[Federal Register Volume 64, Number 222 (Thursday, November 18, 1999)]
[Rules and Regulations]
[Pages 62971-62973]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29866]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 64, No. 222 / Thursday, November 18, 1999 /
Rules and Regulations
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
Rural Business-Cooperative Service
Rural Utilities Service
Farm Service Agency
7 CFR Part 1951
RIN 0560--AF89
Providing Notice to Delinquent Farm Loan Program Borrowers of the
Potential for Cross-Servicing
AGENCIES: Rural Housing Service, Rural Business-Cooperative Service,
Rural Utilities Service, and Farm Service Agency, USDA.
ACTION: Final rule.
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SUMMARY: The Debt Collection Improvement Act of 1996 requires Federal
agencies to transfer delinquent nontax debt to the Department of the
Treasury for debt collection action, known as cross-servicing. The Farm
Service Agency is revising to provide notice to delinquent Farm Loan
Program borrowers of the potential for referral of their debt for
cross-servicing. The revisions also establish time limits for applying
for debt settlement in order to implement the Government wide cross-
servicing program.
EFFECTIVE DATE: November 18, 1999.
FOR FURTHER INFORMATION CONTACT: David Spillman, Chief, Direct Loan
Servicing Branch, telephone (202) 720-0900, electronic mail:
[email protected].
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been reviewed under Executive Order 12866 and has
been determined to be not significant and has not been reviewed by OMB.
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 small entities to a greater extent than large
entities. Therefore, a regulatory flexibility analysis was not
performed.
Executive Order 12612
It has been determined that under section 6(a) of Executive Order
12612, Federalism, that this rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment. The
provisions contained in this rule will not have a substantial direct
effect on States or their political subdivisions or on the distribution
of power and responsibilities among the various levels of government.
Environmental Evaluation
It is the determination of FSA that this action is not a major
Federal action significantly affecting the environment. Therefore, in
accordance with the National Environmental Policy Act of 1969, and 7
CFR part 1940, subpart G, 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 order: (1) all
State and local laws and regulations that are in conflict with this
rule will be preempted; (2) except as specifically stated in this rule,
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 seeking judicial review.
Executive Order 12372
For reasons contained in the Notice related to 7 CFR part 3015,
subpart V (48 FR 29115, June 24, 1983), the programs within this rule
are excluded from the scope of Executive Order 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),
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.
Paperwork Reduction Act
The amendments to 7 CFR part 1951, subpart S contained in this rule
require no revisions to the information collection requirements that
were previously approved by OMB (0560-0161) under the provisions of 44
U.S.C. chapter 35.
Federal Assistance Program
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
Background
Section 331D of the Consolidated Farm and Rural Development Act
(CONACT), requires the Farm Service Agency (FSA) to provide delinquent
Farm Loan Program (FLP) borrowers with a summary of FSA's delinquency
loan servicing and debt settlement programs and an explanation of all
filing requirements and deadlines. Section 331D(c) of the CONACT
requires this notice to be published in the agency's regulations.
Attachment 1 to Exhibit A of 7 CFR part 1951, subpart S was issued to
meet these statutory
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requirements. Attachment 1 to Exhibit A of 7 CFR part 1951, subpart S
is sent to FLP borrowers who are at least 90 days past due or who are
in nonmonetary default.
The Department of the Treasury (Treasury) has promulgated
regulations in 31 CFR part 285 (64 FR 22906, April 28, 1999)
implementing the Debt Collection Improvement Act of 1996. The Treasury
rule is based on 31 U.S.C. 3711(g)(1)(A) which requires executive
agencies to transfer delinquent nontax debt to Treasury for action to
collect the debt or terminate the claim.
Cross-servicing is a new Government wide program, administered by
Treasury, which will also impact the final collection and resolution of
delinquent FLP debt. Sections V and VII of Attachment 1 of Exhibit A of
part 1951, subpart S, are being revised to state that borrowers must
apply for debt settlement within 30 days of receiving an additional
debt settlement notice. A cross reference to the section discussing
cross-servicing has been added. Attachment 3 of Exhibit A of this
subpart has been similarly revised. Section IX of Attachment 1 is being
revised to address the provisions of cross-servicing. As revised, FLP
borrowers are informed of the conditions for account referral for
cross-servicing and information on Treasury's cross-servicing
activities.
