Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations 44393

(b) Assistance may be provided as any

of the following:

(1) Reimbursement for expenses

relating to transportation assistance on

or after January 10, 1997, specifically

related to providing access to existing

feed supplies or to the livestock;

(2) Reimbursement for expenses

relating to eligible livestock feed

purchased on or after January 10, 1997;

or

(3) Donation of CCC-owned feed

grains.

(c) Requests for reimbursement for

transportation assistance and eligible

livestock feed purchases shall include

verifiable sales receipts, service

agreements, or any other documentation

as determined by the FSA county

committee.

(d) Individuals who provide

assistance to livestock which is in

danger of perishing without immediate

assistance or where the owner of the

livestock is not known, shall only

receive CCC-owned feed grain on a

donation basis, not to exceed the

amount of feed grain actually used.

(e) Assistance shall not exceed the

monetary value of multiplying the

number of livestock, by type and weight

range, by the allowance per day in

pounds of corn as determined in

accordance with § 1439.3, by $0.05 per

pound, by a feeding period of 15 days.

(f) For snow removal, the maximum

assistance shall be the lesser of:

(1) Actual cost to move snow to gain

access to the available feed or stranded

livestock; or

(2) The maximum assistance

calculated in accordance with paragraph

(e) of this section.

(g) For feed purchases, the maximum

assistance shall be the lesser of:

(1) The monetary value of purchased

eligible feed; or

(2) The maximum assistance

calculated in accordance with paragraph

(e) of this section.

(h) The maximum assistance for

donated grain is a 15 day feed allowance

calculated in accordance with paragraph

(e) of this section.

4. Sections 1439.701 and 1439.702 are

added as follows:

Subpart—Foundation Livestock Relief

Program (FLRP)

§ 1439.701 General statement.

(a) This subpart sets forth the terms

and conditions of the FLRP. This

program may be authorized by DAFP,

upon a determination that foundation

livestock owners have been forced to

feed excessive quantities of livestock

feed and a Presidential disaster

declaration has been issued for the State

or county as a result of snow and

freezing and related conditions. Under

the program, CCC will provide cash

reimbursement for eligible livestock

feed purchases to the livestock owner

and other persons or entities (public and

private), whose usage of normal

livestock feed supplies was adversely

affected by natural disasters. Cost-share

assistance is provided at 30 percent of

the lesser of actual eligible livestock

feed costs shown on acceptable feed

purchase documents or the calculated

feed allowance for eligible livestock for

a period not to exceed 30 days. This

program shall terminate at the

conclusion of the 1996 livestock feed

crop year.

(b) As determined by DAFP, FLRP

may be authorized for any length of time

not to exceed a 30-day feeding period.

Subsequent feeding periods of the same

or different duration may be designated

by DAFP for the same or related disaster

conditions.

§ 1439.702 Assistance.

(a) Assistance is limited to livestock

owners who have eligible foundation or

replacement livestock, as determined by

DAFP. Eligible livestock includes beef

and dairy cattle, buffalo and beefalo,

sheep, goats, swine, and equine animals

used to raise livestock that will be used

for human consumption or in the

production of food or fiber on the

owner’s farm.

(b) Assistance shall be provided as a

30 percent cost-share payment based on

the lesser of:

(1) Eligible livestock feed purchased

and received during the period

designated by DAFP, or

(2) The calculated feed allowance for

the eligible livestock for up to 30 days,

as determined by DAFP.

(c) Requests for reimbursement of

eligible livestock feed purchases shall

include verifiable sales receipts and any

other documentation the FSA county

committee requires.

(d) Assistance shall not exceed the

monetary value of multiplying the

number of livestock, by type and weight

range, by the allowance per day in

pounds of corn as determined in

accordance with § 1439.3, by $0.05 per

pound, by the number of days in the

feeding period designated by DAFP.

Signed at Washington, DC, on August 14,

1997.

Bruce R. Weber,

Acting Executive Vice President, Commodity

Credit Corporation.

[FR Doc. 97–22128 Filed 8–20–97; 8:45 am]

BILLING CODE 3410–05–P

DEPARTMENT OF AGRICULTURE

Rural Housing Service

Rural Business-Cooperative Service

Rural Utilities Service

Farm Service Agency

7 CFR Part 1955

RIN 0560–AE88

Implementation of the Inventory

Property Management Provisions of

the Federal Agriculture Improvement

and Reform Act of 1996

AGENCIES: Rural Housing Service, Rural

Business-Cooperative Service, Rural

Utilities Service, and Farm Service

Agency, USDA.

ACTION: Interim rule with request for

comments.

SUMMARY: This implements provisions

of the Federal Agriculture Improvement

and Reform Act of 1996 (1996 Act) that

affect the farm credit programs of the

Farm Service Agency (FSA), formerly

administered by the Farmers Home

Administration (FmHA). The provisions

of this rule affect the acquisition,

management and disposal of inventory

farm property by FSA.

DATES: Effective August 21, 1997.

Comments must be submitted by

October 20, 1997.

ADDRESSES: Submit written comments

to the Farm Credit Programs Loan

Servicing and Property Management

Division, Farm Service Agency, United

Sates Department of Agriculture, Room

5449–S, Stop 0523, 1400 Independence

Avenue, SW, Washington, DC 20013–

0523.

FOR FURTHER INFORMATION CONTACT:

James P. Fortner, Senior Realty

Specialist, Farm Service Agency;

Telephone: 202–720–1976; Facsimile:

202–690–0949. E-mail:

jfortner@wdc.fsa.usda.gov

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be

significant and was reviewed by the

Office of Management and Budget under

Executive Order 12866.

Regulatory Flexibility Act

The Farm Service Agency (FSA)

certifies that this rule will not have a

significant impact on a substantial

number of small entities as defined in

the Regulatory Flexibility Act, Pub. L.

96–534, as amended (5 U.S.C. 601).

In addition, the Regulatory Flexibility

Act is not applicable to this rule since
44394 Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations

the Farm Service Agency (FSA) is not

required by 5 U.S.C. 553, or any other

provisions of law, to publish a notice of

proposed rulemaking to effect these

administrative changes.

