This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

65546

Vol. 69, No. 219

Monday, November 15, 2004

DEPARTMENT OF AGRICULTURE 

Rural Housing Service 

Rural Business-Cooperative Service 

Rural Utilities Service 

Farm Service Agency 

7 CFR Parts 1782, 1951, 1955, and 1956 

RIN 0572–AB59 

Servicing of Water Programs Loans 

and Grants

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

SUMMARY: The Rural Utilities Service 

(RUS) proposes to consolidate and 

amend the regulations utilized to 

service water and waste loan and grant 

programs. The proposed rule will 

combine the water and waste loan and 

grant servicing regulations found in 7 

CFR parts 1951, 1955 and 1956 into one 

regulation. Unnecessary and 

burdensome requirements for water and 

waste loan and grant servicing under the 

program will be eliminated. The 

streamlining of the water and waste loan 

and grant servicing regulation will allow 

RUS to provide better service to entities 

needing assistance in resolving financial 

and economic problems in their 

communities and in general improve the 

quality of life in rural areas. 

Additionally, this rule proposes to 

implement Section 6018 of the Farm 

Security and Rural Investment Act of 

2002 (7 U.S.C. 1936a) for the Rural 

Business-Cooperative Service (RBS), 

Rural Housing Service (RHS) and RUS.

DATES: Comments on the proposed rule 

must be received on or before January 

14, 2005.

ADDRESSES: You may submit comments 

by any of the following methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. Follow the 

online instructions for submitting 

comments. 

• Agency Web Site: http://

www.usda.gov/rus/index2/

Comments.htm. Follow the instructions 

for submitting comments. 

• E-mail: RUSComments@usda.gov.

Include in the subject line of the 

message ‘‘7 CFR 1782.’’ 

• Mail: Addressed to Richard Annan, 

Acting Director, Program Development 

and Regulatory Analysis, Rural Utilities 

Service, United States Department of 

Agriculture, 1400 Independence 

Avenue, SW., STOP 1522, Washington, 

DC 20250–1522. 

• Hand Delivery/Courier: Addressed 

to Richard Annan, Acting Director, 

Program Development and Regulatory 

Analysis, Rural Utilities Service, United 

States Department of Agriculture, 1400 

Independence Avenue, SW., Room 

5168–S, Washington, DC 20250–1522. 

Instructions: All submissions received 

must include the agency name and the 

subject heading ‘‘7 CFR 1782’’. All 

comments received must identify the 

name of the individual (and the name of 

the entity, if applicable) who is 

submitting the comment. All comments 

received will be posted without change 

to http://www.usda.gov/rus/index2/

Comments.htm, including any personal 

information provided.

FOR FURTHER INFORMATION CONTACT:

Anita O’Brien, Loan Specialist, Water 

and Environmental Programs, Rural 

Utilities Service, Room 2230 South 

Building, Stop 1570, 1400 

Independence Ave., SW., Washington, 

DC 20250–1570. Telephone: (202) 690–

3789, FAX: (202) 690–0649, e-mail: 

anita.obrien@usda.gov.

SUPPLEMENTARY INFORMATION: 

Classification 

Executive Order 12866 

This proposed rule has been 

determined to be not significant for 

purposes of Executive Order 12866 and, 

therefore, has not been reviewed by the 

Office of Management and Budget 

(OMB). 

Executive Order 12988 

This proposed rule has been reviewed 

in accordance with Executive Order 

12988, Civil Justice Reform. RUS has 

determined that this proposed rule 

meets the applicable standards provided 

in section 3 of the Executive Order. In 

addition, all State and local laws and 

regulations that are in conflict with this 

rule will be pre-empted; no retroactive 

effect will be given to the rule; and in 

accordance with sec. 212(e) of the 

Department of Agriculture 

Reorganization Act of 1994 (7 U.S.C. 

sec. 6912(e)), appeal procedures must be 

exhausted before an action against the 

Department or its agencies may be 

initiated. 

Regulatory Flexibility Act Certification 

It has been determined that the 

Regulatory Flexibility Act is not 

applicable to this rule since the Rural 

Utilities Service is not required by 5 

U.S.C. 551 et seq. or any other provision 

of law to publish a notice of proposed 

rulemaking with respect to the subject 

matter of this rule.

Information Collection and 

Recordkeeping Requirements 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

chapter 35), RUS is requesting 

comments on the collection of 

information incorporated in this 

proposed rule. The reporting burden 

will be transferred from nine existing 

regulations into regulation 1782 and 

where possible, the reporting burden 

will be reduced. 

Title: Servicing of Water and Waste 

Programs. 

Type of Request: New collection. 

Abstract: RUS’ Water and 

Environmental Programs (WEP) provide 

financing and technical assistance for 

development and operation of safe and 

affordable water supply systems and 

sewage and other waste disposal 

facilities. WEP provides loans, 

guaranteed loans and grants for water, 

sewer, storm water, and solid waste 

disposal facilities in rural areas and 

towns of up to 10,000 people. The 

recipients of the assistance covered by 

7 CFR part 1782 must be public entities. 

These can include municipalities, 

counties, special purpose districts; 

federally designated Indian tribes, land 

corporations not operated for profit, 

including cooperatives. The 

information, which is for the most part 

financial in nature, is needed by the 

Agency to determine if borrowers, based 

on their individual situations, qualify 

for the various servicing options. 

Estimate of Burden: Public reporting 

burden for this collection of information 

is estimated to average 30 hours per 

response. 

Federal Register / Vol. 69, No. 219 / Monday, November 15, 2004 / Proposed Rules 65547

Respondents: Business or other for 

profit and non-profit institutions, and 

state and local governments. 

Estimated Number of Respondents:

2,000. 

Estimated Number of Responses per 

Respondents: 1.35. 

Estimated Total Annual Burden on 

Respondents: 80,976 hours. 

The subject regulation is published 

for public review and comment. Copies 

of this information collection can be 

obtained from Michele Brooks, Program 

Development and Regulatory Analysis, 

Rural Utilities Service. Telephone: (202) 

690–1078. 

Comments on this information 

collection must be received by January 

14, 2005. 

Comments are invited on: (a) Whether 

the proposed collection of information 

is necessary for the proper performance 

of the functions of the agency, including 

whether the information will have 

practical utility; (b) the accuracy of the 

agency’s estimate of the burden of the 

proposed collection of information 

including the validity of the 

methodology and assumptions used; (c) 

ways to enhance the quality, utility, and 

clarity of the information to be 

collected; and (d) ways to minimize the 

burden of the collection of information 

on respondents, including the use of 

automated collection techniques or 

other forms of information technology. 

Send comments regarding this 

information collection requirement to 

Michele Brooks, Program Development 

and Regulatory Analysis, USDA, Rural 

Utilities Service, 1400 Independence 

Ave., SW., Room 5166, Stop 1522, 

Washington, DC 20250–1522. 

Comments are best assured of having 

full effect if OMB receives them within 

30 days of publication in the Federal 

Register. All comments will be 

summarized, included in the request for 

OMB approval, and will become a 

matter of public record. 

National Environmental Policy Act 

Certification 

The Administrator of RUS has 

determined that this proposed rule will 

not significantly affect the quality of the 

human environment as defined by the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4321 et seq.). Therefore, 

this action does not require an 

environmental impact statement or 

assessment. 

