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

39565 

Vol. 74, No. 151 

Friday, August 7, 2009 

DEPARTMENT OF AGRICULTURE 

Farm Service Agency 

7 CFR Parts 761 and 766 

RIN 0560–AI05 

Loan Servicing; Farm Loan Programs 

AGENCY: Farm Service Agency, USDA. 

ACTION: Proposed rule. 

SUMMARY: The Farm Service Agency 

(FSA) is proposing to amend the Farm 

Loan Programs (FLP) direct loan 

servicing regulations primarily to 

implement provisions of the Food, 

Conservation, and Energy Act of 2008 

(the 2008 Farm Bill). FSA proposes four 

amendments to the rules. The first 

amendment would further emphasize 

transitioning borrowers to private 

sources of credit in the shortest 

timeframe practicable. The second 

amendment would amend the 

Homestead Protection lease regulations 

by extending the right to purchase the 

leased property to the lessee’s 

immediate family when the lessee is a 

member of a socially disadvantaged 

group. The third amendment would 

amend the account liquidation 

regulations to suspend certain loan 

acceleration and foreclosure actions, 

including suspending interest accrual 

and offsets, if a borrower has filed a 

claim of program discrimination that 

has been accepted as valid by USDA 

and is at the point of acceleration or 

foreclosure. The fourth amendment 

would amend the supervised bank 

account regulations to be consistent 

with the recently amended Federal 

Deposit Insurance Act. 

DATES: We will consider comments that 

we receive by October 6, 2009. 

ADDRESSES: We invite you to submit 

written comments on this proposed 

rule. In your comment, include the 

volume, date, and page number of this 

issue of the Federal Register. You may 

submit comments by any of the 

following methods: 

• E-mail: 

mike.cumpton@wdc.usda.gov. 

• Fax: (202) 720–5804. 

• Mail: Director, Loan Servicing and 

Property Management Division, Farm 

Service Agency, U.S. Department of 

Agriculture, 1400 Independence 

Avenue, SW., Stop 0523, Washington, 

DC 20250–0523. 

• Hand Delivery or Courier: Deliver 

comments to Farm Service Agency, 

Loan Servicing and Property 

Management Division, 1250 Maryland 

Ave., SW., Suite 500, Washington, DC 

20024. 

• Federal eRulemaking Portal: Go to 

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

online instructions for submitting 

comments. 

Comments may be inspected in the 

Office of the Director, Loan Servicing 

and Property Management Division 

(LSPMD), Farm Service Agency, at 1250 

Maryland Ave., SW., Suite 500, 

Washington, DC, between 8 a.m. and 

4:30 p.m., except holidays. 

FOR FURTHER INFORMATION CONTACT: 

Michael C. Cumpton, Assistant to the 

Director, LSPMD, Farm Service Agency; 

telephone: (202) 690–4014; Facsimile: 

(202) 720–5804; E-mail: 

mike.cumpton@wdc.usda.gov. Persons 

with disabilities or who require 

alternative means for communications 

should contact the USDA Target Center 

at (202) 720–2600 (voice and TDD). 

SUPPLEMENTARY INFORMATION: 

Background 

This proposed rule implements three 

provisions of the 2008 Farm Bill (Public 

Law 110–246; June 18, 2008) concerning 

loan servicing for FSA’s direct loan 

program. This law repealed Public Law 

110–234 dated May 22, 2008 that 

inadvertently omitted Title III (Trade of 

the 2008 Farm Bill.) FSA loans are a 

means of providing credit to farmers 

whose financial risk exceeds a level 

acceptable to commercial lenders. For 

two of these amendments, the one that 

would allow family members of lessees 

who are members of a socially 

disadvantaged group to purchase 

properties under Homestead Protection 

and the one setting a moratorium on 

foreclosure actions for borrowers with 

an accepted program discrimination 

claim, there is little to no discretion in 

how to implement the provisions of the 

2008 Farm Bill. For the third 

amendment promoting the goal of 

transitioning borrowers to private credit, 

the 2008 Farm Bill provides general 

guidance. In addition, this proposed 

rule would implement a conforming 

amendment to comply with section 136 

of the Emergency Economic 

Stabilization Act of 2008 (Pub. L. 110– 

343; October 3, 2008), which 

temporarily increased the standard 

maximum deposit insurance amount for 

Federal Deposit Insurance Corporation 

(FDIC)-insured accounts. 

