# Purpose.
**AGENCIES:**
Farm Service Agency, Rural Business-Cooperative Service; Rural Housing Service; and Rural Utilities Service, USDA.
**ACTION:**
Final rule.
**SUMMARY:**
This rule removes the Farm Service Agency's direct Farm Loan Programs regulations from the Rural Development's mission area loan program regulations. In addition, it makes conforming changes to FSA's regulations for the boll weevil eradication loan program, the servicing of minor program loans, the special apple loan program, and the emergency loan for seed producers program.
**DATES:**
*Effective Date:* December 31, 2007.
**FOR FURTHER INFORMATION CONTACT:**
William D. Cobb, USDA, FSA, DAFLP, STOP 0520, 1400 Independence Avenue, SW., Washington, DC 20250-0520; telephone (202) 720-1059; electronic mail: *[email protected]* .
**SUPPLEMENTARY INFORMATION:**
**Discussion of the Final Rule**
FSA proposed to move the majority of its Farm Loan Programs direct loan making and servicing rules from Chapter XVIII to Chapter VII of the Code of Federal Regulations (CFR) in a proposed rule it published on February 9, 2004 (69 FR 6055-6121). Prior to the Department of Agriculture Reorganization Act of 1994 (1994 Act), Chapter XVIII contained the former Farmers Home Administration (FmHA) program regulations and Chapter VII contained the former Agricultural Stabilization and Conservation Service (ASCS) program regulations. The 1994 Act abolished both FmHA and ASCS and consolidated FmHA's Farm Loan Programs and ASCS programs under the newly created FSA, while the remaining FmHA programs were transferred to the Rural Development mission area agencies. With the exceptions listed below, this final rule removes from Chapter XVIII references to FmHA Farm Loan Programs, now operated by FSA.
As a result of the 1994 Act, some of the CFR subparts published by FmHA were used by FSA and one or more of the Rural Development mission area agencies, while others were used exclusively by FSA. The Farm Loan Programs direct loan making and servicing rules were dispersed throughout Chapter XVIII, making their use difficult for all but the most well-informed user. Therefore, in a final rule published on November 8, 2007 (72 FR 63241-63361), FSA is moving its Farm Loan Programs regulations from Chapter XVIII to Chapter VII, and is consolidating and reorganizing them in a logical manner making them easier to use by the general public, applicants and borrowers, and FSA. In the proposed rule of February 9, 2004, FSA stated that when the final rule was published, it would remove the Chapter XVIII subparts used only by FSA. However, as provided in the prefatory remarks to the final rule published on November 8, 2007, FSA will continue to use subpart G of 7 CFR part 1940, subpart C of 7 CFR part 1951, and subpart B of 7 CFR part 1956 until it publishes a final rule revising 7 CFR 799 for environmental procedures and 7 CFR part 792 for debt settlement policies and procedures.
Lastly, FSA is amending 7 CFR parts 771, 772, 773, and 774 to remove CFR citations that no longer are valid.
**Executive Order 12866**
This rule has been determined to be not significant under Executive Order 12866 and was not 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. This rule does not impose any new requirements on FSA applicants and borrowers. In some cases, existing information collections and regulatory requirements have been reduced as a result of streamlining the loan making and servicing application processes.
**Environmental Assessment**
FSA has completed an Environmental Assessment (EA) in accordance 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. A finding of no significant impact (FONSI) was determined as a result of the EA process. The final EA and FONSI are available for review at *http://www.fsa.usda.gov/FSA/webapp?area=home&subject=ecrc&topic=enl-ea* . FSA will accept comments on the final EA and FONSI for a period of 30 days from the date of publication of this rule.
**Executive Order 13132**
The policies contained in this rule do not have a substantial direct effect on the 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 final rule impose substantial direct compliance costs on state and local governments. Therefore, consultation with the States is not required.
**Executive Order 12988**
This final rule has been reviewed in accordance with Executive Order 12988, Civil Justice Reform. In accordance with this Executive Order: (1) All state and local laws and regulations that are in conflict with this rule will be preempted; (2) 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 bringing suit in court challenging action taken under this rule unless those regulations specifically allow bringing suit at an earlier time.
**Executive Order 12372**
For reasons contained in the Notice regarding 7 CFR part 3015, subpart V (48 FR 29115, June 24, 1983), the programs within this rule are excluded from the scope of E.O. 12372, which requires intergovernmental consultation with State and local officials.