Catalog of Federal Domestic Assistance 

The program described by this 

proposed rule is listed in the Catalog of 

Federal Domestic Assistance Programs 

under numbers (1) 10.760—Water and 

Waste Disposal System for Rural 

Communities, (2) 10.761—Technical 

Assistance and Training Grants, (3) 

10.762—Solid Waste Management 

Grants (4) 10.763—Emergency 

Community Assistance Grants, and (5) 

10.770—section 306C Water and Waste 

Loans and Grants. This catalog is 

available on a subscription basis from 

the Superintendent of Documents, the 

United States Government Printing 

Office, Washington, DC 20402–9325, 

telephone number (202) 512–1800. 

Executive Order 12372 

This program is listed in the Catalog 

of Federal Domestic Assistance under 

numbers (1) 10.760—Water and Waste 

Disposal (WWD) System for Rural 

Communities, (2) 10.763—Emergency 

Community Assistance Grants, and (3) 

10.770—Water and Waste Loans and 

Grants (section 306C), and is subject to 

the provisions of Executive Order 12372 

which requires intergovernmental 

consultation with State and local 

officials. 

Unfunded Mandates 

This rule contains no Federal 

mandates (under the regulatory 

provision of title II of the Unfunded 

Mandates Reform Act of 1995) for State, 

local, and tribal governments or the 

private sector. Therefore, this rule is not 

subject to the requirements of section 

202 and 205 of the Unfunded Mandates 

Reform Act. 

Executive Order 13132, Federalism 

The policies contained in this 

proposed rule do not have any 

substantial direct effect on 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 

proposed rule impose substantial direct 

compliance costs on state and local 

governments. Therefore, consultation 

with states is not required. 

Background 

RUS’ water and waste program is 

administered by Water and 

Environmental Programs (WEP). The 

water and waste loan and grant 

programs are authorized by various 

sections of the Consolidated Farm and 

Rural Development Act (7 U.S.C. 1921 

et seq.), as amended. The regulations for 

these programs have not been 

completely reviewed for many years. 

The 1994 streamlining and 

reorganization of the Department of 

Agriculture provided an opportunity to 

review and rewrite the water and waste 

loan and grant servicing regulations. A 

task force was formed for that purpose. 

The aim of the task force was to make 

the regulations easier to understand, 

eliminate unnecessary requirements, 

and continue to protect the interest of 

the U. S. taxpayer. The program 

provides loan servicing options for 

communities facing financial problems. 

Servicing options should result in 

reasonable user costs for rural residents, 

rural businesses, and other rural users. 

Additionally, in order to provide 

uniformity, servicing provisions for 

grants are addressed in the 

Departmental Grant Regulations listed 

cited in 1782.7. 

Major changes are:

1. Combines servicing regulations 

found in 7 CFR parts 1951, 1955 and 

1956 into one regulation. 

2. The field staff is provided with 

more authority to service water and 

waste loans and grants. 

3. The application process for 

servicing actions has been streamlined 

to reduce unnecessary paperwork and 

improve service to the rural 

communities. There will be fewer 

regulations and the number of pages in 

the Code of Federal Regulations will be 

greatly reduced. 

4. The functions of the former 

Farmers Home Administration (FmHA) 

and the Rural Development 

Administration (RDA) relating to the 

water and waste loan and grant 

programs authorized by various sections 

of the Consolidated Farm and Rural 

Development Act, (7 U.S.C. 1926(a)), 

have been transferred to RUS based on 

the Department of Agriculture 

Reorganization Act of 1994, 7 U.S.C. 

6942. Therefore in order to enhance the 

delivery of borrower services and better 

assist the public, RUS is simplifying and 

rewriting regulations originally 

published by FmHA and RDA. All parts 

pertaining to the water and waste loan 

program will be moved into 7 CFR part 

1782. This action will have no effect on 

the Rural Housing Services (RHS) 

community facilities loan program, as 

this action makes no policy changes in 

the regulation with the exception of 

implementing section 6018 of the Farm 

Security and Rural Investment Act of 

2002 (7 U.S.C. 1936a). The following 

programs are affected by these 

amendments: (1) Water and Waste 

Disposal Loans and Grants, (2) 

Watershed loans and advances, (3) 

Resource Conservation and 

Development loans, (4) Technical 

Assistance and Training grants, (5) 

Emergency Community Assistance 

grants, (6) Solid Waste Management 

grants, and (7) Section 306C Water and 

Waste Facility Loans and Grants to 

Alleviate Health Risks. 

65548 Federal Register / Vol. 69, No. 219 / Monday, November 15, 2004 / Proposed Rules 

5. Implement Sec. 6018 of the Farm 

Security and Rural Investment Act of 

2002. This change will allow the 

borrower or grant recipient to use 

property (real and personal) purchased 

or improved with the loan or grant 

funds or proceeds from the sale of 

property (real and personal) purchased 

with such funds, for another project or 

activity. The RUS proposes to include 

language to implement this provision in 

7 CFR 1782.23. These provisions will 

also be applicable to the RBS and RHS 

programs by adding § 1951.218 to 7 CFR 

part 1951, subpart E. 

The Regulations 

RUS has completed a consolidation of 

regulations affecting WEP loans and 

grants. Prior to this rule becoming 

effective, WEP borrowers were affected, 

in part, by the following regulations: 

7 CFR part 1951, subpart A—Account 

Servicing Policies. 

7 CFR part 1951, subpart D—Final 

Payment on Loans. 

7 CFR part 1951, subpart E—Servicing 

of Community and Direct Business 

Programs Loans and Grants. 

7 CFR part 1951, subpart F—

Analyzing Credit Needs and Graduation 

of Borrowers. 

7 CFR part 1951, subpart O—

Servicing Cases Where Unauthorized 

Loan(s) or Other Financial Assistance 

Was Received—Community and Insured 

Business Programs. 

7 CFR part 1955, subpart A—

Liquidation of Loans Secured by Real 

Estate and Acquisition of Real and 

Chattel Property. 

7 CFR part 1955, subpart B—

Management of Property. 

7 CFR part 1955, subpart C—Disposal 

of Inventory Property. 

7 CFR part 1956, subpart C—Debt 

Settlement—Community and Business 

Programs. 

All of the above mentioned 

regulations include regulatory 

provisions of other programs of the 

former FmHA such as farm loans, 

business and industrial loans, single 

family housing, and multi-family 

housing. RUS is consolidating all 

regulatory actions in the above 

mentioned regulations which affect 

WEP loan and grant servicing into one 

new regulation—7 CFR part 1782. This 

consolidated regulation will clarify for 

our borrowers and grantees, the 

available servicing tools and the 

requirements to utilize these tools. 

Additionally, RUS proposes to 

remove all administrative processes 

from the regulations, leaving only 

regulatory actions that impact the 

public. This streamlining will make the 

regulation more concise and much 

easier to read and understand. The 

Agency will issue a Staff Instruction 

that will include the administrative 

portion, which outlines the Agency’s 

internal processing procedures. The 

Staff Instruction will be available to the 

public upon request at no cost. 