Transitioning Borrowers to Private 

Credit 

Sections 302(a), 311(a), and 321(a) of 

the Consolidated Farm and Rural 

Development Act (the Con Act) 

establish the inability ‘‘to obtain 

sufficient credit elsewhere’’ as an 

eligibility requirement for FLP direct 

loans. Section 319 of the Con Act 

requires that FSA develop a plan ‘‘to 

encourage each borrower * * * to 

graduate to private commercial or other 

sources of credit.’’ 

Section 5304 of the 2008 Farm Bill 

requires that the Secretary ‘‘establish a 

plan and promulgate regulations 

(including performance criteria) that 

promote the goal of transitioning 

borrowers to private commercial credit 

and other sources of credit in the 

shortest time practicable.’’ Both section 

319 of the Con Act and section 5304 of 

the 2008 Farm Bill require coordination 

with the following sections of the Con 

Act: 

• Borrower training established under 

section 359; 

• Loan assessment established under 

section 360; 

• Supervised credit under section 

361; and 

• Market placement under section 

362. 

FSA has implemented the borrower 

training program in existing regulations 

in 7 CFR part 764, subpart J. The market 

placement program is addressed in 7 

CFR 762.110(g). Requirements regarding 

a borrower’s graduation to another 

source of credit are addressed in 7 CFR 

part 765, subpart C. None of these 

regulations would be changed by this 

proposed rule. The supervised credit 

requirement, which includes the loan 

assessment program, is specified in 7 

CFR part 761, subpart C. This rule 

proposes to amend 7 CFR 761.103 

pertaining to farm assessments, as well 

as 7 CFR 761.1, ‘‘Introduction,’’ to 

encourage the transitioning of borrowers 


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39566 Federal Register / Vol. 74, No. 151 / Friday, August 7, 2009 / Proposed Rules 

to commercial credit in the shortest 

period of time practicable and better 

establish the use of borrower training, 

supervised credit, including loan 

assessment, and market placement to 

plan for and evaluate a borrower’s 

ability to graduate. 

FSA is developing an internal plan 

that will include performance criteria to 

evaluate its success in transitioning 

borrowers to commercial credit. 

Performance criteria are not being 

established for borrowers in this 

proposed rule. 

Extension of Right To Reacquire 

Homestead Property to Family 

Members 

This rule proposes to amend section 

766.154, ‘‘Homestead Protection 

Leases.’’ Section 766.154(c) currently 

addresses the right of a lessee to 

purchase leased property under 

Homestead Protection. This proposed 

amendment would expand that right to 

also allow an immediate family member 

of a lessee who is a member of a socially 

disadvantaged group (as currently 

defined in section 761.2) to exercise the 

option to purchase, as required by 

section 5305 of the 2008 Farm Bill. The 

lessee may designate a member of the 

lessee’s immediate family (parent, 

sibling, or child) as having this right to 

purchase. This immediate family 

member also has the right under section 

5305 to choose any independent 

appraiser from a list of three approved 

by FSA to establish the current market 

value of the property. This policy will 

be added to the FSA Handbook 

procedures. 