Environmental Impact Statement

This document has been reviewed in

accordance with 7 CFR part 1940,

subpart G, Environmental Program. The

issuing agencies have determined that

this action does not significantly affect

the quality of human environment, and

in accordance with the National

Environmental Policy Act of 1969, Pub.

L. 91–190, an Environmental Impact

Statement is not required.

The Unfunded Mandate Reform Act of

1995

Title II of the Unfunded Mandate

Reform Act of 1995 (UMRA), Pub. L.

104–4, 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,

FSA generally must prepare a written

statement, including a cost-benefit

assessment, 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 FSA to

identify and consider a reasonable

number of regulatory alternatives and

adopt the least costly, more costeffective or least burdensome alternative

that achieves the objectives of the rule.

This rule contains no Federal

mandates (under regulatory provisions

of title II of the UMRA) for State, local,

and tribal governments or the private

sector. Thus, this rule is not subject to

the requirements of sections 202 and

205 of the UMRA.

Executive Order 12988

This interim final rule has been

reviewed under Executive Order 12998,

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

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

regarding 7 CFR part 3015, subpart V

(48 FR 29115, June 24, 1983), the

programs within this rule are not

affected by Executive Order 12372.

Programs Affected

This rule does not affect any programs

listed in the Catalog of Federal Domestic

Assistance.

Paperwork Reduction Act

The information collection

requirements contained in this

regulation have been approved by OMB

under the provisions of 44 U.S.C.

chapter 35 and have been assigned OMB

control numbers 0575–0109 and 0575–

0110 in accordance with the Paperwork

Reduction Act of 1995 (44 U.S.C. 3507).

This interim rule does not revise or

impose any new information collection

or recordkeeping requirement from

those approved by OMB.

Discussion of the Interim Rule

On April 4, 1996, the 1996 Act was

signed into law and required certain

provisions to be implemented either

immediately or no later than 90 days

from the date of enactment. The specific

changes to the acquisition, management,

and disposal of real and chattel property

which served as security for FSA farm

credit programs loans are discussed

below:

Liquidation and Acquisition

The 1996 Act eliminated the

Leaseback/Buyback program which

provided the former borrower and

owner, the borrower’s spouse or

children, stockholder in the corporation

if the borrower and owner was a

corporation held exclusively by

members of the same family, or the

previous operator with rights to lease

back an acquired property for up to 5

years with an option to purchase.

Several changes were made by the 1996

Act in relationship to the voluntary

conveyance of property by Native

American borrowers when new property

is located within the boundaries of an

Indian reservation. Leaseback/buyback

rights as well as the regular leasing

authority were eliminated for Native

American borrowers. See § 638(1) of the

1996 Act which eliminated the

leaseback/buyback program, as well as

most of the Agency’s authority to lease

inventory property (previously

contained in § 335(e)(3) of the

Consolidated Farm and Rural

Development Act) (CONACT) and to

resolve disputes over lease terms

(previously contained in § 335(e)(9) of

the CONACT).

Under the program provided by the

1996 Act, if the Native American

borrower and owner does not

voluntarily convey the real property to

FSA, FSA will, not less than 30 days

prior to the foreclosure sale of the

property, provide the Native American

borrower and owner with the option of

(1) requiring FSA to assign the loan and

security instruments to the Secretary of

the Interior, or (2) requiring FSA to

assign the loan and security instruments

to the tribe having jurisdiction over the

reservation where the property is

located pursuant to

§ 335(e)(1)(D)(v)(I)(bb) of the CONACT.

If the Native American borrower and

owner require FSA to assign the loan

and security instruments to the

Secretary of the Interior and the

Secretary of the Interior agrees to the

assignment, pursuant to

§ 335(e)(1)(D)(v)(aa) the Secretary of

Agriculture is released from all further

responsibility for collection of the loan.

If the Native American borrower and

owner elect to require FSA to assign the

loan to the tribe, the tribe must assume

the loan and the loan terms will be

restructured to be consistent with

Indian Land Acquisition Loans made

pursuant to 25 U.S.C. § 488 and the

principal amount will be the lesser of

the fair market value of the property or

the outstanding principal and interest

on the date of the assignment. While the

narrow language of

§ 335(e)(1)(D)(v)(I)(bb) only provides for

the assignment of the loan to the tribe

and could be interpreted as releasing the

Government’s interest in the repayment

of the loan, in the context of the

amendment made to § 335(e)(1)(D) by

the 1996 Act, there is no indication that

Congress intended for the Government

to release the Government’s right to be

repaid and in effect make a grant to the

tribe. Had Congress intended for the

loan to be transferred to the tribe with

no repayment responsibility, language

similar to the language for assignment to

the Secretary of the Interior could have

been used. We interpret

§ 335(e)(1)(D)(v)(III) as requiring that, if

the loan is assigned to the tribe, it must

be assumed by the tribe as well.

Management

The 1996 Act eliminated FSA’s ability

to lease inventory farm property except

to those beginning farmers or ranchers

who are selected to purchase an

inventory property but are unable to do

so due to a lack of Agency credit funds.

Leases with beginning farmers or

ranchers who were selected to purchase

an inventory property on a credit sale

may not exceed 18 months or the date

that FSA credit assistance becomes

available, whichever is earlier.

We have added a paragraph asserting

FSA’s limited authority to lease
Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations 44395

property pursuant to § 335(b) of the

CONACT. While the statute is not free

from doubt because § 638(2) of the 1996

Act limits leasing to beginning farmers

and ranchers, § 335(b) was not repealed

by the 1996 Act. It states as follows:

Except as provided in subsections (c)

and (e), real property administered

under the provisions of this title may be

operated or leased by the Secretary for

such period or periods as the Secretary

may deem necessary to protect the

Government’s investment therein.

Based on this authority as modified

by the limitation that inventory property

should be sold within 105 days of

acquisition, we have provided limited

authority to lease property upon the

approval of the Administrator when it is

impossible to sell it.