**Unfunded Mandates**
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, 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 1806, 1901, 1924, 1925, 1927, 1951, and 1955 contained in this final rule have been approved by OMB under control numbers 0575-0042, 0575-0075, 0575-0087, 0575-0088, 0575-0093, 0575-0147, 0575-0158, and 0575-0172. In accordance with 5 CFR 1320, FSA submitted to OMB correction worksheets to transfer applicable information collections to FSA-assigned OMB control numbers.
**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.
FSA has posted on the e-Gov Web site at *http://www.sc.egov.usda.gov* all the forms an applicant or borrower has to complete in their entirety, or review and execute. Further, FSA has made available its handbooks at *http://www.fsa.usda.gov/FSA/webapp?area=home&subject=lare&topic=hbk* . Applicants or borrowers may download and review any agency handbook through the “Laws and Regulations” link, and become familiar with the requirements for applying for benefits.
**Federal Assistance Programs**
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
**List of Subjects**
Loan programs—agriculture, Pesticides and pests, Cotton.
Agriculture, Credit, Rural areas.
Fruits, Loan programs—agriculture.
Seeds, Loan programs—agriculture.
Buildings, Community development, Disaster assistance, Flood plains, Housing, Loan programs—Housing and Community Development, Insurance, Loan programs—Agriculture, Real property insurance, Rural areas.
Finance, Historic preservation, Loan Programs—Agriculture, Loan programs—Housing and community development, Natural resources, Rural areas.
Administrative practice and procedures, Applications, Credit, Government contracts, Loan programs—Agriculture, Loan programs—Housing and community development, Low and moderate income housing, Marital status discrimination, Reporting requirements, Sex discrimination.
Agriculture, Construction management, Construction and repair, Energy conservation, Housing, Loan programs—Agriculture, Loan programs—Housing and community development, Low and moderate income housing.
Real property taxes, Taxes.
Loan programs—Agriculture, Loan programs—Housing and community development, Mortgages.
Administrative practice and procedure, Agriculture, Allocations, Grant programs—Housing and community development, Loan programs—Agriculture, Rural areas.
Applicant eligibility, Beginning farmers and ranchers, Loan programs—agriculture.
Accounting, Loan programs—Agriculture, Military personnel.
Accounting, Account servicing, Credit, Debt restructuring, Foreclosure, Government acquired property, Loan programs—Agriculture, Loan programs—Housing and community development, Low and moderate income housing loans—Servicing, Mortgages, Rural areas, Sale of government acquired property, Surplus government property.
Foreclosure, Government acquired property, Government property management, Sale of government acquired property, Surplus government property.
Accounting, Loan programs—Agriculture, Rural areas.
Crops, Government property, Livestock, Loan programs—Agriculture, Rural areas.
Foreclosure, Loan programs—Agriculture, Rural areas.
**7 CFR Part 771**
Accordingly, 7 CFR Chapters VII and XVIII are amended as follows:
**PART 771—BOLL WEEVIL ERADICATION LOAN PROGRAM**
1. The authority citation for part 771 continues to read as follows:
**Authority:**
5 U.S.C. 301; 7 U.S.C. 1989; and Pub. L. 104-180, 110 Stat. 1569.
**7 CFR Part 771**
2. Revise the first sentence of § 771.15(c) introductory text to read as follows:
§ 771.15
(c) *Restructuring* . The provisions of 7 CFR part 766 are not applicable to loans made under this section. * * *
**7 CFR Part 772**
**PART 772—SERVICING MINOR PROGRAM LOANS**
3. The authority citation for part 772 continues to read as follows:
**Authority:**
5 U.S.C. 301, 7 U.S.C. 1989, 25 U.S.C. 490.
**7 CFR Part 772**
4. Revise the second sentence of § 772.9 (b) to read as follows:
§ 772.9
(b) *Borrower liability* . * * * IMP borrowers who have had previous debt forgiveness on a farm loan program loan as defined in 7 CFR part 761, however, cannot be released from liability by FSA until the previous loss to the Agency has been repaid with interest from the date of debt forgiveness. * * *
**7 CFR Part 772**
5. Revise the first sentence of § 772.11 to read as follows:
§ 772.11
Transfers and assumptions for IMP loans are processed in accordance with 7 CFR part 765. * * *
**7 CFR Part 772**
6. Revise the first sentence of § 772.12 (b)(2) to read as follows:
§ 772.12
(b) * * *
(1) * * *
(2) All IMP borrowers classified as “commercial” or “standard” by the agency must be reviewed at least every 2 years. * * *
**7 CFR Part 772**
7. Revise § 772.13 (b) to read as follows:
§ 772.12
(b) *IMP loans* . Delinquent IMP borrowers will be serviced according to 7 CFR part 3, part 766, and part 1951, subpart C, concerning internal agency offset and referral to the Department of the Treasury Offset Program and Treasury Cross-Servicing (or successor regulations).
