Farm Service Agency, USDA.
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.
Effective Date: January 7, 2009.Start Further Info
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: firstname.lastname@example.org. 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).End Further Info End Preamble Start Supplemental Information
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 This law repealed Public Law 110-234, dated May 22, 2008, that inadvertently omitted Title III (Trade) and reenacted those provisions with the missing title.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 Start Printed Page 7434415 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.
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).
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.
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.
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.Start List of Subjects
List of SubjectsEnd List of Subjects Start Amendment Part
For the reasons discussed above, this rule amends 7 CFR chapter VII, Subchapter D—Special Programs, as follows:End Amendment Part Start Part
PART 761—GENERAL PROGRAM ADMINISTRATIONEnd Part Start Amendment Part
1. The authority citation for part 761 continues to read as follows:End Amendment Part Start Amendment Part
2. Amend § 761.2 paragraph (b) as follows:End Amendment Part Start Amendment Part
a. Remove the definitions of “Beginning Farmer Downpayment Loan” and “Socially disadvantaged applicant,”End Amendment Part Start Amendment Part
b. Add definitions, in alphabetical order, for “Downpayment Loan” andEnd Amendment Part Start Amendment Part
c. In the definition of “Farm Ownership loan” remove the words “Beginning Farmer.”End Amendment Part
(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.
3. Amend § 761.8 as follows:End Amendment Part Start Amendment Part
a. In paragraph (a)(1) remove the words “Beginning Farmer,”End Amendment Part Start Amendment Part
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,” andEnd Amendment Part Start Amendment Part
c. In paragraph (a)(6) remove the amount “$700,000” and add, in its place, the amount “$800,000.”End Amendment Part Start Amendment Part
4. Revise § 761.210 paragraph (a) to read as follows:End Amendment Part
(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 LOANSEnd Part Start Amendment Part
5. The authority citation for part 762 continues to read as follows:End Amendment Part
6. Amend § 762.121 paragraph (b)(1) by removing the words “beginning farmer.”End Amendment Part
7. Amend § 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.”End Amendment Part
8. Amend § 762.124 paragraph (e)(3) by removing the words “for beginning farmers.”End Amendment Part Start Amendment Part
9. Revise § 762.130 paragraph (d)(4)(iii)(C) to read as follows:End Amendment Part
(d) * * *
(4) * * *
(iii) * * *
(C) Loans to farmers involved in the direct downpayment program.
PART 764—DIRECT LOAN MAKINGEnd Part Start Amendment Part
10. The authority citation for part 764 continues to read as follows:End Amendment Part
11. Amend § 764.1 paragraph (b)(1) by removing the words “Beginning Farmer.”End Amendment Part
12. Amend § 764.103 paragraphs (c) and (e) by removing the words “beginning farmer.”End Amendment Part
Subpart E—Downpayment Loan ProgramStart Amendment Part
13. Revise Subpart E heading to read as shown above.End Amendment Part
14. Amend § 764.201 as follows:End Amendment Part Start Amendment Part
a. In the heading remove the words “Beginning Farmer” andEnd Amendment Part Start Amendment Part
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.End Amendment Part
15. Amend § 764.202 paragraph (b) by adding the words “or socially disadvantaged farmer” at the end.End Amendment Part Start Amendment Part
16. Amend § 764.203 as follows:End Amendment Part Start Amendment Part
a. In paragraph (a)(2) remove the number “10” and add, in its place, the number “5,”End Amendment Part Start Amendment Part
b. Revise paragraphs (b) and (c) to read as set forth below, andEnd Amendment Part Start Amendment Part
c. Remove paragraph (d).End Amendment Part
(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
(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.
17. Amend § 764.204, as follows:End Amendment Part Start Amendment Part
a. Revise paragraph (a) to read as set forth below,End Amendment Part Start Amendment Part
b. In paragraph (b)(1) remove the words “Beginning Farmer,” andEnd Amendment Part Start Amendment Part
c. In paragraphs (b)(1) and (2) remove the number “15” and add, in its place, the number “20.”End Amendment Part
(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.
18. Amend § 764.205 introductory paragraph by removing the words “Beginning Farmer.”End Amendment Part Start Part
PART 767—INVENTORY PROPERTY MANAGEMENTEnd Part Start Amendment Part
19. The authority citation for part 767 continues to read as follows:End Amendment Part
20. Amend § 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.”End Amendment Part
21. Amend § 767.151 as follows:End Amendment Part Start Amendment Part
a. In paragraphs (a), (b), and (d) add the words “or socially disadvantaged farmers” immediately after “beginning farmers” andEnd Amendment Part Start Amendment Part
b. In paragraph (c) add the words “or socially disadvantaged farmer” immediately after the words “beginning farmer.”End Amendment Part
22. Amend § 767.152 paragraph (a) by adding the words “or socially disadvantaged farmer” immediately after the words “beginning farmer.”End Amendment Part
23. Amend § 767.153 paragraph (b)(3) by removing the words “non-beginning farmer purchasers” and adding, in their place, the words “purchasers who areEnd Amendment Part Start Signature
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