Disposal

The 1996 Act placed new

requirements on FSA to dispose of

inventory property. The definition of a

beginning farmer contained in § 640(1)

of the 1996 Act was amended to raise

the maximum amount of farm or ranch

property that may be owned from 15

percent to 25 percent of the median

farm size in the county in which the

property is located. However, the

Agency will use 25 percent of the mean

rather than the median farm size in this

definition since median farm sizes are

unavailable in the Census of

Agriculture. Inventory must be

advertised for sale no later than 15 days

after acquisition by the Agency. Not

later than 75 days from the date of

acquisition, the Agency will offer to sell

inventory property to qualified

beginning farmers or ranchers at the

current market value based on a current

appraisal. Based on the statutory

language contained in § 638(2) of the

1996 Act which provides a priority in

the sale of inventory property only to

beginning farmers and ranchers, the

Agency has removed the regulatory

priorities previously contained in

§ 1955.107(f)(1). The previous priorities

were as follows: first priority to

beginning farmers and ranchers who

were also socially disadvantaged

applicants (SDA); second priority to

beginning farmers and ranchers; third

priority to operators of not larger than

family-size farms who were also SDAs;

fourth priority to operators of not larger

than family size farms who meet the

Agency’s eligibility requirements and

fifth priority to operators of not larger

than family size farms who are not

eligible for Agency credit. Under this

interim rule, the only remaining priority

is to beginning farmers and ranchers

who can purchase the property at the

current market value based on a current

appraisal. If more than one qualified

beginning farmer or rancher submits an

application to purchase an inventory

property, FSA will select a purchaser

through a random selection process.

Appeal rights for participation in the

random selection as a qualified

beginning farmer or rancher were

eliminated by § 638(2) of the 1996 Act

and replaced by an expedited review by

the State Executive Director that is

administratively final. If inventory

property is not sold to a beginning

farmer or rancher within 75 days from

acquisition, § 638(2) of the 1996 Act

requires FSA, not later than 30 days

after the 75-day period, to sell the

property by means of a public sale, such

as a public auction or sealed bids, at the

best price obtainable.

A transitional rule provides that

properties under a lease upon passage of

the 1996 Act would be advertised for

sale no later than 60 days after the lease

expires and properties in inventory

upon passage of the 1996 Act, but not

under a lease, would be advertised no

later than 60 days from April 4, 1996.

The transitional rule was implemented

in Notice FC–37 which informed FSA

county and State offices that property in

inventory and not leased before April 5,

1996, will be offered for sale within 60

days of the enactment of the 1996 Act.

The Notice also stated that property

then under the lease will be offered for

sale no later than 60 days after the lease

expires. The transitional rule for leased

properties is also contained in

§ 1955.107(a) of this rule.

While section 638 of the 1996 Act by

its terms applies to all property acquired

under the CONACT, and thus applies to

non-FSA programs, these programs

rarely acquire or lease inventory

property. Therefore, compliance with

the 1996 Act will be achieved by

guidance given on a case-by-case basis,

rather than through published

procedures, by requiring program

officials to immediately contact the

National Office whenever they acquire

inventory property. See § 1955.108.

The 1996 Act modified how

conservation easements are placed on

wetlands located on inventory property.

Wetland conservation easements will

only be placed on those wetlands or

converted wetlands located on

inventory property that were not

considered as cropland on the date of

acquisition and were not used for

farming at any time during the 5-year

period prior to acquisition. The 1996

Act also amended the process whereby

inventory property can be transferred to

Federal or State agencies for

conservation purposes. The 1996 Act

requires that, upon receipt of a request

for transfer, FSA must provide at least

two public notices, hold at least one

public meeting if requested, and consult

with the Governor and at least one

elected county official of the State and

county where the property requested for

transfer is located.

List of Subjects in 7 CFR Part 1955

Foreclosure, Government property.

Chapter XVIII, Title 7, Code of Federal

Regulations is amended as follows:

PART 1955—PROPERTY

MANAGEMENT

1. 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

2. Section 1955.3 is amended by

removing the definition of ‘‘Leaseback/

Buyback Property.’’

3. Section 1955.4(a) is amended by

removing the word ‘‘Assistant’’ in the

first sentence and adding in its place the

word ‘‘Deputy.’’

4. Section 1955.9 is revised to read as

follows:

§ 1955.9 Requirements for voluntary

conveyance of real property located within

a federally recognized Indian reservation

owned by a Native American borrowerowner.

(a) The borrower-owner is a member

of the tribe that has jurisdiction over the

reservation in which the real property is

located. An Indian tribe may also meet

the borrower-owner criterion if it is

indebted for Farm Credit Programs

loans.

(b) A voluntary conveyance will be

accepted only after all preacquisition

primary and preservation servicing

actions have been considered in

accordance with subpart S of part 1951

of this chapter.

(c) When all servicing actions have

been considered under subpart S of part

1951 of this chapter and a positive

outcome cannot be achieved, the

following additional actions are to be

taken:

(1) The county official will notify the

Native American borrower-owner and

the tribe by certified mail, return receipt

requested, and by regular mail if the

certified mail is not received, that:

(i) The borrower-owner may convey

the real estate security to FSA and FSA

will consider acceptance of the property

into inventory in accordance with

paragraph (d) of this section.
44396 Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations

(ii) The borrower-owner must inform

FSA within 60 days from receipt of this

notice of the borrower and owner’s

decision to deed the property to FSA;

(iii) The borrower-owner has the

opportunity to consult with the Indian

tribe that has jurisdiction over the

reservation in which the real property is

located, or counsel, to determine if State

or tribal law provides rights and

protections that are more beneficial than

those provided the borrower-owner

under Agency regulations;

(2) If the borrower-owner does not

voluntarily deed the property to FSA,

not later than 30 days before the

foreclosure sale, FSA will provide the

Native American borrower-owner with

the following options:

(i) The Native American borrowerowner may require FSA to assign the

loan and security instruments to the

Secretary of the Interior. If the Secretary

of the Interior agrees to such an

assignment, FSA will be released from

all further responsibility for collection

of any amounts with regard to the loans

secured by the real property.

(ii) The Native American borrowerowner may require FSA to complete a

transfer and assumption of the loan to

the tribe having jurisdiction over the

reservation in which the real property is

located if the tribe agrees to the

assumption. If the tribe assumes the

loans, the following actions shall occur:

(A) FSA shall not foreclose the loan

because of any default that occurred

before the date of the assumption.