**7 CFR Part 772**
8. Revise the second sentence of § 772.16 to read as follows:
§ 772.16
* * * If such a transfer or voluntary sale is not carried out, the loan will be liquidated according to 7 CFR part 766. * * *
**7 CFR Part 772**
9. Revise § 772.17 to read as follows:
§ 772.17
With respect to any aspect of a credit transaction, the Agency will comply with the requirements of the Equal Credit Opportunity Act and the Department's civil rights policy in 7 CFR part 15d.
**7 CFR Part 773**
**PART 773—SPECIAL APPLE LOAN PROGRAM**
10. The authority citation for part 773 continues to read as follows:
**Authority:**
Pub. L. 106-224.
**7 CFR Part 773**
11. Revise § 773.22 to read as follows:
§ 773.22
Loans will be serviced as a Non-program loan in accordance with 7 CFR part 766 during the term of the loan. If the loan is not paid in full during this term, servicing will proceed in accordance with 7 CFR part 766, subpart H.
**7 CFR Part 774**
**PART 774—EMERGENCY LOAN FOR SEED PRODUCERS PROGRAM**
12. The authority citation for part 774 continues to read as follows:
**Authority:**
Pub. L. 106-224.
**7 CFR Part 774**
13. Revise the second sentence of § 774.18(b)(2) to read as follows:
§ 774.18
(b) * * *
(2) * * * If the loan is not paid in full during this time and default occurs, servicing will proceed in accordance with 7 CFR part 766, subpart H.
**7 CFR Part 774**
14. Revise § 774.23 to read as follows:
§ 774.23
Loans will be serviced as a Non-program loan in accordance with 7 CFR part 766. If the loan is not repaid as agreed and default occurs, servicing will proceed in accordance with 7 CFR part 766, subpart H.
**7 CFR Part 1806**
**PART 1806—INSURANCE**
15. The authority citation for part 1806 continues to read as follows:
**Authority:**
5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480; 42 U.S.C. 2942.
**7 CFR Part 1806**
**Subpart A—Real Property Insurance**
16. Section 1806.1(a) is amended by removing the text “the Farm Credit Programs of the Farm Service Agency (FSA) or” in the first sentence; and adding a new last sentence to read as follows:
§ 1806.1
(a) * * * This subpart is inapplicable to Farm Service Agency, Farm Loan Programs.
**Subpart B—National Flood Insurance**
17. Section 1806.21(a) is amended by revising the last sentence to read as follows:
§ 1806.21
(a) * * * This subpart does not apply to Farm Service Agency, Farm Loan Programs and to Rural Rental Housing, Rural Cooperative Housing, or Farm Labor Housing programs of the Rural Housing Service.
**7 CFR Part 1901**
**PART 1901—PROGRAM-RELATED INSTRUCTIONS**
18. The authority citation for part 1901 continues to read as follows:
**Authority:**
5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
**7 CFR Part 1901**
**Subpart F—Procedures for the Protection of Historical and Archeological Properties**
19. Section 1901.251 is amended by adding a new last sentence to read as follows:
§ 1901.251
* * * This subpart is inapplicable to Farm Service Agency, Farm Loan Programs.
**7 CFR Part 1901**
**Subpart K—Certificates of Beneficial Ownership and Insured Notes**
20. Section 1901.501 is amended by adding a new last sentence to read as follows:
§ 1901.501
* * * This subpart is inapplicable to Farm Service Agency, Farm Loan Programs.
**Subpart N [Removed]**
21. Subpart N is removed and reserved.
**7 CFR Part 1910**
**PART 1910—GENERAL**
22. 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.
**7 CFR Part 1910**
**Subpart A [Removed]**
23. Subpart A is removed and reserved.
**7 CFR Part 1910**
**Subpart B—Credit Reports (Individual)**
24. Amend § 1910.51 by adding a new last sentence to read as follows:
§ 1910.51
* * * This subpart is inapplicable to Farm Service Agency, Farm Loan Programs.
**7 CFR Part 1910**
**Subpart C—Commercial Credit Reports**
25. Amend § 1910.101 by adding a new last sentence to read as follows:
§ 1910.101
* * * This subpart is inapplicable to Farm Service Agency, Farm Loan Programs.
**7 CFR Part 1924**
**PART 1924—CONSTRUCTION AND REPAIR**
26. 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.