Conclusion 

RUS believes the consolidation and 

streamlining of the regulations for this 

program will maximize the ability of the 

Borrowers to use and understand the 

available servicing tools under this 

program. This consolidation is 

consistent with the Administration’s 

efforts to streamline Government 

functions, improve the efficiency and 

effectiveness of Government activities, 

and strive to be more borrower friendly. 

This effort will enable the Agency to 

reduce regulations, streamline Agency 

operations and provide servicing 

assistance with fewer staff resources.

List of Subjects 

7 CFR Part 1782 

Accounting, Appeal procedures, 

Auditing, Debts, Delinquency, Grant 

programs—Agriculture, Insurance, Loan 

programs—Agriculture. 

7 CFR Part 1951 

Accounting, Credit, Grant programs—

Agriculture, Loan Programs—

Agriculture, Low and moderate-income 

housing loans—Rent subsidies, 

reporting, and recordkeeping 

requirements, Rural areas. 

7 CFR Part 1955 

Government property, Government 

property management, Surplus 

government property. 

7 CFR Part 1956 

Accounting, Loan programs—

Agriculture, Rural areas.

Therefore, chapters XVII and XVIII of 

title 7, Code of Federal Regulations are 

proposed to be amended as follows:

CHAPTER XVII—RURAL UTILITIES 

SERVICE, DEPARTMENT OF 

AGRICULTURE 

1. Part 1782 is added to read as 

follows:

PART 1782—SERVICING OF WATER 

AND WASTE PROGRAMS

Sec. 

1782.1 Purpose. 

1782.2 Objectives. 

1782.3 Definitions. 

1782.4 Availability of forms and 

regulations.

1782.5 Nondiscrimination. 

1782.6 [Reserved]. 

1782.7 Grants. 

1782.8 Payments. 

1782.9 Environmental requirements. 

1782.10 Audit requirements. 

1782.11 Refinancing requirements. 

1782.12 Sale or exchange of security 

property. 

1782.13 Transfer of Security and 

Assumption of Loans. 

1782.14 Protection of Service Areas—7 

U.S.C. 1926(b). 

1782.15 Mergers and consolidations. 

1782.16 Defeasance of RUS indebtedness. 

1782.17 Subordination of security or parity 

lien. 

1782.18 [Reserved]. 

1782.19 Third party agreements. 

1782.20 Debt Settlement. 

1782.21 [Reserved] 

1782.22 Exception authority. 

1782.23 Use of Rural Development Loans 

and Grants for Other Purposes. 

1782.24—1782.99 [Reserved]. 

1782.100 OMB Control Number.

Authority: 5 U.S.C. 301; 7 U.S.C. 1981; 16 

U.S.C. 1005.

§ 1782.1 Purpose. 

This part outlines the Rural Utilities 

Service’s (RUS) policies and procedures 

for servicing direct and insured Water 

and Waste Disposal loans and grants; 

Watershed loans and advances; 

Resource Conservation and 

Development loans; Technical 

Assistance and Training grants; 

Emergency Community Water 

Assistance grants; Solid Waste 

Management grants; and section 306C 

WWD loans and grants.

§ 1782.2 Objectives. 

Loan and grant servicing is provided 

by RUS in order to assist recipients in 

complying with the established 

objectives and requirements for loans 

and grants, repaying loans on schedule, 

acting in accordance with any necessary 

agreements, and protecting RUS’

financial interest. Servicing by RUS 

includes, but is not limited to, the 

review of budgets, management reports, 

audits and financial statements; 

performing security inspections; 

providing, arranging or recommending 

technical assistance; evaluating 

environmental impacts of proposed 

actions by the Borrower; and performing 

civil rights compliance and graduation 

reviews.

§ 1782.3 Definitions. 

Acceleration. A written notice 

informing the borrower that the total 

unpaid principal and interest is due and 

payable immediately. 

Adjustment. Satisfaction of a debt, 

including release of liability, when 

acceptance by the agency is conditioned 

upon completion of payment of the 

adjusted amount at a specific time or 

times; with or without the payment of 

Federal Register / Vol. 69, No. 219 / Monday, November 15, 2004 / Proposed Rules 65549

any consideration when the adjustment 

offer is approved. An adjustment is not 

a final settlement until all payments 

under the adjustment agreement have 

been made. 

Administrator. Administrator of RUS. 

Agency. RUS or any employee acting 

on its behalf in accordance with 

appropriate delegations of authority. 

Assumption of debt. Agreement by 

one party to legally bind itself to pay the 

debt incurred by another. 

Borrower. Recipient of RUS or 

predecessor agency loan assistance. 

Cancellation. Final discharge of debt 

with a release of liability. 

Chargeoff. Write off of a debt and 

termination of servicing activity without 

release of liability. A Chargeoff is a 

decision upon the part of the Agency to 

remove debt from Agency receivables; 

however, future payments may be 

received. 

Compromise. Satisfaction of a debt 

including a release of liability by 

accepting a lump-sum payment of less 

than the total amount owed. 

Defeasance. Defeasance is the use of 

invested proceeds from a new bond 

issue to repay outstanding bonds in 

accordance with the repayment 

schedule of the outstanding bonds. The 

new issue supersedes the contractual 

agreements from the prior issue. 

Disposition of facility. Relinquishing 

control of a facility to another entity. 

False information. Information, 

known to be incorrect, provided with 

the intent to obtain benefits which 

would not have been obtainable based 

on correct information. 

Government. The United States of 

America acting through the RUS, USDA. 

USDA and RUS may be used 

interchangeably throughout this part. 

Grantee. Recipient of RUS or 

predecessor agency grant assistance, 

technical assistance, or services. 

Letter of Conditions. A written 

document that describes the conditions 

which the borrower and/or grantee must 

meet for funds to be advanced and the 

loan and/or grant to be closed. 

Liquidation. To satisfy a debt through 

the sale of a borrower’s assets and 

discharge of liabilities. 

Parity Lien. A lien having an equal 

lien position to another lender’s lien on 

a borrower’s asset. 

Reasonable rates and terms.

Commercial rates and terms borrowers 

are expected to pay when borrowing for 

similar purposes and periods of time. 

Rural Development. The mission area 

of the Under Secretary for Rural 

Development. Rural Development State 

and local offices administer the water 

and waste programs on behalf of RUS. 

Rural Utilities Service (RUS). An 

Agency of the USDA established 

pursuant to section 232 of the 

Department of Agriculture 

Reorganization Act of 1994 (Pub. L. 

103–354). 

Servicing office. The USDA office 

which maintains the official file of the 

borrower or grantee and is responsible 

for the routine servicing of the loan and 

grant account. 

Servicing official. A USDA official 

who has been delegated loan and grant 

approval and servicing authorities 

subject to any dollar limitations within 

applicable programs. 

Settlement. Compromise, adjustment, 

cancellation, or chargeoff of a debt owed 

USDA. The term ‘‘settlement’’ is used 

for convenience in referring to 

compromise, adjustment, cancellation, 

or chargeoff action, individually or 

collectively. 

Subordination agreement. A formal 

agreement whereby RUS permits 

another lender to have a senior or prior 

lien position on a borrower’s assets to 

facilitate the borrower’s obtaining 

financing from another source of credit. 