(B) The assumed loan shall be for the

lesser of the outstanding principal and

interest of the loan or the fair market

value of the property as determined by

an appraisal.

(C) The assumed loan shall be treated

as though it is a regular Indian Land

Acquisition Loan made in accordance

with subpart N of part 1823 of this

chapter.

(3) If a Native American borrowerowner does not voluntarily convey the

real property to FSA, not less than 30

days before a foreclosure sale of the

property, FSA will provide written

notice to the Indian tribe that has

jurisdiction over the reservation in

which the real property is located of the

following:

(i) The sale;

(ii) The fair market value of the

property; and

(iii) The ability of the Native

American borrower-owner to require the

assignment of the loan and security

instruments either to the Secretary of

the Interior or the tribe (and the

consequences of either action) as

provided in § 1955.9(c)(2).

(4) FSA will accept the offer of

voluntary conveyance of the property

unless a hazardous substance, as

defined in the Comprehensive

Environmental Response,

Compensation, and Liability Act of

1980, is located on the property which

will require FSA to take remedial action

to protect human health or the

environment if the property is taken

into inventory. In this case, a voluntary

conveyance will be accepted only if

FSA determines that it is in the best

interests of the Government to acquire

title to the property.

(d) When determining whether to

accept a voluntary conveyance of a

Native American borrower-owner’s real

property, the county official must

consider:

(1) The cost of cleaning or mitigating

the effects if a hazardous substance is

found on the property. A deduction

equal to the amount of the cost of a

hazardous waste clean-up will be made

to the fair market value of the property

to determine if it is in the best interest

of the Government to accept title to the

property. FSA will accept the property

if clear title can be obtained and if the

value of the property after removal of

hazardous substances exceeds the cost

of hazardous waste clean-up.

(2) If the property is located within

the boundaries of a federally recognized

Indian reservation, and is owned by a

member of the tribe with jurisdiction

over the reservation, FSA will credit the

Native American borrower-owner’s

account based on the fair market value

of the property or the FSA debt against

the property, whichever is greater.

5. Section 1955.15(b)(3) is amended

by revising the reference to

‘‘§ 1955.137(e)’’ in the first sentence to

read ‘‘§ 1955.137(c)’’ and the reference

to ‘‘§ 1955.137(b)’’ in the first sentence

to read ‘‘§ 1955.137(c).’’

6. Exhibit G of subpart A is amended

by removing the words ‘‘County

Supervisor’’ and ‘‘State Director’’ and

adding in their place, the words

‘‘County Official’’ and ‘‘State Executive

Director,’’ respectively and by revising

the heading of the exhibit and the first

paragraph to read as follows:

Exhibit G of Subpart A—Worksheet for

Accepting a Voluntary Conveyance

of Farm Credit Program Security

Property into Inventory

lllllllllllllllllllll

(present owner/borrower)

Refer to Exhibit I in FmHA Instruction 1951–

S for guidance in estimating the incomes and

expenses to be used in this exhibit. The

holding period to be used is 105 days (3.5

months).

* * * * *

7. Exhibit G–1 of subpart A is

amended by removing the words

‘‘County Supervisor’’ and ‘‘State

Director’’ and adding in their place the

words ‘‘County Official’’ and ‘‘State

Executive Director,’’ respectively, and

by revising the heading of the exhibit

and the first paragraph to read as

follows:

Exhibit G–1 of Subpart A—Worksheet

for Determining Farm Credit

Programs, Maximum Bid on Real

Estate Property

lllllllllllllllllllll

(present owner/borrower)

Refer to Exhibit I in FmHA Instruction 1951–

S for guidance in estimating the incomes

and expenses to be used in this exhibit.

The holding period to be used is 105

days (3.5 months).

* * * * *

Subpart B—Management of Property

8. Section 1955.53 is amended by

removing the definitions of ‘‘Leaseback/

Buyback Property’’ and ‘‘Socially

disadvantaged applicant’’ and by

revising the definitions of ‘‘Suitable

property’’ and ‘‘Surplus property’’ to

read as follows:

§ 1955.53 Definitions:

* * * * *

Suitable property. For FSA inventory

property, real property that can be used

for agricultural purposes, including

those farm properties that may be used

as a start up or add-on parcel of

farmland. It also includes a residence or

other off-farm site that could be used as

a basis for a farming operation. For

agencies other than FSA, real property

that could be used to carry out the

objectives of the Agency’s loan program

with financing provided through that

program.

Surplus property. For FSA inventory

property, real property that cannot be

used for agricultural purposes including

nonfarm properties. For other agencies,

property that cannot be used to carry

out the objectives of financing available

through the applicable loan program.

9. Section 1955.63 is amended by

revising the introductory text and

paragraphs (a) and (b) to read as follows:

§ 1955.63 Suitability determination.

As soon as real property is acquired,

a determination must be made as to

whether or not the property can be used

for program purposes. The suitability

determination will be recorded in the

running record of the case file.

(a) Determination. Property which

secured loans or was acquired under the

CONACT will be classified as suitable

or surplus in accordance with the

definitions for‘‘suitable’’ and ‘‘surplus’’
Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations 44397

found in § 1955.53 of this subpart. For

FSA property, the county committee

will make this determination. For other

agencies, this determination will be

made by the State Director, or designee.

(b) Grouping and subdividing farm

properties larger than family-size. The

county official will subdivide farm

properties larger than family-size

whenever possible into parcels for the

purpose of creating one or more suitable

farm properties. Properties may also be

subdivided to facilitate the granting or

selling of a conservation easement or the

fee title transfer of portions of a property

for conservation purposes. Such land

shall be subdivided into parcels of land

the shape and size of which are suitable

for farming, the value of which shall not

exceed the direct farm ownership loan

limit of $200,000 or the guaranteed farm

ownership loan limit of $300,000. The

county official may also group two or

more individual properties into one or

more suitable farm properties. The

environmental effects will also be

considered pursuant to subpart G of part

1940 of this chapter. Also refer to

§ 1955.140 of subpart C of this part.

* * * * *

10. Section 1955.66 is revised to read

as follows:

§ 1955.66 Lease of real property.