Moratorium on Loan Acceleration and 

Foreclosure for Borrowers With an 

Accepted Discrimination Claim 

Section 14002 of the 2008 Farm Bill 

requires a moratorium on certain 

acceleration and loan foreclosure 

proceedings against any farmer or 

rancher who has a claim of program 

discrimination accepted by the 

Department as valid or who files such 

a claim that is accepted. The statutory 

moratorium applies only with respect to 

Farm Loan Program loans made under 

subtitle A, B, or C, of the Con Act, 

which includes Farm Ownership (FO), 

Soil and Water (SW), Recreation loans, 

and Emergency (EM) loans. Section 

343(a)(10) of the Con Act defines 

‘‘Farmer Program Loan’’ to include FO 

loans under section 303, Operating 

Loans (OL) under section 312, SW loans 

under section 304, EM loans under 

section 321, Economic Emergency (EE) 

loans under section 202 of the 

Emergency Agricultural Credit 

Adjustment Act, Economic Opportunity 

(EO) loans under the Economic 

Opportunity Act of 1961, Softwood 

Timber (ST) loans under section 1254 of 

the Food Security Act of 1985, and 

Rural Housing loans for farm service 

buildings (RHF) under section 502 of 

the Housing Act of 1949. SW, EE, EO, 

ST, and RHF loans are no longer being 

made, but a few remain to be serviced. 

FSA regulation, 7 CFR 761.2, also 

includes Recreation loans formerly 

made under section 304 of the Con Act 

as a ‘‘program loan.’’ Loans made under 

statutory authorities other than the Con 

Act, such as the EE, EO, ST, and RHF 

loans, would not be covered by the 

section 14002 moratorium, but will 

continue to be covered by FSA’s 

internal voluntary suspension of 

acceleration and foreclosure when the 

borrower has a program discrimination 

complaint accepted by the USDA Office 

of Adjudication and Compliance (OAC). 

Non-program loans are not covered by 

the mandatory section 14002 

moratorium, but will continue to be 

covered by the Agency’s voluntary 

suspension policy on acceleration and 

foreclosure when the borrower has a 

program discrimination complaint 

accepted by OAC. Non-program loans 

are defined by section 761.2 as those 

loans made on more stringent terms for 

the convenience of FSA because the 

applicant or property does not qualify 

for a program loan under applicable 

statutes and regulations. For example, 

under FSA regulations a third party may 

assume a program loan on non-program 

terms if the transferee is not eligible for 

the program loan, and in some 

circumstances FSA might collect an 

unauthorized loan by permitting the 

borrower to continue making payments 

on non-program terms. Homestead 

Protection financing and financing of 

recapture under Shared Appreciation 

Agreements authorized by sections 352 

and 353 of the Con Act, respectively, 

also are considered non-program loans. 

Non-program loans historically have not 

been considered eligible for the broad 

loan servicing options available for 

program loans. These servicing rights 

are commonly the subject of dispute in 

the program discrimination claims 

addressed by section 14002, so it is 

reasonable to limit the moratorium to 

the program loans specified in the 

statute. FSA has found no Congressional 

intent for this moratorium provision to 

cover non-program loans. In fact, 

Congress’ specific reference to ‘‘Farm 

Loan Program Loans’’ indicates 

otherwise. Liquidation of non-program 

loans, therefore, may be delayed if a 

borrower’s program loans are under 

moratorium. This rule proposes to 

amend section 766.351, ‘‘Liquidation,’’ 

to specify the provisions of the 

moratorium accordingly. 

An ‘‘accepted’’ claim under section 

14002 is a claim for which OAC has 

made the determination to accept on 

basic jurisdictional grounds. As 

explained in the Conference Report for 

the 2008 Farm Bill, ‘‘accepted’’ is a 

procedural term and not a statement as 

to the merits of the program 

discrimination claim. The acceptance of 

the claim is distinct from the person’s 

filing of a program discrimination claim. 

The moratorium began on the effective 

date of the 2008 Farm Bill, which was 

May 22, 2008, if the borrower had a 

pending claim that was accepted and 

the borrower was at the point of 

acceleration and foreclosure on or prior 

to that date. Otherwise, it will begin 

when a program discrimination 

complaint has been accepted and the 

borrower is at the point of acceleration 

or foreclosure. In either case, 

moratorium begins after all available 

loan servicing and appeal rights have 

been offered to the borrower. If the 

borrower’s account were accelerated 

and foreclosed prior to enactment of the 

statute or OAC’s acceptance of the 

borrower’s program discrimination 

claim, the moratorium would never be 

triggered. The moratorium will end on 

the earlier of the date the program 

discrimination claim is resolved by 

USDA OAC, or the date that a court of 

competent jurisdiction renders a final 

decision on the program discrimination 

claim if the farmer or rancher appeals 

the decision of USDA OAC. 