**7 CFR Part 1924**
**Subpart A—Planning and Performing Construction and Other Development**
27. Section 1924.1 is amended by removing the text “, insured Farm Ownership (FO), Soil and Water (SW), Softwood Timber (ST)” and the text “, and Emergency (EM) loans for individuals” from the first sentence; and adding a new last sentence to read as follows:
§ 1924.1
* * * This subpart is inapplicable to Farm Service Agency, Farm Loan Programs.
**Subpart B—[Removed]**
**7 CFR Part 1924**
28. Subpart B is removed and reserved.
**7 CFR Part 1925**
**PART 1925—TAXES**
29. The authority citation for part 1925 continues to read as follows:
**Authority:**
5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
**7 CFR Part 1925**
**Subpart A—Real Estate Tax Servicing**
30. Section 1925.1 is amended by removing the text “a Farm Ownership (FO), Operating Loan (OL), Soil and Water (SW), Recreation Loan (RL), Emergency (EM), Economic Opportunity (EO),” and “Softwood Timber (ST),” in the first sentence; and adding a new last sentence to read as follows:
§ 1925.1
* * * This subpart is inapplicable to Farm Service Agency, Farm Loan Programs.
**7 CFR Part 1927**
**PART 1927—TITLE CLEARANCE AND LOAN CLOSING**
31. The authority citation for part 1927 continues to read as follows:
**Authority:**
5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
**7 CFR Part 1927**
**Subpart B—Real Estate Title Clearance and Loan Closing**
32. Section 1927.51(a) is amended by removing the text “and Farm Service Agency (FSA) loans: Farm Ownership (FO), Nonfarm Enterprise (FO-NFE), Emergency (EM), Operating (OL)” in the first sentence; removing the text “Soil and Water (SW), Indian Land acquisition loan involving nontrust property,” in the first sentence; and adding a new last sentence to read as follows:
§ 1927.51
(a) * * * This subpart is inapplicable to Farm Service Agency, Farm Loan Programs.
**7 CFR Part 1940**
**PART 1940—GENERAL**
33. The authority citation for part 1940 continues to read as follows:
**Authority:**
5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
**Subpart L—Methodology and Formulas for Allocation of Loan and Grant Program Funds**
**7 CFR Part 1940**
34. Section 1940.551(a) is amended by adding a new last sentence to read as follows:
§ 1940.551
(a) * * * This subpart is inapplicable to Farm Service Agency, Farm Loan Programs.
**7 CFR Part 1940**
§§ 1940.555 through 1940.559
35. Remove and reserve §§ 1940.555 through 1940.559.
**7 CFR Part 1941**
**PART 1941—[REMOVED]**
36. Remove and reserve part 1941.
**7 CFR Part 1943**
**PART 1943—[REMOVED]**
37. Remove and reserve part 1943.
**7 CFR Part 1950**
**PART 1950—GENERAL**
38. The authority citation for part 1950 continues to read as follows:
**Authority:**
5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
**7 CFR Part 1950**
**Subpart C—Servicing Accounts of Borrowers Entering the Armed Forces**
39. Section 1950.101 is amended by adding a new last sentence to read as follows:
§ 1950.101
* * * This subpart is inapplicable to Farm Service Agency, Farm Loan Programs.
**7 CFR Part 1951**
**PART 1951—SERVICING AND COLLECTIONS**
40. The authority citation for part 1951 continues to read as follows:
**Authority:**
5 U.S.C. 301; 7 U.S.C 1932 Note; 7 U.S.C. 1989; 31 U.S.C. 3716; 42 U.S.C. 1480.
**7 CFR Part 1951**
**Subpart A—Account Servicing Policies**
41. Section 1951.1 is amended by removing the text “Farmer Program loans (FP) which include Softwood Timber (ST), Operating Loan (OL), Farm Ownership (FO), Soil and Water (SW), Recreation Loan (RL), Emergency Loan (EM), Economic Emergency Loan (EE), Special Livestock Loan (SL), Economic Opportunity Loan (EO), and Rural Housing Loan for farm service buildings (RHF)”; and adding a new last sentence to read as follows:
§ 1951.1
* * * In addition, this subpart is inapplicable to Farm Service Agency, Farm Loan Programs.