When inventory real property, except

for FSA and MFH properties, cannot be

sold promptly, or when custodial

property is subject to lengthy

liquidation proceedings, leasing may be

used as a management tool when it is

clearly in the best interest of the

Government. Leasing will not be used as

a means of deferring other actions

which should be taken, such as

liquidation of loans in abandonment

cases or repair and sale of inventory

property. Leases will provide for

cancellation by the lessee or the Agency

on 30-day written notice unless Special

Stipulations in an individual lease for

good reason provide otherwise. If

extensive repairs are needed to render a

custodial property suitable for

occupancy, this will preclude its being

leased since repairs must be limited to

those essential to prevent further

deterioration of the security in

accordance with § 1955.55(c) of this

subpart. The requirements of subpart G

of part 1940 of this chapter will be met

for all leases.

(a) Authority to approve lease of

property. (1) Custodial property.

Custodial property may be leased

pending foreclosure with the servicing

official approving the lease on behalf of

the Agency.

(2) Inventory property. Inventory

property may be leased under the

following conditions. Except for farm

property proposed for a lease under the

Homestead Protection Program, any

property that is listed or eligible for

listing on the National Register of

Historic Places may be leased only after

the servicing official and the State

Historic Preservation Officer determine

that the lease will adequately ensure the

property’s condition and historic

character.

(i) SFH. SFH inventory will generally

not be leased; however, if unusual

circumstances indicate leasing may be

prudent, the county official is

authorized to approve the lease.

(ii) MFH. MFH projects will generally

not be leased, although individual living

units may be leased under a

management agreement. After the

property is placed under a management

contract, the contractor will be

responsible for leasing the individual

units in accordance with subpart C of

part 1930 of this chapter. In cases where

an acceptable management contract

cannot be obtained, the District Director

may execute individual leases.

(iii) Farm property. (A) Any property

which secures an insured loan made

under the CONACT and which contains

a dwelling (whether located on or off

the farm) that is possessed and occupied

as a principal residence by a prior

owner who was personally liable for a

Farm Credit Programs loan must first be

considered for Homestead Protection in

accordance with subpart S of part 1951

of this chapter.

(B) Other than for Homestead

Protection and except as provided in

paragraph (c), the county official may

only approve the lease of farm property

to a beginning farmer or rancher who

was selected through the random

selection process to purchase the

property but is not able to complete the

purchase due to the lack of Agency

funding.

(C) When the servicing official

determines it is impossible to sell farm

property after advertising the property

for sale and negotiating with interested

parties in accordance with §1955.107 of

subpart C of this part, farm property

may be leased, upon the approval of the

Administrator, on a case-by-case basis.

This authority cannot be delegated. Any

lease under this paragraph shall be for

1 year only, and not subject to renewal

or extension. If the servicing official

determines that the prospective lessee

may be interested in purchasing the

property, the lease may contain an

option to purchase.

(D) When a lease with an option to

purchase is signed, the lessee should be

advised that FSA cannot make a

commitment to finance the purchase of

the property.

(E) Chattel property will not normally

be leased unless it is attached to the real

estate as a fixture or would normally

pass with the land.

(F) The property may not be used for

any purpose that will contribute to

excessive erosion of highly erodible

land or to conversion of wetlands to

produce an agricultural commodity. See

Exhibit M of subpart G of part 1940 of

this chapter. All prospective lessees of

inventory property will be notified in

writing of the presence of highly

erodible land, converted wetlands and

wetland and other important resources

such as threatened or endangered

species. This notification will include a

copy of the completed and signed Form

SCS–CPA–26, ‘‘Highly Erodible Land

and Wetland Conservation

Determination,’’ which identifies

whether the property contains wetland

or converted wetlands or highly

erodible land. The notification will also

state that the lease will contain a

restriction on the use of such property

and that the Agency’s compliance

requirements for wetlands, converted

wetlands, and highly erodible lands are

contained in Exhibit M of subpart G of

part 1940 of this chapter. Additionally,

a copy of the completed and signed

Form SCS–CPA–26 will be attached to

the lease and the lease will contain a

special stipulation as provided on the

FMI to Form RD 1955–20, ‘‘Lease of

Real Property,’’ prohibiting the use of

the property as specified above.

(iv) Organization property other than

MFH. Only the State Director, with the

advice of appropriate National Office

staff, may approve the lease of

organization property other than MFH,

such as community facilities, recreation

projects, and businesses. A lease of

utilities may require approval by State

regulatory agencies.

(b) Selection of lessees for other than

farm property. When the property to be

leased is residential, a special effort will

be made to reach prospective lessees

who might not otherwise apply because

of existing community patterns. A lessee

will be selected considering the

potential as a program applicant for

purchase of the property (if property is

suited for program purposes) and ability

to preserve the property. The leasing

official may require verification of

income or a credit report (to be paid for

by the prospective lessee) as he or she

deems necessary to assure payment

ability and creditworthiness of the

prospective lessee.

(c) Selection of lessees for FSA

property. FSA inventory property may

only be leased to an eligible beginning
44398 Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations

farmer or rancher who was selected to

purchase the property through the

random selection process in accordance

with §1955.107(a)(2)(ii) of subpart C of

this part. The applicant must have been

able to demonstrate a feasible farm plan

and Agency funds must have been

unavailable at the time of the sale. Any

applicant determined not to be a

beginning farmer or rancher may request

that the State Executive Director

conduct an expedited review in

accordance with §1955.107(a)(2)(ii) of

subpart C of this part.

(d) Property securing Farm Credit

Programs loans located within an

Indian Reservation. (1) State Executive

Directors will contact the Bureau of

Indian Affairs Agency supervisor to

determine the boundaries of Indian

Reservations and Indian allotments.

(2) Not later than 90 days after

acquiring a property, FSA will afford

the Indian tribe having jurisdiction over

the Indian reservation within which the

inventory property is located an

opportunity to purchase the property.

The purchase shall be in accordance

with the priority rights as follows:

(i) To a member of the Indian tribe

that has jurisdiction over the reservation

within which the real property is

located;

(ii) To an Indian corporate entity;

(iii) To the Indian tribe.