In addition to the moratorium on 

acceleration and foreclosure, section 

14002 provided that interest accrual and 

offset would be suspended on the farm 

program loans made under subtitle A, B, 

or C of the Con Act for the claimants 

during the moratorium period (at the 

point of acceleration or foreclosure after 

all servicing and appeal rights have 

been exhausted). These benefits were 

not provided under FSA’s prior 

voluntary suspension policy and cannot 

be provided on any loans not made 

under subtitle A, B, or C of the Con Act. 

Interest accrual and Treasury offset 

generally are required by 31 U.S.C. 

sections 3717 and 3716, respectively. 

Interest accruals and offsets will resume 

on the covered loans when the 

moratorium terminates. If the borrower 

does not prevail on the program 

discrimination claim, the borrower will 

be liable for the interest that accrued 

during the moratorium under section 

14002. In such case, the interest that 

would have accrued during the 

moratorium will be reinstated on the 

debt. Any debt that would have been 


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paid down through offset will remain 

when the moratorium terminates and 

will be collected through normal 

procedures. If the borrower does prevail 

on the program discrimination claim, 

the borrower will not be liable for the 

interest and offsets during the 

moratorium. FSA will implement any 

settlement agreement or court order, as 

appropriate. 

Establishing a Supervised Bank 

Account 

This rule proposes to amend existing 

regulations in 7 CFR 761.51(e) which 

currently require that a financial 

institution pledge acceptable collateral 

with the Federal Reserve Bank when the 

balance deposited into a supervised 

bank account will exceed $100,000. The 

Emergency Economic Stabilization Act 

of 2008, section 136, amended the 

Federal Deposit Insurance Corporation 

Act to temporarily increase the standard 

maximum deposit insurance amount 

from $100,000 to $250,000, effective 

October 3, 2008, and ending December 

31, 2009. After that date, the standard 

maximum deposit insurance amount 

will return to $100,000. This rule, 

therefore, proposes to amend section 

761.51, ‘‘Establishing a Supervised Bank 

Account,’’ to remove the reference to the 

$100,000 threshold for insured balances 

and replace it with a reference to ‘‘the 

maximum amount insurable by the 

Federal Government.’’ 

Executive Order 12866 

The Office of Management and Budget 

(OMB) designated this rule as not 

significant under Executive Order 12866 

and, therefore, OMB was not required to 

review this proposed rule. 

Regulatory Flexibility Act 

In accordance with the Regulatory 

Flexibility Act (5 U.S.C. 601), FSA is 

certifying that there would not be a 

significant economic impact on a 

substantial number of small entities. All 

FSA direct loan borrowers and all farm 

entities affected by this rule are small 

businesses according to the North 

American Industry Classification 

System and the U. S. Small Business 

Administration. There is no diversity in 

size of the entities affected by this rule, 

and the costs to comply with it are the 

same for all entities. 

In this rule, FSA is proposing to 

revise regulations that affect loan 

servicing only. 

In 2007, over 2,500 direct borrowers 

(about 3.7 percent of the portfolio) 

graduated to commercial credit. FSA 

believes graduation will continue in the 

3 to 5 percent range and is dependent 

on the overall farm economy. 

Currently, FSA has 38 inventory 

properties under a Homestead 

Protection lease. The extension of 

purchase rights to the immediate family 

of lessees who are a members of a 

socially disadvantaged group will affect 

very few of these cases. 