**7 CFR Part 1951**
**Subpart C—Offsets of Federal Payments to USDA Agency Borrowers**
42. Revise the fourth and fifth sentences of the introductory text of § 1951.111 and the third sentence of § 1951.111(d)(1) to read as follows:
§ 1951.111
* * * For delinquent Farm Loan Programs direct loans, salary offset will not begin until the borrower has been notified of servicing options in accordance with 7 CFR part 766. In addition, for Farm Loan Programs direct loans, salary offset will not be instituted if the Federal salary has been considered on the farm operating plan, and it was determined the funds were to be used for another purpose other than payment on the USDA Agency loan. * * *
(d) * * *
(1) * * * For Farm Loan Programs direct loans, this notice will be sent after the borrower is over 90 days past due and immediately after sending notification of servicing rights in accordance with 7 CFR part 766. * * *
**7 CFR Part 1951**
**Subpart D—Final Payment on Loans**
43. Section 1951.151 is amended by removing the text “Farm Service Agency (FSA),” in the first sentence; and adding a new last sentence to read as follows:
§ 1951.151
* * * In addition, this subpart is inapplicable to Farm Service Agency, Farm Loan Programs.
**7 CFR Part 1951**
**Subpart F—Analyzing Credit Needs and Graduation of Borrowers**
44. Section 1951.251 is amended by removing the text “Farm Service Agency (FSA)”, in the third sentence; and revising the fourth sentence to read as follows:
§ 1951.251
* * * This subpart does not apply to Farm Service Agency, Farm Loan Programs and to RHS direct single family housing (SFH) customers. * * *
**7 CFR Part 1951**
**Subparts J, L, S, and T—[Removed]**
45. Subparts J, L, S, and T are removed and reserved.
**7 CFR Part 1955**
**PART 1955—PROPERTY MANAGEMENT**
46. 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.
**7 CFR Part 1955**
**Subpart A—Liquidation of Loans Secured by Real Estate and Acquisition of Real and Chattel Property**
47. Section 1955.1 is amended by removing the text “Farm Credit programs of the Farm Service Agency (FSA),” in the second sentence; and revising the fourth sentence to read as follows:
§ 1955.1
* * * This subpart does not apply to Farm Service Agency, Farm Loan Programs, to RHS single family housing loans, or to CF loans sold without insurance in the private sector. * * *
**7 CFR Part 1955**
**Subpart B—Management of Property**
48. Section 1955.51 is amended by removing the comma immediately following “(RBS)” and adding the word “and” in its place; by removing the text “, and Farm Service Agency (FSA),” in the first sentence of the introductory paragraph; and revising the second sentence of the introductory paragraph to read as follows:
§ 1955.51
* * * This subpart does not apply to Farm Service Agency, Farm Loan Programs, or to RHS single family housing loans or community program loans sold without insurance to the private sector. * * *
**7 CFR Part 1955**
**Subpart C—Disposal of Inventory Property**
49. Section 1955.101 is amended by revising the fifth sentence to read as follows:
§ 1955.101
* * * This subpart does not apply to Farm Service Agency, Farm Loan Programs, Single Family Housing (SFH) inventory property, or to the Rural Rental Housing, Rural Cooperative Housing, and Farm Labor Housing Programs. * * *
**7 CFR Part 1956**
**PART 1956—DEBT SETTLEMENT**
50. The authority citation for part 1956 continues to read as follows:
**Authority:**
5 U.S.C. 301; 7 U.S.C. 1989; 31 U.S.C. 3711; 42 U.S.C. 1480.
**7 CFR Part 1956**
**Subpart B—Debt Settlement—Farm Loan Programs and Multi-Family Housing**
51. Revise the second sentence of the “debt forgiveness” definition in § 1956.54 to read as follows:
§ 1956.54
*Debt forgiveness.* * * * Included, but not limited to, are losses from a writedown or writeoff under 7 CFR part 766, debt settlement, after discharge under the provisions of the bankruptcy code, and associated with release of liability. * * *
**7 CFR Part 1962**
**PART 1962—PERSONAL PROPERTY**
52. The authority citation for part 1962 continues to read as follows:
**Authority:**
5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
**7 CFR Part 1962**
**Subpart A—Servicing and Liquidation of Chattel Security**
53. Section 1962.1 is amended by adding a new last sentence to read as follows:
§ 1962.1
* * * This subpart is inapplicable to Farm Service Agency, Farm Loan Programs.
**7 CFR Part 1965**
**PART 1965—REAL PROPERTY**
**Subpart A—[Removed]**
54. Subpart A is removed and reserved.
Dated: November 5, 2007.
Mark Keenum,
Under Secretary for Farm and Foreign Agricultural Services.
Dated: November 2, 2007.
Thomas C. Dorr,
Under Secretary for Rural Development.