(3) The Indian tribe having

jurisdiction over the Indian reservation

may revise the order of priority and may

restrict the eligibility for purchase to:

(i) Persons who are members of such

Indian tribe;

(ii) Indian corporate entities that are

authorized by such Indian tribe to

purchase lands within the boundaries of

the reservation; or

(iii) The Indian tribe itself.

(4) If any individual, Indian corporate

entity, or Indian tribe covered in

paragraphs (d)(1) and (d)(2) of this

section wishes to purchase the property,

the county official must determine the

prospective purchaser has the financial

resources and management skills and

experience that is sufficient to assure a

reasonable prospect that the terms of the

purchase agreement can be fulfilled.

(5) If the real property is not

purchased by any individual, Indian

corporate entity or Indian tribe pursuant

to paragraphs (d)(1) and (d)(2) of this

section and all appeals have concluded,

the State Executive Director shall

transfer the property to the Secretary of

the Interior if they are agreeable. If

present on the property being

transferred, important resources will be

protected as outlined in §§1955.137 and

1955.139 of subpart C of this part.

(6) Properties within a reservation

formerly owned by entities and nontribal members will be treated as regular

inventory that is not located on an

Indian Reservation and disposed of

pursuant to this part.

(e) Lease amount. Inventory property

will be leased for an amount equal to

that for which similar properties in the

area are being leased or rented (market

rent). Inventory property will not be

leased for a token amount.

(1) Farm property. To arrive at a

market rent amount, the county official

will make a survey of lease amounts of

farms in the immediate area with

similar soils, capabilities, and income

potential. The income-producing

capability of the property during the

term of the lease must also be

considered. This rental data will be

maintained in an operational file as well

as in the running records of case files for

leased inventory properties. While cash

rent is preferred, the lease of a farm on

a crop-share basis may be approved if

this is the customary method in the

area. The lessee will market the crops,

provide FSA with documented evidence

of crop income, and pay the pro rata

share of the income to FSA.

(2) SFH property. The lease amount

will be the market rent unless the lessee

is a potential program applicant, in

which case the lease amount may be set

at an amount approximating the

monthly payment if a loan were made

(reflecting payment assistance, if any)

calculated on the basis of the price of

the house and income of the lessee, plus

1⁄12 of the estimated real estate taxes,

property insurance, and maintenance

which would be payable by a

homeowner.

(3) Property other than farm or SFH.

Any inventory property other than a

farm or single-family dwelling will

generally be leased for market rent for

that type property in the area. However,

such property may be leased for less

than market rent with prior approval of

the Administrator.

(f) Property containing wetlands or

located in a floodplain or mudslide

hazard area. Inventory property located

in areas identified by the Federal

Insurance Administration as special

flood or mudslide hazard areas will not

be leased or operated under a

management contract without prior

written notice of the hazard to the

prospective lessee or tenant. If property

is leased by FSA, the servicing official

will provide the notice, and if property

is leased under a management contract,

the contractor must provide the notice

in compliance with a provision to that

effect included in the contract. The

notice must be in writing, signed by the

servicing official or the contractor, and

delivered to the prospective lessee or

tenant at least one day before the lease

is signed. A copy of the notice will be

attached to the original and each copy

of the lease. Property containing

floodplains and wetlands will be leased

subject to the same use restrictions as

contained in § 1955.137(a)(1) of subpart

C of this part.

(g) Highly erodible land. If farm

inventory property contains ‘‘highly

erodible land,’’ as determined by the

NRCS, the lease must include

conservation practices specified by the

NRCS and approved by FSA as a

condition for leasing.

(h) Lease of FSA property with option

to purchase. A beginning farmer or

rancher lessee will be given an option

to purchase farm property. Terms of the

option will be set forth as part of the

lease as a special stipulation.

(1) The lease payments will not be

applied toward the purchase price.

(2) The purchase price (option price)

will be the advertised sales price as

determined by an appraisal prepared in

accordance with subpart E of part 1922

of this chapter.

(3) For inventory properties leased to

a beginning farmer or rancher applicant,

the term of the lease shall be the earlier

of:

(i) A period not to exceed 18 months

from the date that the applicant was

selected to purchase the inventory farm,

or

(ii) The date that direct, guaranteed,

credit sale or other Agency funds

become available for the beginning

farmer or rancher to close the sale.

(4) Indian tribes or tribal corporations

which utilize the Indian Land

Acquisition program will be allowed to

purchase the property for its market

value less the contributory value of the

buildings, in accordance with subpart N

of part 1823 of this chapter.

(i) Costs. The costs of repairs to leased

property will be paid by the

Government. However, the Government

will not pay costs of utilities or any

other costs of operation of the property

by the lessee. Repairs will be obtained

pursuant to subpart B of part 1924 of

this chapter. Expenditures on custodial

property as limited in § 1955.55 (c) (2)

of this subpart will be charged to the

borrower’s account as recoverable costs.

(j) Security deposit. A security deposit

in at least the amount of one month’s

rent will be required from all lessees of

SFH properties. The security deposit for

farm property should be determined by

considering only the improvements or

facilities which might be subject to

misuse or abuse during the term of the

lease. For all other types of property, the
Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations 44399

leasing official may determine whether

or not a security deposit will be

required and the amount of the deposit.

(k) Lease form. Form RD 1955–20

approved by OGC will be used by the

agency to lease property.

(l) Lease income. Lease proceeds will

be remitted according to subpart B of

part 1951 of this chapter.

(1) Custodial property. The proceeds

from a lease of custodial property will

be applied to the borrower’s account as

an extra payment unless foreclosure

proceedings require that such payments

be held in suspense.

(2) Inventory property. The proceeds

from a lease of inventory property will

be applied to the lease account.

11. Exhibit B of subpart B is revised

to read as follows.

Exhibit B—Notification of Tribe of

Availability of Farm Property for

Purchase

(To Be Used By Farm Service Agency to

Notify Tribe)

From: County official

To: (Name of Tribe and address)

Subject: Availability of Farm Property for

Purchase

[To be Used within 90 days of acquisition]

Recently the Farm Service Agency (FSA)

acquired title to llll acres of farm real

property located within the boundaries of

your Reservation. The previous owner of this

property was llll. The property is

available for purchase by persons who are

members of your tribe, an Indian Corporate

entity, or the tribe itself. Our regulations

provide for those three distinct priority

categories which may be eligible; however,

you may revise the order of the priority

categories and may restrict the eligibility to

one or any combination of categories.