The conditions for referral of debt for cross-servicing have been
established by Treasury in 31 CFR 285.12(c) and (d). Based on
Treasury's requirements, in order for a delinquent FLP account to be
referred for cross-servicing, all security must have been liquidated
and the debt must be legally enforceable. In addition, delinquent FLP
borrowers will be notified that they have 30 days to submit an
acceptable debt settlement offer to FSA. If a satisfactory debt
settlement is not submitted or FSA rejects a debt settlement offer, the
account will be referred to Treasury for collection by cross-servicing
after all appeal rights are exhausted. Referral of debt to Treasury for
cross-servicing is not an appealable action because it is required by
statute.
Treasury has outlined cross-servicing activities in 31 CFR 285.12.
As revised, section IX of Attachment 1 briefly describes Treasury's
collection activities under cross-servicing. If debt is referred for
cross-servicing, Treasury may take action to collect the debt by offset
or garnishment, refer the debt to a private collection agency for
collection, or refer the debt for collection by the U.S. Department of
Justice (DOJ). Collection fees may be charged to the borrower when
collection is made. In addition, FSA will report the debt to a credit
bureau. After an account is referred to Treasury, any debt settlement
offer must be submitted to Treasury, or its private collection agency
contractor. If the account is referred to DOJ for collection, the
settlement offer must be submitted to DOJ.
Good Cause Statement: FSA is publishing this rule as a final rule
without notice and opportunity for public comment based on its finding
that notice and public comment are unnecessary and contrary to the
public interest. Referral of all agencies', including FSA's, nontax
debt or claims, to Treasury for cross-servicing is required by 31
U.S.C. 3711(g)(1)(A), which requires Treasury referral of all nontax
debt or claims due the United States for a period of 180 days. Treasury
published an interim final rule with a request for comments on April 2,
1998, at 63 FR 16353. Treasury's interim final rule was effective
immediately based on its good cause finding that the requirement to
transfer debt to Treasury for debt collection became effective on April
26, 1996, the date of enactment of the Debt Collection Improvement Act.
On April 28, 1999, at 64 FR 22906, Treasury promulgated the final rule.
Therefore, FSA's compliance with the Government wide requirements that
took effect on April 2, 1998, make additional public comment
unnecessary. It would not be in the public interest for FSA to provide
incomplete information about the debt settlement program if its loan
servicing notice did not immediately discuss Treasury cross-servicing
and its impact on FSA's debt settlement programs. For the reasons
stated above, FSA for good cause also finds that making this rule
immediately effective serves the public interest.
List of Subjects in 7 CFR Part 1951
Accounting Servicing, Credit, Debt Restructuring, Loan Programs-
Agriculture, Loan Programs-Housing and Community Development.
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. 1932; 7 U.S.C. 1989; 42 U.S.C.
1480.
Subpart S--Farm Loan Programs Account Servicing Policy
2. Revise the first paragraph of Section V of Attachment 1 to
Exhibit A to Subpart S to read as follows:
Exhibit A--Notice of the Availability of Loan Servicing and Debt
Settlement Programs for Delinquent Farm Borrowers
* * * * *
Attachment 1 * * *
V. Debt Settlement Programs
Purpose
These programs apply after it has been determined that primary
loan service programs cannot help you. You may be eligible for both
debt settlement and homestead protection. If you do not have FSA
collateral you will need to apply for debt settlement only. Under
these programs, the debt you owe FSA may be settled for less than
the amount you owe. Please apply for debt settlement from FSA by
submitting an application for debt settlement on Form RD 1956-1
within 30 days of receiving an additional debt settlement notice.
See section IX. These programs are subject to the discretion of the
agency and are not a matter of entitlement or right.