Due to the acceleration and 

foreclosure moratorium FSA expects 

some Government losses due to the 

suspension of interest accrual (when the 

borrower prevails) and the loss of some 

offset payments. FSA does not expect 

these changes to impose any additional 

cost to the borrowers. Therefore, the 

costs of compliance from this rule are 

expected to be minimal. Therefore, FSA 

certifies that this rule will not have a 

significant economic impact on a 

substantial number of small entities. 

Environmental Review 

The environmental impacts of this 

rule have been considered in a manner 

consistent with the provisions of the 

National Environmental Policy Act 

(NEPA, 42 U.S.C. 4321–4347), the 

regulations of the Council on 

Environmental Quality (40 CFR parts 

1500–1508), and FSA regulations for 

compliance with NEPA (7 CFR part 

799). The changes to the FLP direct loan 

servicing program, required by the 2008 

Farm Bill that are identified in this 

proposed rule, are non-discretionary. 

Therefore, FSA has determined that 

NEPA does not apply to this rule, and 

no environmental assessment or 

environmental impact statement will be 

prepared. 

Executive Order 12988 

This rule has been reviewed in 

accordance with E.O. 12988, Civil 

Justice Reform. In accordance with the 

executive order: (1) All State and local 

laws and regulations that are in conflict 

with this rule would be preempted; (2) 

no retroactive effect would be given to 

this rule; and (3) administrative 

proceedings in accordance with 7 CFR 

part 11 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 set forth in the Notice to 

7 CFR part 3015, subpart V (48 FR 

29115, June 24, 1983), the programs and 

activities within this rule are excluded 

from the scope of Executive Order 

12372, which requires 

intergovernmental consultation with 

State and local officials. 

Unfunded Mandates 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA, Pub. L. 

104–4) requires Federal agencies to 

assess the effects of their regulatory 

actions on State, local, and tribal 

governments or the private sector. 

Agencies generally must prepare a 

written statement, including a cost 

benefit analysis, for proposed and final 

rules with Federal mandates that may 

result in expenditures of $100 million or 

more in any 1 year 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 proposed 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 proposed rule is not subject to the 

requirements of sections 202 and 205 of 

UMRA. 

Executive Order 13132 

The policies contained in this rule 

would not have any substantial direct 

effect on States, the relationship 

between the national government and 

the States, or the distribution of power 

and responsibilities among the various 

levels of government. Nor would this 

proposed rule impose substantial direct 

compliance costs on State and local 

governments. Therefore, consultation 

with the States is not required. 

Paperwork Reduction Act 

The amendments proposed for 7 CFR 

parts 761 and 766 require no changes or 

new collection to the currently 

approved information collections by 

OMB under the control numbers of 

0560–0233, 0560–0233 and 0560–0238. 

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. 

Federal Assistance Programs 

The title and number of the Federal 

assistance programs, as found in the 

Catalog of Federal Domestic Assistance, 

to which this proposed rule would 

apply are: 

10.404 Emergency Loans; 

10.406 Farm Operating Loans; 

10.407 Farm Ownership Loans. 


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39568 Federal Register / Vol. 74, No. 151 / Friday, August 7, 2009 / Proposed Rules 

List of Subjects 

7 CFR Part 761 

Agriculture, Agricultural 

commodities, Credit, Livestock, Loan 

programs—Agriculture. 

7 CFR Part 766 

Agriculture, Agricultural 

commodities, Credit, Livestock, Loan 

programs—Agriculture. 

For the reasons discussed in the 

preamble, the Farm Service Agency 

(USDA) proposes to amend 7 CFR 

chapter VII as follows: 

PART 761—GENERAL PROGRAM 

ADMINISTRATION 

1. The authority citation for part 761 

continues to read as follows: 

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

Subpart A—General Provisions 

2. In § 761.1, paragraph (c) is 

amended by adding a new fourth 

sentence at the end to read as follows: 

§ 761.1 Introduction. 

* * * * * 

(c) * * * The programs are designed 

to allow those who participate to 

transition to private commercial credit 

or other sources of credit in the shortest 

period of time practicable through the 

use of supervised credit, including farm 

assessments, borrower training, and 

market placement. 