Following is a more detailed description of

these categories:

1. Persons who are members of your Tribe.

Individuals so selected must be able to meet

the eligibility criteria for the purchase of

Government inventory property and be able

to carry on a family farming operation. Those

persons not eligible for FSA’s regular

programs may also purchase this property as

a Non-Program loan on ineligible rates and

terms.

2. Indian corporate entities. You may

restrict eligible Indian corporate entities to

those authorized by your Tribe to purchase

lands within the boundaries of your

Reservation. These entities also must meet

the basic eligibility criteria established for

the type of assistance granted.

3. The Tribe itself is also considered

eligible to exercise their right to purchase the

property. If available, Indian Land

Acquisition funds may be used or the

property financed as a Non-Program loan on

ineligible rates and terms.

We are requesting that you notify the local

FSA county office of your selection or

intentions within 45 days of receipt of this

letter, regarding the purchase of this real

estate. If you have questions regarding

eligibility for any of the groups mentioned

above, please contact our office. If the Tribe

wishes to purchase the property, but is

unable to do so at this time, contact with the

FSA county office should be made.

Sincerely,

County official

Subpart C—Disposal of Inventory

Property

12. Section 1955.102 is amended by

revising the fifth sentence to read as

follows:

§ 1955.102 Policy.

* * * Examples are: (RH) property;

detached Labor Housing or Rural Rental

Housing units may be sold as SFH units;

or SFH units may be sold as a Rural

Rental Housing project. * * *

13. Section 1955.103 is amended by

removing the number ‘‘15’’ and

replacing it with the number ‘‘25’’ in the

first sentence of paragraph (5) of the

definition of ‘‘Beginning farmer or

rancher,’’ by removing the definitions

for ‘‘Agricultural production unit,’’

‘‘Cropland,’’ ‘‘Forage production area,’’

‘‘Leaseback/Buyback,’’ ‘‘Leaseback/

Buyback Property,’’ ‘‘Marketable

agricultural production unit comparable

to that acquired,’’ and ‘‘Previous

operator,’’ and by revising the

definitions of ‘‘Suitable property’’ and

‘‘Surplus property’’ to read as follows:

§ 1955.103 Definitions.

* * * * *

Suitable property. For FSA inventory

property, real property that can be used

for agricultural purposes, including

those farm properties that may be used

as a start-up or add-on parcel of

farmland. It would also include a

residence or other off-farm site that

could be used as a basis for a farming

operation. For Agencies other than FSA,

real property that could be used to carry

out the objectives of the Agency’s loan

programs with financing provided

through that program.

Surplus property. For FSA inventory

property, real property that cannot be

used for agricultural purposes including

nonfarm properties. For other agencies,

property that cannot be used to carry

out the objectives of financing available

through the applicable loan program.

§ 1955.105 [Amended]

14. Section 1955.105 is amended by

removing the words ‘‘Leaseback/

Buyback and,’’ removing the word ‘‘are’’

and replacing it with the word ‘‘is’’ in

the last sentence of paragraph (a) and

revising the reference ‘‘§1955.137(f)’’ to

read ‘‘§1955.137(d)’’ in paragraph (d).

15. Section 1955.106 is amended by

revising paragraphs (a) and (c) to read as

follows:

§ 1955.106 Disposition of farm property.

(a) Rights of previous owner and

notification. Before property which

secured a Farm Credit Programs loan is

taken into inventory, the FSA county

official will advise the borrower-owner

of Homestead Protection rights (see

subpart S of part 1951 of this chapter.)

* * * * *

(c) Nonprogram (NP) borrowers.

Nonprogram (NP) borrowers are not

eligible for Homestead Protection

provisions as set forth in subpart S of

part 1951 of this chapter. When it is

determined that all conditions of

§ 1951.558(b) of subpart L of part 1951

of this chapter have been met, loans for

unauthorized assistance will be treated

as authorized loans and will be eligible

for homestead protection.

16. Section 1955.107 is revised to read

as follows:

§ 1955.107 Sale of FSA property

(CONACT).

FSA inventory property will be

advertised for sale in accordance with

the provisions of this subpart. If a

request is received from a Federal or

State agency for transfer of a property

for conservation purposes, the

advertisement should be conditional on

that possibility. Real property will be

managed in accordance with the

provisions of subpart B of this part until

sold.

(a) Suitable Property. Not later than

15 days from the date of acquisition, the

Agency will advertise suitable property

for sale. For properties currently under

a lease, except leases to beginning

farmers and ranchers under

§ 1955.66(a)(2)(iii) of subpart B of this

part, the property will be advertised for

sale not later than 60 days after the lease

expires or is terminated. There will be

a preference for beginning farmers or

ranchers. The advertisement will

contain a provision to lease the property

to a beginning farmer or rancher for up

to 18 months should FSA credit

assistance not be available at the time of

sale. The first advertisement will not be

required to contain the sales price but

it should inform potential beginning

farmer or rancher applicants that

applications will be accepted pending

completion of the advertisement

process. When possible, the sale of

suitable FSA property should be

handled by county officials. Farm

property will be advertised for sale by

publishing, as a minimum, two weekly

advertisements in at least two

newspapers that are widely circulated

in the area in which the farm is located.

Consideration will be given to

advertising inventory properties in

major farm publications. Either Form
44400 Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations

RD 1955–40 or Form RD 1955–41,

‘‘Notice of Sale,’’ will be posted in a

prominent place in the county.

Maximum publicity should be given to

the sale under guidance provided by

§ 1955.146 of this subpart and care

should be taken to spell out eligibility

criteria. Tribal Councils or other

recognized Indian governing bodies

having jurisdiction over Indian

reservations (see § 1955.103 of this

subpart) shall be responsible for

notifying those parties in § 1955.66(d)(2)

of subpart B of this part.

(1) Price. Property will be advertised

for sale for its appraised market value

based on the condition of the property

at the time it is made available for sale.

The market value will be determined by

an appraisal made in accordance with

subpart E of part 1922 of this chapter.