A subordinate lien position is an 

inferior or junior lien position.

USDA. United States Department of 

Agriculture. 

Unliquidated obligations. Obligated 

loan or grant funds that have not been 

advanced. 

Voluntary conveyance. A method by 

which title to security is voluntarily 

transferred to the Government.

§ 1782.4 Availability of forms and 

regulations. 

Information about the availability of 

forms, regulations, bulletins, and 

procedures referenced in this chapter 

are available in any office of the USDA/

Rural Development or RUS, United 

States Department of Agriculture, 

Washington, DC 20250–1500 or at the 

Web site http://www.usda.gov/rus/

water.

§ 1782.5 Nondiscrimination. 

Each instrument of conveyance 

required for a transfer, assumption, sale 

of facility, or other servicing action 

under this subpart will comply with 

Title VI of the Civil Rights Act of 1964, 

Title IX of the Education Amendments 

of 1972, section 504 of the 

Rehabilitation Act of 1973, and other 

similarly worded Federal statutes and 

regulations issued pursuant thereto that 

prohibits discrimination on the basis of 

race, color, national origin, handicap, 

religion, age, or sex in programs or 

activities receiving Federal financial 

assistance. Such provisions apply for as 

long as the property continues to be 

used for the same or similar purposes 

for which the Federal assistance was 

extended, or for so long as the purchaser 

owns it, whichever is later.

§ 1782.6 [Reserved]

§ 1782.7 Grants. 

Servicing actions relating to RUS 

grants are governed by the provisions of 

7 CFR parts 3015, 3016, 3017, 3018, 

3019, 3021, and 3052 as applicable, and 

Executive Order (E.O.) 12803. Grantees 

remain responsible for property 

acquired with grant funds in accordance 

with terms of a grant agreement and 

applicable regulations.

§ 1782.8 Payments. 

Payments will be applied in 

accordance with the terms of the debt 

instrument. Information on non-typical 

payments can be obtained from the 

Servicing official or office. All new 

borrowers will use pre-authorized debits 

as required in their Letter of Conditions.

§ 1782.9 Environmental requirements. 

Servicing actions involving 

subordination and lease or sale of RUS 

owned property will be reviewed for 

compliance with 7 CFR part 1794 as 

required in § 1794.3. The appropriate 

environmental review will be completed 

prior to approval of the servicing action.

§ 1782.10 Audit requirements. 

Audits for loans will be required in 

accordance with § 1780.47 of this title. 

If the borrower becomes delinquent or is 

experiencing problems, the servicing 

official will require an audit or other 

documentation deemed necessary to 

resolve the delinquency. The provisions 

of 7 CFR part 3052 address audit 

requirements for recipients of federal 

grants.

§ 1782.11 Refinancing requirements. 

If at any time it appears to the 

Government that the borrower is able to 

refinance the amount of the 

indebtedness then outstanding, in 

whole or in part, by obtaining a loan for 

such purposes from responsible 

cooperative or private credit sources, at 

reasonable rates and terms, the borrower 

will, upon request of the Government, 

apply for and accept such loan in 

sufficient amount to repay the 

Government and will take all such 

actions as may be required in 

connection with such loan.

§ 1782.12 Sale or exchange of security 

property. 

A cash sale of all or a portion of a 

borrower’s assets or an exchange of 

security property may be approved 

subject to the conditions set forth in this 

section. 

65550 Federal Register / Vol. 69, No. 219 / Monday, November 15, 2004 / Proposed Rules 

(a) Approval conditions. Approval 

may be given when the servicing official 

determines that: 

(1) The consideration is for the full 

amount of the debt or the present fair 

market value as determined by an 

appraisal completed by a qualified Rural 

Development employee or an 

independent appraiser as determined 

appropriate by the approval official; 

(2) The sale or exchange will not 

prevent carrying out the purpose of the 

loan; 

(3) The remaining property is 

adequate security for the loan and the 

transaction will not adversely affect 

RUS’ security position; 

(4) If the property to be sold or 

exchanged will be used for similar 

purposes that the loan was made, the 

purchaser will: 

(i) Execute Form RD 400–4, 

‘‘Assurance Agreement.’’ The 

instrument of conveyance will contain 

the civil rights covenant referenced in 7 

CFR 1901.202(e); and 

(ii) Provide RUS with a written 

agreement assuming all rights and 

obligations of the original borrower, and 

(5) Proceeds remaining after paying 

any reasonable and necessary selling 

expenses are to be used for one or more 

of the following purposes: 

(i) To pay RUS debt, pay on debts 

secured by a prior lien, and pay on 

debts secured by a parity or subsequent 

lien if it is to RUS’ advantage; 

(ii) To purchase or acquire property 

more suited to the borrower’s needs, 

providing RUS security position is 

maintained; and 

(iii) To develop or enlarge the facility 

if necessary to improve the borrower’s 

debt-paying ability, place the operation 

on a sounder financial basis, or further 

the loan objectives and purposes. 

(b) Sale of assets financed with RUS 

grants. The requirements for the sale or 

disposition of assets financed with RUS 

grants are determined by the terms of 

the grant agreement, 7 CFR parts 3015, 

3016, and 3019, and E.O. 12803, as 

applicable. 

(c) Release from liability. If a borrower 

can no longer meet the objectives of the 

loan, the property may be sold. If the 

full amount of the borrower’s debt is 

paid or assumed, the State Director may 

release the borrower from liability.

§ 1782.13 Transfer of Security and 

Assumption of Loans. 

It is RUS policy to approve transfers 

and assumptions to transferees that will 

continue the original purpose of the 

loan. Assistant Administrator written 

concurrence is required when the 

transfer exceeds the State Director’s loan 

approval authority. The transfer will be 

approved in accordance with the 

following requirements:

(a) General requirements for 

transferees. The fulfillment of the 

following requirements for transfers will 

be determined by the approval official, 

in his or her discretion: 

(1) The transferees must meet the 

eligibility requirements of 7 CFR 1780.7 

and provide the same information 

required in 7 CFR Part 1780, subpart B 

for application processing. 

(2) The transfer will not be 

disadvantageous to the Government as 

determined by the approval official. 

(3) If the RUS debt(s) exceeds the 

present market value of the security as 

determined by an appraisal, the 

transferee will assume an amount at 

least equal to the present market value. 

(4) RUS must concur in plans for 

disposition of funds in any reserve 

account, including project construction 

bank accounts. A reserve account may 

be considered as a transferable asset. 

(5) The transferee will assume all of 

the borrower’s responsibilities regarding 

loans. The transferee will also agree to 

accept the original loan conditions plus 

any conditions set forth by RUS with 

regard to the transfer. 

(6) A current appraisal will be 

completed to establish the present 

market value of the security when the 

full debt is not being assumed. 

(7) There must be no lien, judgement, 

or similar claims of other parties against 

the RUS security being transferred 

unless the transferee is willing to accept 

such claims. RUS must also determine 

that the claims will not prevent the 

transferee from repaying the RUS debt, 

meeting all operating and maintenance 

costs, and maintaining required 

reserves. The written consent of any 

other lienholder will be obtained where 

required. 