* * * * * 

Subpart B—Supervised Bank 

Accounts 

3. In § 761.51, paragraph (e) is revised 

to read as follows: 

§ 761.51 Establishing a supervised bank 

account. 

* * * * * 

(e) If the funds to be deposited into 

the account cause the balance to exceed 

the maximum amount insurable by the 

Federal Government, the financial 

institution must agree to pledge 

acceptable collateral with the Federal 

Reserve Bank for the excess over the 

insured amount, before the deposit is 

made. 

Subpart C—Supervised Credit 

4. In § 761.103, paragraph (a) is 

revised to read as follows: 

§ 761.103 Farm assessment. 

(a) The Agency, in collaboration with 

the applicant, will assess the farming 

operation to: 

(1) Determine the applicant’s financial 

condition, organization structure, and 

management strengths and weaknesses; 

(2) Identify and prioritize training and 

supervisory needs; and 

(3) Develop a plan of supervision to 

assist the borrower in achieving 

financial viability and transitioning to 

private commercial credit or other 

sources of credit in the shortest time 

practicable. 

* * * * * 

PART 766—DIRECT LOAN 

SERVICING—SPECIAL 

5. The authority citation for part 766 

is revised to read as follows: 

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

Subpart D—Homestead Protection 

Program 

6. In § 766.154, paragraph (c) is 

revised to read as follows: 

§ 766.154 Homestead Protection leases. 

* * * * * 

(c) Lease-purchase options. (1) The 

lessee may exercise in writing the 

purchase option and complete the 

homestead protection purchase at any 

time prior to the expiration of the lease 

provided all lease payments are current. 

(2) If the lessee is a member of a 

socially disadvantaged group, the lessee 

may designate a member of the lessee’s 

immediate family (that is, parent, 

sibling, or child) (designee) as having 

the right to exercise the option to 

purchase. 

(3) The purchase price is the market 

value of the property when the option 

is exercised as determined by a current 

appraisal obtained by the Agency. 

(4) The lessee or designee may 

purchase homestead protection property 

with cash or other credit source. 

(5) The purchaser may receive Agency 

program or non-program financing 

provided: 

(i) The purchaser has not received 

previous debt forgiveness; 

(ii) The Agency has funds available to 

finance the purchase of homestead 

protection property; 

(iii) The purchaser demonstrates an 

ability to repay such an FLP loan; and 

(iv) The purchaser is otherwise 

eligible for the FLP loan. 

* * * * * 

Subpart H—Loan Liquidation 

7. Section 766.358 is added to read as 

follows: 

§ 766.358 Acceleration and Foreclosure 

Moratorium. 

(a) Notwithstanding any other 

provisions of this subpart, borrowers 

who file or have filed a program 

discrimination complaint that is 

accepted by USDA Office of 

Adjudication and Compliance or 

successor office (USDA), and have been 

serviced to the point of acceleration or 

foreclosure on or after May 22, 2008, 

will not be accelerated or liquidated 

until such complaint has been resolved 

by USDA or closed by a court of 

competent jurisdiction. This 

moratorium applies only to program 

loans made under subtitle A, B, or C of 

the Act (for example, FO, OL, EM, SW, 

or RL). Interest will not accrue and no 

offsets will be taken on these loans 

during the moratorium. Interest accrual 

and offsets will continue on all other 

loans, including, but not limited to, 

non-program loans. 

(1) If the Agency prevails on the 

program discrimination compliant, the 

interest that would have accrued during 

the moratorium will be reinstated on the 

account when the moratorium 

terminates, and all offsets and servicing 

actions will resume. 

(2) If the borrower prevails on the 

program discrimination compliant, the 

interest that would have accrued during 

the moratorium will not be reinstated on 

the account unless specifically required 

by the settlement agreement or court 

order. 