* * * * *
3. Revise the eighth paragraph of section VII of Attachment 1 to
Exhibit A to Subpart S to read as follows:
* * * * *
Attachment 1 * * *
VII. * * *
Consideration for Debt Settlement Programs
If you wish to be considered for debt settlement, you will need
to request and return a completed Form RD 1956-1. You may request
debt settlement from FSA within 30 days of receiving an additional
debt settlement notice. See section IX. Usually, the most
appropriate time for making this request is when FSA has determined
that Primary Loan Servicing options will not provide the best net
recovery to the Government and you are requesting preservation loan
servicing. If you no longer have any security remaining for the
outstanding FSA loans, you may want to request debt settlement
instead of primary and preservation loan servicing.
* * * * *
4. Revise section IX of Attachment 1 to Exhibit A to Subpart S to
read as follows:
* * * * *
Attachment 1 * * *
IX. Acceleration and Foreclosure
If you do not appeal an adverse determination or if you are
denied relief on appeal, FSA will accelerate your loan account and
make demand for payment of the whole debt. FSA will stop allowing
you to use any of your crop, livestock, and milk checks, on which
they have a claim, to pay for living and operating expenses. FSA
will repossess the collateral or start legal foreclosure or
liquidation proceedings to take and sell the collateral, including
your equipment, livestock, crops, and land. FSA will continue to
take by administrative offset, money which FSA and other Federal
Government agencies owe you.
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FSA may refrain from taking these actions if you agree to do
one, or a combination of the following actions, within an agreed
upon time, with FSA's approval:
(1) Sell all the collateral for the loan at market value.
(2) Convey (legally transfer) the collateral to FSA. You may
apply or reapply for homestead protection jointly with this action,
even if you applied before and were not accepted.
(3) Apply to transfer the collateral to someone else and have
that person assume all or part of the FSA debt. (This is called
transfer and assumption.)
If any of these options, or foreclosure, result in payment of
less than you legally owe, the servicing official will send you a
notice providing you with 30 days to submit a debt settlement
application. If you do not respond in a timely manner, your account
will be sent to the U.S. Department of the Treasury (Treasury) for
collection through cross-servicing. If you submit a debt settlement
application within the required time frame, and the application is
rejected, your debt will be referred to Treasury for cross-servicing
after all appeal rights on the debt settlement application are
exhausted. Referral of debt to Treasury for cross-servicing is not
an appealable action. If your debt is referred for cross-servicing,
Treasury may:
(1) Take action to collect the debt by offset or garnishment,
including offset of tax refunds and garnishment of salary,
(2) Refer the debt to a private collection agency for
collection, or
(3) Refer the debt for collection by the U.S. Department of
Justice (DOJ).
Collection fees may be charged to you when collections are made.
In addition, FSA will report the debt to a credit bureau. After your
account is referred to Treasury, any debt settlement offer must be
submitted to Treasury, or its private collection agency contractor.
If your account is referred to DOJ for collection, your offer must
be made to DOJ.
* * * * *
5. Revise the seventh paragraph of Attachment 3 to Exhibit A to
Subpart S to read as follows:
* * * * *
Attachment 3 * * *
Purpose of Debt Settlement Programs
These programs apply after it has been determined that primary
loan service programs cannot help you. You may be eligible for both
debt settlement and preservation loan service programs. If you no
longer have FSA collateral you will need to apply for debt
settlement only. Under these programs, the debt you owe FSA may be
settled for less than the amount you owe. You may apply for debt
settlement from FSA by requesting and submitting an application for
debt settlement on Form RD 1956-1 within 30 days of receiving an
additional debt settlement notice. See section IX of 1951-S, Exhibit
A, Attachment 1, which is included with this notice.
* * * * *
Signed in Washington, D.C., on November 4, 1999.
August Schumacher, Jr.,
Under Secretary for Farm and Foreign Agricultural Services.
[FR Doc. 99-29866 Filed 11-17-99; 8:45 am]
BILLING CODE 3410-05-P