(8) A letter of conditions establishing 

requirements to be met in connection 

with the transfer will be issued, and the 

transferee will be required to execute 

Form RD 1942–46, ‘‘Letter of Intent to 

Meet Conditions,’’ prior to closing of the 

transfer. 

(9) The transferee will obtain 

insurance according to RUS 

requirements. 

(10) The effective date of the transfer 

is the date the transfer is closed, which 

is the same date Form RD 1951–15, 

‘‘Community Programs Assumption 

Agreement,’’ or other appropriate 

assumption agreement, which is 

executed and delivered by all necessary 

parties. 

(11) Title to all assets will be 

conveyed from the transferor to the 

transferee unless all parties concerned, 

including RUS, agree upon other 

arrangements. All instruments of 

conveyance will contain the necessary 

nondiscrimination covenant as referred 

to in § 1782.5.

(12) If the transfer and assumption is 

to one or more members of the 

borrower’s organization, there must not 

be a loss to the Government. 

(13) The State Director is authorized 

to approve transfers to eligible 

transferees at the same interest rate as 

on the borrower’s note(s) or bond(s). 

The maturity of the debt instrument for 

the assumed debt may not exceed the 

lesser of the repayment period 

authorized in 7 CFR 1780.13(e) for a 

‘‘new’’ loan or the expected life of the 

facility. 

(14) RUS National Office concurrence 

is required for transfers not in 

compliance with paragraphs (a)(1) 

through (14) of this section. 

(b) Loan requirements for eligible 

transferees. If a loan is evidenced and 

secured by a note and lien on real or 

chattel property, Form RD 1951–15, or 

other appropriate assumption agreement 

will be executed by the transferee. If a 

bond secures a loan, transfer documents 

will be developed by bond counsel and 

approved by Office of the General 

Counsel, USDA (OGC). 

(1) Loans being transferred and 

assumed may be combined when the 

security is the same, new terms are 

being provided, a new debt instrument 

will be issued, and the loans have the 

same interest rate and are for the same 

purpose. If applicable, 7 CFR 1780.94(l) 

will govern the preparation of any new 

debt instruments required. 

(2) A loan may be made in connection 

with a transfer if the transferee meets all 

eligibility and other requirements for 

the kind of loan being made. Such a 

loan will be considered as a separate 

loan, and must be evidenced by a 

separate debt instrument. However, it is 

permissible to have one authorizing 

loan resolution or ordinance if 

permitted by State statutes. 

(3) Any development funds remaining 

in a bank account that are not refunded 

to RUS will be transferred to a bank 

account for the transferee. This will 

occur simultaneously with the closing 

of the transfer and the funds will be 

used in completing planned 

development. 

(c) Release from liability. Transferors 

may be released from liability when 

their debt is paid in full or when the 

debt is settled in accordance with 

§ 1782.20 of this part. 

(d) Transfer of facility financed with 

RUS grants. The requirements for the 

sale or disposition of assets financed 

with RUS grants are determined by the 

terms of the grant agreement, 7 CFR 

Federal Register / Vol. 69, No. 219 / Monday, November 15, 2004 / Proposed Rules 65551

parts 3015, 3016, and 3019, and E.O. 

12803, as applicable.

§ 1782.14 Protection of Service Areas—7 

U.S.C. 1926(b). 

(a) 7 U.S.C. 1926(b) was enacted to 

protect the service area of RUS 

borrowers with outstanding loans, or 

those loans sold in the sale of assets 

authorized by the ‘‘Joint Resolution 

Making Continuing Appropriations for 

the Fiscal Year 1987, Pub. L. 99–591, 

100 Stat. 3341 (1986),’’ from loss of 

users due to actions or activities of other 

entities in the service area of the RUS 

financed system. Without this 

protection, other entities could extend 

service to users within the service area 

and thereby undermine the purpose of 

the congressionally mandated water and 

waste loan and grant programs; and 

jeopardize the borrower’s ability to 

repay its RUS debt. 

(b) Responsibility for initiating action 

in response to those actions prohibited 

by 7 U.S.C. 1926(b) rests with the 

borrower.

§ 1782.15 Mergers and consolidations. 

Mergers and consolidations will be 

processed the same as a transfer and 

assumption, although approvals by RUS 

will give consideration to the 

differences under the applicable law 

regarding the type of transaction under 

consideration. Mergers occur when two 

or more entities combine in such a 

manner that only one remains in 

existence. Consolidations occur when 

two or more entities combine to form a 

new consolidated entity, and the 

original entities cease to exist. In both 

mergers and consolidations, the 

surviving or emerging entity acquires 

the assets and assumes the liabilities of 

the entity or entities that ceased to exist.

§ 1782.16 Defeasance of RUS 

indebtedness. 

Defeasance, or amending outstanding 

loan instruments and agreements to 

permit defeasance of RUS debt 

instruments, is not authorized.

§ 1782.17 Subordination of security or 

parity lien. 

In order for RUS to agree to either a 

subordination or to a parity lien 

position, the borrower must submit a 

written request to the servicing office. 

(a) The written request for parity or 

subordination must contain the 

following items: 

(1) An explanation of the purpose of 

the request for parity or subordination; 

amount of loan for which parity or 

subordination is requested; description 

of security property; type of security 

instrument; name, and address of 

financial institution requesting the 

transaction; and other information 

determined necessary by the servicing 

official to evaluate the request. 

(2) Current financial statements or an 

audit, if available or determined 

necessary by the servicing official. 

(3) An annual operating budget which 

projects income and expenses for a 

typical year’s operation. If construction 

is involved, the budget must be 

projected through the first full year of 

operation following completion of the 

planned improvements. 

(4) A copy of the proposed security 

instrument. 

(5) A certification from the borrower 

that the RUS debt cannot be refinanced 

at reasonable rates and terms. 

(6) An appraisal, when the primary 

security is real estate or determined 

necessary by the servicing official in 

order to determine the adequacy of loan 

security or repayment ability. 

(7) A certification that any 

development work will comply with 

subpart C of part 1780 of this chapter. 

(8) Requests for a subordination of 

security are subject to the appropriate 

environmental review as required by 

§ 1794.3 of this chapter. 

(b) Requests for parity or 

subordination must comply with 

requirements of paragraph (a) of this 

section, requirements as specified in the 

bond or loan documents, the 

requirements as specified in § 1780.94(i) 

of this chapter, and as provided in 

applicable State law. 

(c) Proposals for tax exempt issues 

will be considered for parity only. 

(d) Once the borrower has met all of 

the requirements in paragraphs (a), (b) 

and (c) of this section and the proposal 

is determined to be in the Government’s 

interest, RUS will then grant approval of 

the borrower’s request for parity or 

subordination.

§ 1782.18 [Reserved]

§ 1782.19 Third party agreements. 

The State Director may authorize 

third party operation, maintenance, and 

management of an RUS financed 

facility. The borrower’s attorney must 

review the contract, management 

agreement, written lease or other third 

party agreement and issue an opinion to 

the agency as to their legal sufficiency. 

The borrower shall retain the legal 

authority necessary for owning, 

constructing, operating and maintaining 

the facility.

§ 1782.20 Debt settlement. 

Pursuant to 7 U.S.C. 1981 this section 

prescribes policies for debt settlement of 

Water and Waste Disposal Loans; 

Watershed loans and advances; 

Resource Conservation and 

Development loans; and 306(c) Water 

and Waste Facility loans. 