(b) The moratorium will begin on: 

(1) May 22, 2008, if the borrower had 

a pending program discrimination claim 

that was accepted by USDA as valid and 

was at the point of acceleration or 

foreclosure on or before that date or 

(2) The date after May 22, 2008, when 

the borrower has a program 

discrimination claim accepted by USDA 

as valid and the borrower is at the point 

of acceleration or foreclosure. 

(c) The point of acceleration under 

this section is the earliest of the 

following: 

(1) The day after all rights offered on 

the Agency notice of intent to accelerate 

expire if the borrower does not appeal; 

(2) The day after all appeals resulting 

from an Agency notice of intent to 

accelerate are concluded if the borrower 

appeals and the Agency prevails on the 

appeal; 

(3) The day after all appeal rights have 

been concluded relating to a failure to 

graduate and the Agency prevails on 

any appeal; 

(4) Any other time when, because of 

litigation, third party action, or other 

unforeseen circumstance, acceleration is 

the next step for the Agency in servicing 

and liquidating the account. 

(d) A borrower is considered to be in 

foreclosure status under this section 

anytime after acceleration of the 

account. 

(e) The moratorium will end on the 

earlier of: 


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(1) The date the program 

discrimination claim is resolved by 

USDA or 

(2) The date that a court of competent 

jurisdiction renders a final decision on 

the program discrimination claim if the 

farmer or rancher appeals the decision 

of USDA. 

Signed in Washington, DC, on August 3, 

2009. 

Jonathan Coppess, 

Administrator, Farm Service Agency. 

[FR Doc. E9–18986 Filed 8–6–09; 8:45 am] 

BILLING CODE 3410–05–P 

DEPARTMENT OF ENERGY 

10 CFR Part 609 

RIN 1901–AB21 

Loan Guarantees for Projects That 

Employ Innovative Technologies 

AGENCY: Office of the Chief Financial 

Officer, Department of Energy. 

ACTION: Proposed rule. 

SUMMARY: On October 23, 2007, the 

Department of Energy (DOE or the 

Department) published a final rule 

establishing regulations for the loan 

guarantee program authorized by 

Section 1703 of Title XVII of the Energy 

Policy Act of 2005 (Title XVII or the 

Act). Section 1703 of Title XVII 

authorizes the Secretary of Energy 

(Secretary) to make loan guarantees for 

projects that ‘‘avoid, reduce, or 

sequester air pollutants or 

anthropogenic emissions of greenhouse 

gases; and employ new or significantly 

improved technologies as compared to 

commercial technologies in service in 

the United States at the time the 

guarantee is issued.’’ Section 1703 of 

Title XVII also identifies ten categories 

of technologies and projects that are 

potentially eligible for loan guarantees. 

The two principal goals of section 1703 

of Title XVII are to encourage 

commercial use in the United States of 

new or significantly improved energyrelated technologies and to achieve 

substantial environmental benefits. DOE 

believes that commercial use of these 

technologies will help sustain and 

promote economic growth, produce a 

more stable and secure energy supply 

and economy for the United States, and 

improve the environment. 

Through experience gained 

implementing the loan guarantee 

program authorized by section 1703 of 

Title XVII, and information received 

from industry indicating the wide 

variety of ownership structures which 

participants would like to employ in 

implementing projects seeking loan 

guarantees, DOE believes it is 

appropriate to consider certain changes 

to the existing regulations to provide 

flexibility in the determination of an 

appropriate collateral package to secure 

guaranteed loan obligations, facilitate 

collateral sharing and related 

intercreditor arrangements with other 

project lenders, and to provide a more 

workable interpretation of certain 

statutory provisions regarding DOE’s 

treatment of collateral. 

DATES: Comments on this proposed rule 

must be postmarked no later than 

September 8, 2009. 

ADDRESSES: Comments may be 

submitted using any of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: lgprogram@hq.doe.gov. 

• Postal Mail: David G. Frantz, 

Director, Loan Guarantee Program 

Office, Office of the Chief Financial 

Officer, 1000 Independence Avenue, 

SW., Washington, DC.20585–0121. 

