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###### Department of Agriculture

###### Rural Housing Service

###### Rural Business—Cooperative Service

###### Rural Utilities Service

###### Farm Service Agency

          - 7 CFR Part 1951
          - RIN 0575-AC57

# AGENCY:

Rural Housing Service, USDA.

# ACTION:

Final rule.

# SUMMARY:

The Rural Housing Service (RHS) hereby amends the regulation utilized to service the Community Facilities and Business Programs loan program by adding requirements for servicing delinquent Community Facilities in conformance with the Debt Collection Improvement Act of 1996. The intended effect of this action is to establish a workout agreement with delinquent borrowers to collect delinquent loans prior to referral for treasury offset.

# DATES:

This rule is effective January 7, 2005.

# FOR FURTHER INFORMATION CONTACT:

Dan Spieldenner, Community Programs Senior Loan Specialist, Rural Housing Service, U.S. Department of Agriculture, STOP 0787, 1400 Independence Ave. SW., Washington, DC 20250-0787, telephone: (202) 720-9700.

# SUPPLEMENTARY INFORMATION:

## Classification

This rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget (OMB).

## Programs Affected

The Catalog of Federal Domestic Assistance Program impacted by this action is 10.766, Community Facilities Loans and Grants.

## Intergovernmental Review

                    This program is subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with State and local officials. RHS conducts intergovernmental consultations for each loan in the manner delineated in 7 CFR part 3015, subpart V.                          ( print page 70884)    

## Civil Justice Reform

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. In accordance with this rule: (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 of the National Appeals Division (7 CFR part 11) must be exhausted before bringing suit in court challenging action taken under this rule.

## Environmental Impact Statement

                    The action has been reviewed in accordance with 7 CFR part 1940, subpart G, “Environmental Program.” The Agency has determined that this action does not constitute a major Federal action significantly affecting the quality of the human environment and, in accordance with the National Environmental Policy Act of 1969, 42 U.S.C. 4321*et seq.*, an Environmental Impact Statement is not required.                

## Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. chapters 17A and 25, established requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, RHS generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with Federal mandates that may result in expenditures to State, local, or tribal governments, in the aggregate, or to 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 generally requires RHS to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. This rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

## Regulatory Flexibility Act

This rule has been reviewed with regard to the requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). 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 since this rulemaking action does not involve a new or expanded program.

## Federalism

The policies contained in this 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 rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required.

## Implementation

It is the policy of this Department that rules relating to public property, loans, grants, benefits, or contracts shall comply with 5 U.S.C. 553, notwithstanding the exemption of that section with respect to such rules.

## Paperwork Reduction Act

The information collection and record keeping requirements contained in this regulation have been approved by the Office of Management and Budget (OMB) under the provisions of 44 U.S.C. chapter 35 and were assigned OMB control number 0575-0066 in accordance with the Paperwork Reduction Act of 1995. Under the Paperwork Reduction Act of 1995, no person is required to respond to a collection of information unless it displays a valid OMB control number. The revisions in this rulemaking for part 1951 required an amendment to the burden package and this modification has been approved by OMB.

## Discussion

                    The proposed rule was published in the                     **Federal Register**                     on April 30, 2004 (69 FR 23697), for public comment. We received no comments on the proposed rule. The Debt Collection Improvement Act of 1996 requires transfer of accounts that are more than 180 days delinquent to the Department of Treasury for collection by offset of Federal payments unless a suitable agreement for collection of the delinquent amount is negotiated between the borrower and the federal agency. This change to regulation establishes requirements for negotiation of a “Workout Agreement” and the reporting requirements that are necessary to monitor the borrower's progress in resolving the delinquency. It also incorporates some administrative corrections. There are no substantive changes from the notice of proposed rulemaking.                

# List of Subjects in 7 CFR Part 1951

      - Accounting servicing
      - Grant programs—Housing and community development
      - Reporting requirements
      - Rural areas

Therefore, Chapter XVIII, Title 7, Code of Federal Regulations, is amended as follows:

# PART 1951—SERVICING AND COLLECTIONS

1. The authority citation for part 1951 continues to read as follows: 

Authority:5 U.S.C. 301; 7 U.S.C. 1932; 7 U.S.C. 1989; 31 U.S.C. 3716; 42 U.S.C. 1480.

# Subpart E—Servicing of Community and Direct Business Programs Loans and Grants

2. Section 1951.203 is amended by revising paragraph (a) to read as follows: 

§ 1951.203 

                            (a)                             *Approval official.*                             An official who has been delegated loan and/or grant approval authorities within applicable programs.                        

* * * * *

3. Section 1951.222 is amended by revising paragraph (a)(1) to read as follows: 

§ 1951.222 

* * * * *

(a) * * *

(1) The request must be for subordination of a specific amount of the Rural Development indebtedness.

* * * * *

§ 1951.226 

4. Section 1951.226 is amended in paragraph (b)(4)(ii) by revising the word “below” to read “of this subpart.”

§ 1951.230 

5. Section 1951.230 is amended in paragraph (f)(2) by revising the words “Form FmHA or its successor agency under Public Law 103-354 442-46” to read “an Agency approved form”. 

6. Section 1951.242 is added to read as follows: 

§ 1951.242 

(a) For the purpose of this section, a loan is delinquent when a borrower fails to make all or part of a payment by the due date.

(b) The delinquent loan borrower and the Agency, at its discretion, may enter into a written workout agreement.

                            (c) For loans that are delinquent, the borrower must provide, monthly comparative financial statements in a format that is acceptable to the Agency                                   ( print page 70885)                                by the 15th day of the following month. The Agency may waive this requirement if it would cause a hardship for the borrower or the borrower is actively marketing the security property.                        

§ 1951.250 

7. Section 1951.250 is amended by removing the last sentence. 

Dated: December 1, 2004.

Russell T. Davis,

Administrator, Rural Housing Service.

[FR Doc. 04-26872 Filed 12-7-04; 8:45 am]

BILLING CODE 3410-XV-P