(a) General requirements for debt 

settlement. (1) The debt or any 

extension thereof on which settlement is 

requested must be due and payable. The 

debt will be due and payable either 

under the terms of the note or other 

instrument, or by acceleration, unless 

the debt is to be cancelled without 

application under paragraph (e)(2) of 

this section or charged off under 

paragraph (f) of this section. 

(2) Normally, all security will be 

disposed of prior to the date of 

application for debt settlement unless it 

is necessary to abandon security 

through the debt settlement process. In 

such cases, debt settlement may proceed 

if the servicing official determines that 

further collection efforts would be 

ineffective, uneconomical, and not in 

the best interests of the Government. 

(3) Debtors will not be permitted to 

sell security and use the proceeds as 

part or all of a compromise/adjustment 

debt settlement offer. 

(4) Request for debt settlement will 

consist of Form RD 1956–1 

‘‘Application For Settlement of 

Indebtedness,’’ current financial 

information, description and estimated 

market value of collateral, and status of 

operation (i.e. number of users, 

compliance with environmental issues, 

etc.). 

(5) OGC advice on compliance with 

State or Federal statutes that may affect 

the debt settlement action must be 

requested. 

(b) Debts ineligible for settlement.

Debts will not be settled if: 

(1) Referral to OIG and/or to OGC is 

contemplated or pending because of 

suspected criminal violation, or 

(2) Civil action to protect the interest 

of the Government is contemplated or 

pending, or 

(3) An investigation for suspected 

fiscal irregularity is contemplated or 

pending, or 

(4) The debtor requests settlement of 

a claim that has been referred to or a 

judgment obtained by the United States 

Attorney. The settlement offer and any 

related payment must be submitted 

directly to the United States Attorney 

for consideration. 

(c) Types of debt settlement.

Typically, debt settlement will be 

accomplished through compromise/

adjustment, chargeoff, or cancellation. 

Any debt remaining after the security 

has been liquidated, by sale or transfer, 

will be cancelled if there are no other 

assets from which to collect the debt. 

The servicing official will proceed with 

65552 Federal Register / Vol. 69, No. 219 / Monday, November 15, 2004 / Proposed Rules 

advice from OGC and the National 

Office, as required. 

(d) Compromise and adjustment.

Debts may be compromised or adjusted 

and security retained by the debtor, 

provided: 

(1) The debtor is unable to pay the 

indebtedness in full, and

(2) The debtor has offered an amount 

equal to the present fair market value of 

all security or facility financed, and 

(3) The debtor has offered any 

additional amount that the debtor is 

able to pay. 

(e) Cancellation. Nonjudgment debts, 

regardless of the amount, may be 

cancelled with or without application 

by the debtor. 

(1) With application by the debtor.

Debts may be cancelled upon 

application of the debtor, subject to the 

following conditions: 

(i) The servicing official furnishes a 

favorable recommendation concerning 

the cancellation; 

(ii) There is no known security for the 

debt and the debtor has no other assets 

from which the debt could be collected; 

(iii) The debtor is unable to pay any 

part of the debt and has no reasonable 

prospect of being able to do so; and 

(iv) The debt or any extension thereof 

is due and payable under the terms of 

the note or other instrument, or due to 

acceleration by written notice prior to 

the date of application. 

(2) Without application by debtor.

Debts may be cancelled upon a 

favorable recommendation of the 

servicing official in the following 

instances: 

(i) Debtors discharged in bankruptcy.

If there is no security for the debt, debts 

discharged in bankruptcy shall be 

cancelled by the use of Form RD 1956–

1. A copy of the Bankruptcy Court’s 

Discharge Order must be attached. 

(ii) Impractical to obtain debtor’s 

signature. Debts may be cancelled if it 

is impractical to obtain a signed 

application and the requirements of 

paragraphs (e)(1) of this section are met. 

Form RD 1956–1 will document the 

specific reason(s) why it was impossible 

or impracticable to obtain the signature 

of the debtor. If the debtor refused to 

sign the application, the reason(s) 

should be documented. 

(f) Chargeoff. (1) Judgment debts.

Judgment debts, regardless of the 

amount, may be charged off without the 

debtor’s signature upon a favorable 

recommendation of the servicing official 

provided: 

(i) The United States Attorney’s file is 

closed, and 

(ii) The requirements of paragraph 

(e)(2)(ii) of this section, if applicable, 

have been met, or 2 years have elapsed 

since any collections were made on the 

judgment. The debtor must also have no 

equity in the property subject to the lien 

or upon which a lien can be obtained. 

(2) Nonjudgment debts. Debts that 

cannot be settled under other sections of 

this part may be charged off without the 

debtor’s signature upon a favorable 

recommendation of the servicing official 

in the following instances: 

(i) When OGC advises in writing that 

the claim is legally without merit, or 

that evidence necessary to prove the 

claim in court cannot be provided; or 

(ii) When there is no known security 

for the debt, the debtor has no other 

assets from which the debt could be 

collected, and the debtor: 

(A) Is unable to pay any part of the 

debt and has no reasonable prospect of 

being able to do so; or 

(B) Is able to pay part or all of the debt 

but refuses to do so, and OGC provides 

an opinion to the effect that the 

Government cannot enforce collection 

of a significant amount from assets or 

income.

§ 1782.21 [Reserved]

§ 1782.22 Exception authority. 

The Administrator may, in individual 

cases, make an exception to any 

requirement or provision of this part 

which is not inconsistent with the 

authorizing statute or other applicable 

law and is determined to be in the 

Government’s interest. Requests for 

exceptions must be made in writing by 

the State Director and supported with 

documentation to explain the adverse 

effect on the Government’s interest, 

propose alternative course(s) of action, 

and show how the adverse affect will be 

eliminated or minimized if the 

exception is granted. The exception 

decision will be documented in writing, 

signed by the Administrator, and 

retained in the files.

§ 1782.23 Use of Rural Development Loans 

and Grants for other purposes. 

(a) If, after making a loan or a grant, 

the Administrator determines that the 

circumstances under which the loan or 

grant was made have sufficiently 

changed to make the project or activity 

for which the loan or grant was made 

available no longer appropriate, the 

Administrator may allow the borrower 

or grantee to use property (real and 

personal) purchased or improved with 

the loan or grant funds, or proceeds 

from the sale of property (real and 

personal) purchased with such funds, 

for another project or activity that: 

(1) Will be carried out in the same 

area as the original project or activity; 

(2) Meets the criteria for a loan or 

grant described in section 381E(d) of the 

Consolidated Farm and Rural 

Development Act, as amended; and 

(3) Satisfies such additional 

requirements as are established by the 

Administrator. 

(b) If the new use of the property is 

under the authority of another USDA 

Agency Administrator, the other 

Administrator will be consulted on 

whether the new use will meet the 

criteria of the other program. Since the 

new project or activity must be carried 

out in the same area as the original 

project or activity, a new rural area 

determination will not be necessary. 