Please submit one signed original paper 

copy. 

• Hand Delivery/Courier: David G. 

Frantz, Director, Loan Guarantee 

Program Office, Office of the Chief 

Financial Officer, 1000 Independence 

Avenue, SW., Washington, DC 20585– 

0121. Please submit one signed original 

paper copy. 

FOR FURTHER INFORMATION CONTACT: 

David G. Frantz, Director, Loan 

Guarantee Program Office, Office of the 

Chief Financial Officer, 1000 

Independence Avenue, SW., 

Washington, DC 20585–0121, (202) 586– 

8336, e-mail: lgprogram@hq.doe.gov; or 

Susan S. Richardson, Chief Counsel for 

the Loan Guarantee Program, Office of 

the General Counsel, 1000 

Independence Avenue, SW., 

Washington, DC 20585–0121, (202) 586– 

9521, e-mail: lgprogram@hq.doe.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background and Proposed Amendment 

II. Regulatory Review 

A. Executive Order 12866 

B. National Environmental Policy Act of 

1969 

C. The Regulatory Flexibility Act 

D. Paperwork Reduction Act 

E. Unfunded Mandates Reform Act of 1995 

F. Treasury and General Government 

Appropriations Act, 1999 

G. Executive Order 13132 

H. Executive Order 12988 

I. Treasury and General Government 

Appropriations Act, 2001 

J. Executive Order 13211 

K. Congressional Notification 

L. Approval by the Office of the Secretary 

of Energy 

I. Background and Proposed 

Amendment 

Today’s proposed rule would amend 

the regulations implementing the loan 

guarantee program authorized by 

section 1703 of Title XVII of the Energy 

Policy Act of 2005 (42 U.S.C. 16511– 

16514) (referred to as Title XVII). 

Section 1703 of Title XVII authorizes 

the Secretary of Energy (Secretary), after 

consultation with the Secretary of the 

Treasury, to make loan guarantees for 

projects that ‘‘(1) avoid, reduce, or 

sequester air pollutants or 

anthropogenic emissions of greenhouse 

gases; and (2) employ new or 

significantly improved technologies as 

compared to commercial technologies in 

service in the United States at the time 

the guarantee is issued.’’ (42 U.S.C. 

16513(a)) 

Section 1702 of Title XVII outlines 

general terms and conditions for loan 

guarantee agreements and directs the 

Secretary to include in loan guarantee 

agreements ‘‘such detailed terms and 

conditions as the Secretary determines 

appropriate to (i) protect the interests of 

the United States in case of a default; 

and (ii) have available all the patents 

and technology necessary for any person 

selected, including the Secretary, to 

complete and operate the project. (42 

U.S.C. 16512(g)(2)(c)). Further, section 

1702(d) addresses certain threshold 

requirements that must be met before 

the guaranty is made; and section 

1702(g) addresses the Secretary’s rights 

in the case of default of the loan. 

Specifically, section 1702(d) of Title 

XVII states, under the heading 

‘‘Repayment’’ and addressing 

‘‘Subordination,’’ that ‘‘[t]he 

[guaranteed] obligation shall be subject 

to the condition that the obligation is 

not subordinate to other financing.’’ 

Further, when addressing the situation 

of default, section 1702(g)(2) of Title 

XVII states, with respect to 

‘‘subrogation’’ and ‘‘superiority of 

rights,’’ that ‘‘[t]he rights of the 

Secretary, with respect to any property 

acquired pursuant to a guarantee or 

related agreements, shall be superior to 

the rights of any other person with 

respect to the property.’’ 

In the October 23, 2007 final rule 

implementing Title XVII, DOE 

interpreted the interplay between these 

two provisions of section 1702 such that 

both describe the rights the Secretary 

must secure as a condition of making a 

guarantee. This understanding is 

reflected in the text of the regulations 

which requires that the Secretary 

receive a first lien security interest in all 

project assets as an incident to making 

a guarantee. Moreover, this 


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