762.145 as follows:
0
a. Revise paragraph (b)(10) to read as set forth below, and
0
b. Revise the second sentence of paragraph (c)(1)(iii) to read as set
forth below.
Sec. 762.145 Restructuring guaranteed loans.
* * * * *
(b) * * *
(10) For CL, the lender must ensure that the borrower is
maintaining the practice for which the CL was made.
(c) * * *
(1) * * *
(iii) * * * The maturity date cannot exceed 30 years from the date
of the original note.
* * * * *
PART 764--DIRECT LOAN MAKING
0
8. The authority citation for part 764 continues to read as follows:
Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
0
9. Revise Sec. 764.51(b)(15) to read as follows:
Sec. 764.51 Loan application.
* * * * *
(b) * * *
(15) For CL only, a conservation plan or Forest Stewardship
Management Plan as defined in Sec. 761.2 of this chapter; and
* * * * *
0
10. Revise Sec. 764.231(a) introductory text to read as follows:
Sec. 764.231 Conservation loan uses.
(a) CL funds may be used for any conservation activities included
in a conservation or Forestry Service Stewardship Management Plan,
including but not limited to:
* * * * *
0
11. Revise Sec. 764.235 to read as follows:
Sec. 764.235 Security requirements.
(a) The loan must be secured in accordance with requirements
established in Sec. Sec. 764.103 through 764.106.
(b) Loans to purchase chattels will be secured by a first lien on
chattels purchased with loan funds. Real estate may be taken as
additional security if needed.
(c) Loans of $25,000 of less for real estate purposes will be
secured in the following order of priority:
(1) By a lien on chattels determined acceptable by the Agency, and
then
(2) By a lien on real estate, if available and necessary. When real
estate is taken as security a certification of ownership in real estate
is required. Certification of ownership may be in the form of an
affidavit that is signed by the applicant, names all of the record
owners of the real estate in question and lists the balances due on all
known debts against the real estate. Whenever the Agency is uncertain
of the record owner or debts against the real estate security, a tile
search is required.
(d) Loans greater than $25,000 for real estate purposes will be
secured in the following order of priority:
[[Page 15939]]
(1) By a lien on real estate, if available, and then
(2) By a lien on chattels, if needed and determined acceptable by
the Agency.
(e) For loans greater than $25,000 title clearance is required when
real estate is taken as security.
0
12. Revise Sec. 764.402(d)(1)(ii) to read as follows:
Sec. 764.402 Loan closing.
* * * * *
(d) * * *
(1) * * *
(ii) As provided in Sec. 764.235 for CLs and Sec. 764.355 for
EMs;
* * * * *
Signed on March 12, 2012.
Carolyn B. Cooksie,
Acting Administrator, Farm Service Agency.
[FR Doc. 2012-6558 Filed 3-16-12; 8:45 am]
BILLING CODE 3410-05-P