(c) Borrowers and grantees that wish 

to use the proceeds for other purposes 

may make their request through the 

appropriate Rural Development State 

Office. Permission to use this option 

will be exercised on a case-by-case-basis 

on applications submitted through the 

State Office to the Administrator for 

consideration. If the proposal is 

approved, the Administrator will issue 

a memorandum to the State Director 

outlining the conditions necessary to 

complete the transaction.

§ 1782.24–1782.99 [Reserved]

§ 1782.100 OMB Control Number. 

The information collection 

requirements in this part are approved 

by the Office of Management and 

Budget (OMB) and assigned OMB 

Control Number 0572–XXXX.

CHAPTER XVIII—RURAL HOUSING 

SERVICE, RURAL BUSINESS—

COOPERATIVE SERVICE, RURAL UTILITIES 

SERVICE, AND FARM SERVICE AGENCY, 

DEPARTMENT OF AGRICULTURE.

PART 1951—SERVICING AND 

COLLECTIONS 

2. The authority citation for part 1951 

continues to read as follows:

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 

U.S.C. 1480.

Subpart A—Account Servicing Policies 

3. Amend § 1951.1 by adding the 

following sentence to the end of the 

section:

§ 1951.1 Purpose. 

* * * This subpart does not apply to 

Water and Waste Programs of the Rural 

Utilities Service, Watershed loans, or 

Resource Conservation and 

Development loans, which are serviced 

under part 1782 of this title.

Subpart D—Final Payment on Loans 

4. Revise § 1951.151 to read as 

follows:

Federal Register / Vol. 69, No. 219 / Monday, November 15, 2004 / Proposed Rules 65553

§ 1951.151 Purpose. 

This subpart prescribes 

authorizations, policies and procedures 

of the Farm Service Agency (FSA), Rural 

Housing Service (RHS), and Rural 

Business—Cooperative Service (RBS), 

herein referred to as ‘‘Agency,’’ for 

processing final payment of all loans. 

This subpart does not apply to direct 

Single Family Housing customers of the 

RHS. This subpart does not apply to 

Water and Waste Programs of the Rural 

Utilities Service, Watershed loans, 

Resource Conservation and 

Development loans, which are serviced 

under part 1782 of this title.

Subpart E—Servicing of Community 

and Direct Business Programs Loans 

and Grants 

5. Revise § 1951.201 to read as 

follows:

§ 1951.201 Purposes. 

This subpart prescribes the Rural 

Development mission area policies, 

authorizations, and procedures for 

servicing Community Facility loans and 

grants; Rural Business Enterprise/

Television Demonstration grants; 

Association Recreation loans; Direct 

Business loans; Economic Opportunity 

Cooperative loans; Rural Renewal loans; 

Energy Impacted Area Development 

Assistance Program grants; National 

Nonprofit Corporation grants; System 

for Delivery of Certain Rural 

Development Programs panel grants; 

and Rural Cooperative Development 

Grants in subpart F of part 4284 of this 

title. Rural Development State Offices 

act on behalf of the Rural BusinessCooperative Service, and the Farm 

Service Agency as to loan and grant 

programs formerly administered by the 

Farmers Home Administration and the 

Rural Development Administration. 

Loans sold without insurance to the 

private sector will be serviced in the 

private sector and will not be serviced 

under this subpart. The provisions of 

this subpart are not applicable to such 

loans. Future changes to this subpart 

will not be made applicable to such 

loans. This subpart does not apply to 

Water and Waste Programs of the Rural 

Utilities Service, Watershed loans, and 

Resource Conservation and 

Development Loans, which are serviced 

under part 1782 of this title. 

6. Add § 1951.218 to read as follows:

§ 1951.218 Use of Rural Development 

Loans and Grants for other purposes. 

(a) If, after making a loan or a grant, 

the Administrator determines that the 

circumstances under which the loan or 

grant was made have sufficiently 

changed to make the project or activity 

for which the loan or grant was made 

available no longer appropriate, the 

Administrator may allow the loan 

borrower or grant recipient to use 

property (real and personal) purchased 

or improved with the loan or grant 

funds, or proceeds from the sale of 

property (real and personal) purchased 

with such funds, for another project or 

activity that: 

(1) Will be carried out in the same 

area as the original project or activity; 

(2) Meets the criteria for a loan or 

grant described in section 381E(d) of the 

Consolidated Farm and Rural 

Development Act, as amended; and 

(3) Satisfies such additional 

requirements as are established by the 

Administrator. 

(b) For the purpose of this section, 

Administrator means the Administrator 

of the Rural Housing Service or Rural 

Business-Cooperative Service that has 

the delegated authority to administer 

the loan or grant program that covers the 

property or the proceeds from the sale 

property proposed to be used in another 

way. 

(c) If the new use of the property is 

under the authority of another 

Administrator, the other Administrator 

will be consulted on whether the new 

use will meet the criteria of the other 

program. Since the new project or 

activity must be carried out in the same 

area as the original project or activity, a 

new rural area determination will not be 

necessary. 

(d) Borrowers and grantees that wish 

to take advantage of this option may 

make their request through the 

appropriate Rural Development State 

Office. Permission to use this option 

will be exercised on a case-by-case-basis 

on applications submitted through the 

State Office to the Administrator for 

consideration. If the proposal is 

approved, the Administrator will issue 

a memorandum to the State Director 

outlining the conditions necessary to 

complete the transaction.

Subpart F—Analyzing Credit Needs 

and Graduation of Borrowers 

6. Revise § 1951.251 to read as 

follows:

§ 1951.251 Purpose. 

This subpart prescribes the policies to 

be followed when analyzing a direct 

borrower’s need for continued Agency 

supervision, further credit, and 

graduation. All loan accounts will be 

reviewed for graduation in accordance 

with this subpart, with the exception of 

Guaranteed, Rural Development Loan 

Funds, and Rural Rental Housing loans 

made to build or acquire new units 

pursuant to contracts entered into on or 

after December 15, 1989, and 

Intermediary Relending Program loans. 

The term ‘‘Agency’’ used in this subpart 

refers to the Farm Service Agency (FSA) 

(including its county and State 

committees and their personnel), Rural 

Housing Service (RHS), or Rural 

Business-Cooperative Service (RBS), 

depending upon the loan program 

discussed herein. This subpart does not 

apply to RHS direct single family 

housing (SFH) customers. In addition, 

this subpart does not apply to Water and 

Waste Programs of the Rural Utilities 

Service, Watershed loans, Resource 

Conservation and Development loans, 

which are serviced under part 1782 of 

this title.

Subpart O—Servicing Cases Where 

Unauthorized Loan(s) or Other 

Financial Assistance Was Received—

Community and Insured Business 

Programs 

7. Revise § 1951.701 to read as 

follows:

§ 1951.701 Purpose. 

This subpart prescribes the policies 

and procedures for servicing 

Community and Business Program loans 

and/or grants made by Rural 

Development when it is determined that 

the borrower or grantee was not eligible 

for all or part of the financial assistance 

received in the form of a loan, grant, or 

subsidy granted, or any other direct 

financial assistance. It does not apply to 

guaranteed loans. Loans sold without 

insurance by the Rural Development to 

the private sector will be serviced in the 

private sector and will not be serviced 

under this subpart. The provisions of 

this subpart are not applicable to such 

loans. Future changes to this subpart 

will not be made applicable to such 

loans. This subpart does not apply to 

Water and Waste Programs of the Rural 

Utilities Service, Watershed loans, and 

Resource Conservation and 

Development Loans, which are serviced 

under part 1782 of this title.

PART 1955—PROPERTY 

MANAGEMENT 

8. The authority citation for part 1955 

continues to read as follows:

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

42 U.S.C. 1480.

Subpart A—Liquidation of Loans 

Secured by Real Estate and 

Acquisition of Real and Chattel 

Property 

9. Revise § 1955.1 to read as follows:

65554 Federal Register / Vol. 69, No. 219 / Monday, November 15, 2004 / Proposed Rules 

§ 1955.1 Purpose. 

This subpart delegates authority and 

prescribes procedures for the 

liquidation of loans to individuals and 

to organizations as identified in 

§ 1955.3. It pertains to the Farm Credit 

programs of the Farm Service Agency 

(FSA), Multi-Family Housing (MFH) 

and Community Facilities (CF) 

programs of the Rural Housing Service 

(RHS), and direct programs of the Rural 

Business-Cooperative Service (RBS). 

Guaranteed RBS loans are liquidated 

upon direction from the Deputy 

Administrator, Business Programs, RBS. 

This subpart does not apply to RHS 

single family housing loans or to CF 

loans sold without insurance in the 

private sector. These CF loans will be 

serviced in the private sector and future 

revisions to this subpart no longer apply 

to such loans. In addition, this subpart 

does not apply to Water and Waste 

Programs of the Rural Utilities Service, 

Watershed loans, Resource Conservation 

and Development loans, which are 

serviced under part 1782 of this title.

Subpart B—Management of Property 

10. Revise the introductory text of 

§ 1955.51 to read as follows:

§ 1955.51 Purpose. 

This subpart delegates authority and 

prescribes policies and procedures for 

the Rural Housing Service (RHS), Rural 

Business-Cooperative Service (RBS), 

and Farm Service Agency (FSA), herein 

referred to as ‘‘Agency,’’ and references 

contained in this subpart to the Farmers 

Home Administration (FmHA) are 

synonymous with ‘‘Agency.’’ This 

subpart does not apply to RHS single 

family housing loans or community 

program loans sold without insurance to 

the private sector. These community 

program loans will be serviced by the 

private sector and future revisions and 

this subpart no longer apply to such 

loans. In addition, this subpart does not 

apply to Water and Waste Programs of 

the Rural Utilities Service, Watershed 

loans, Resource Conservation and 

Development loans, which are serviced 

under part 1782 of this title. This 

subpart does cover:

* * * * *

Subpart C—Disposal of Inventory 

Property 

11. Revise § 1955.101 to read as 

follows:

§ 1955.101 Purpose. 

This subpart delegates program 

authority and prescribes policies and 

procedures for the sale of inventory 

property including real estate, related 

real estate rights and chattels. It also 

covers the granting of easements and 

rights-of-way on inventory property. 

Credit sales of inventory property to 

ineligible (nonprogram (NP)) purchasers 

will be handled in accordance with 

subpart J of part 1951 of this chapter, 

except Community and Business 

Programs (C&BP) and Multi-Family 

Housing (MFH) which will be handled 

in accordance with this subpart. In 

addition, credit sales of Single-Family 

Housing (SFH) properties converted to 

MFH will be handled in accordance 

with this subpart. This subpart does not 

apply to SFH inventory property. In 

addition, this subpart does not apply to 

Water and Waste Programs of the Rural 

Utilities Service, Watershed loans, 

Resource Conservation and 

Development loans, which are serviced 

under part 1782 of this title.

PART 1956—DEBT SETTLEMENT 

12. The authority citation for part 

1956 continues to read as follows:

Authority: 5 U.S.C. 301; 7 U.S.C. 1981; 31 

U.S.C 3711; 42 U.S.C. 1480.

Subpart C—Debt Settlement—

Community and Business Programs 

13. Amend § 1956.101 by adding the 

following sentence to the end of the 

section:

§ 1956.101 Purpose. 

* * * In addition, this subpart does 

not apply to Water and Waste Programs 

of the Rural Utilities Service, Watershed 

loans, Resource Conservation and 

Development loans, which are serviced 

under part 1782 of this title.

Dated: October 7, 2004. 

Gilbert Gonzalez, 

Acting Under Secretary, Rural Development.

[FR Doc. 04–25247 Filed 11–12–04; 8:45 am] 

BILLING CODE 3410–15–P

DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service 

7 CFR Part 4280 

RIN 0570–AA50 

Renewable Energy Systems and 

Energy Efficiency Improvements 

Grant, Guaranteed Loan, and Direct 

Loan Program

AGENCY: Rural Business-Cooperative 

Service, USDA.

ACTION: Proposed rule: extension of 

comment period. 

SUMMARY: The Rural BusinessCooperative Service (RBS) is extending 

the deadline of November 4, 2004, for 

submitting comments regarding the 

proposed Renewable Energy Systems 

and Energy Efficiency Improvements 

Grant, Guaranteed Loan, and Direct 

Loan Program. The program will assist 

farmers, ranchers, and small rural 

businesses to purchase renewable 

energy systems and make energy 

efficiency improvements. The proposed 

rule was published in the Federal 

Register on October 5, 2004 (69 FR 

59650). This extension will allow 

additional time for the public to submit 

comments.

DATES: Comments must be submitted by 

December 15, 2004.

ADDRESSES: You may submit comments 

to this rule by any of the following 

methods: 

Agency Web Site: http://

rdinit.usda.gov/regs/. Follow 

instructions for submitting comments 

on the Web site. 

E-Mail: comments@usda.gov. Include 

the RIN No. 0570–AA50 in the subject 

line of the message. 

Federal eRulemaking Portal: http://

www.regulations.gov. Follow the 

instructions for submitting comments. 

Mail: Submit written comments via 

the U.S. Postal Service to the Branch 

Chief, Regulations and Paperwork 

Management Branch, U.S. Department 

of Agriculture, STOP 0742, 1400 

Independence Avenue, SW., 

Washington, DC 20250–0742. 

Hand Delivery/Courier: Submit 

written comments via Federal Express 

Mail or another courier service requiring 

a street address to the Branch Chief, 

Regulations and Paperwork 

Management Branch, U.S. Department 

of Agriculture, 300 7th Street, SW., 7th 

Floor, Washington, DC 20024. 

All written comments will be 

available for public inspection during 

regular working hours at 300 7th Street, 

SW., 7th Floor, address listed above.

FOR FURTHER INFORMATION CONTACT:

Georg A. Shultz, Special Advisor for 

Renewable Energy Policy and Programs, 

Office of the Deputy Administrator 

Business Programs, U.S. Department of 

Agriculture, Mail Stop 3220, 1400 

Independence Ave., SW., Washington, 

DC 20250–3220, telephone: (202) 720–

2976.

SUPPLEMENTARY INFORMATION: RBS 

published the notice of proposed rule 

making with a 30-day comment period. 

The reason for this limited time for 

comments was based primarily on the 

need to have a published final rule in 

time for the implementation of the 

program in fiscal year (FY) 2005. The 

Agency felt that since the program 

outlined in the proposed rule is similar