Property contaminated with hazardous

waste will be appraised ‘‘as improved’’

which will be used as the sale price for

advertisement to beginning farmers or

ranchers.

(2) Selection of purchaser. After

homestead protection rights have

expired, suitable farmland must be sold

in the priority outlined in this

paragraph. When farm inventory

property is larger than family size, the

property will be subdivided into

suitable family size farms pursuant to

§ 1955.140 of this subpart.

(i) Sale to Beginning Farmers/

Ranchers. Not later than 75 days from

the date of acquisition, FSA will sell

suitable farm property, with a priority

given to applicants who are classified as

beginning farmers or ranchers, as

defined in § 1955.103 of this subpart, as

of the time of sale.

(ii) Random selection. The county

official will first determine whether

applicants meet the eligibility

requirements of a beginning farmer or

rancher. For applicants who are not

determined to be beginning farmers or

ranchers, they may request that the State

Executive Director provide an expedited

review and determination of whether

the applicant is a beginning farmer or

rancher for the purpose of acquiring

inventory property. This review shall

take place not later than 30 days after

denial of the application. The State

Executive Director’s review decision

shall be final and is not administratively

appealable. When there is more than

one beginning farmer or rancher

applicant, the Agency will select by lot

by placing the names in a receptacle and

drawing names sequentially. Drawn

offers will be numbered and those

drawn after the first drawn name will be

held in suspense pending sale to the

successful applicant. The random

selection drawing will be open to the

public, and applicants will be advised

of the time and place.

(iii) Notification of applicants not

selected to purchase suitable farmland.

When the Agency selects an applicant to

purchase suitable farmland, in

accordance with this paragraph, all

applicants not selected will be notified

in writing that they were not selected.

The outcome of the random selection by

lot is not appealable if such selection is

conducted in accordance with this

subpart.

(3) Credit sale procedure. Subject to

the availability of funds, credit sale to

program applicants will be processed as

follows:

(i) The interest rate charged by the

Agency will be the lower of the interest

rates in effect at the time of loan

approval or closing.

(ii) The loan limits for the requested

type of assistance are applicable to a

credit sale to an eligible applicant.

(iii) Title clearance and loan closing

for a credit sale and any subsequent

loan to be closed simultaneously must

be the same as for an initial loan except

that:

(A) Form RD 1955–49, ‘‘Quitclaim

Deed,’’ or other form of nonwarranty

deed approved by the Office of the

General Counsel (OGC) will be used.

(B) The buyer will pay attorney’s fees

and title insurance costs, recording fees,

and other customary fees unless they are

included in a subsequent loan. A

subsequent loan may not be made for

the primary purpose of paying closing

costs and fees.

(iv) Property sold on credit sale may

not be used for any purpose that will

contribute to excessive erosion of highly

erodible land or to the conversion of

wetlands to produce an agricultural

commodity, see Exhibit M of subpart G

of part 1940 of this chapter. All

prospective buyers will be notified in

writing as a part of the property

advertisement of the presence of highly

erodible land and wetlands on

inventory property.

(b) Surplus Property and Suitable

Property not sold to a Beginning Farmer

or Rancher. Except where a lessee is

exercising the option to purchase under

the Homestead Protection provision of

subpart S of part 1951 of this chapter,

surplus property will be offered for

public sale by sealed bid or auction

within 15 days from the date of

acquisition in accordance with

§1955.147 or §1955.148 of this subpart.

Suitable farm property which has been

advertised for sale to a beginning farmer

or rancher in accordance with

§1955.107 (a) of this subpart but has not

sold within 75 days from the date of

acquisition will be offered for public

sale by sealed bid or auction to the

highest bidder as provided in paragraph

(b)(1) of this section. All prospective

buyers will be notified in writing as a

part of the property advertisement of the

presence of highly erodible land,

converted wetlands, floodplains,

wetlands, or other special

characteristics of the property that may

limit its use or cause an easement to be

placed on the property.

(1) Advertising surplus property. FSA

will advertise surplus property for sale

by sealed bid or auction within 15 days

from the date of acquisition or, for those

suitable properties not sold to beginning

farmers or ranchers in accordance with

the provisions or paragraph (a) of this

section, within 75 days of the date of

acquisition.

(2) Sale by sealed bid or auction.

Surplus real estate must be offered for

public sale by sealed bid or auction and

must be sold no later than 105 days

from the date of acquisition to the

highest bidder. Preference will be given

to a cash offer which is at least *percent

of the highest offer requiring credit.

(*Refer to Exhibit B of RD Instruction

440.1 (available in any Agency office)

for the current percentage.) Equally

acceptable sealed bid offers will be

decided by lot.

(3) Negotiated sale. If no acceptable

bid is received through the sealed bid or

auction process, the State Executive

Director will sell surplus property at the

maximum price obtainable without

further public notice by negotiation

with interested parties, including all

previous bidders. The rates and terms

offered for a credit sale through

negotiation will be within the

limitations established in paragraph (b)

(4) of this section. A sale made through

negotiation will require a bid deposit of

not less than 10 percent of the

negotiated price in the form of a

cashier’s check, certified check, postal

or bank money order, or bank draft

payable to FSA. Preference will be given

to a cash offer which is at least * percent

of the highest offer requiring credit.

[*Refer to Exhibit B of RD Instruction

440.1 (available in any Agency office)

for the current percentage.] Equally

acceptable offers will be decided by lot.

(4) Rates and terms. Subject to the

availability of funds, rates and terms for

Homestead Protection will be in

accordance with subpart S of part 1951

of this chapter. Sales of suitable

property offered to program eligible

applicants will be on rates and terms

provided in subpart A of part 1943 of

this chapter. Surplus property and

suitable property which has not been

sold to program eligible applicants will

be offered for cash or on ineligible terms
Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations 44401

in accordance with subpart J of part

1951 of this chapter. The State

Executive Director will determine the

loan terms for surplus property within

these limitations. A credit sale made on

ineligible terms will be closed at the

interest rate in effect at the time the

credit sale was approved. After

extensive sales efforts where no

acceptable offer has been received, the

State Executive Director may request the

Administrator to permit offering surplus

property for sale on more favorable rates

and terms; however, the terms may not

be more favorable than those legally

permissible for eligible borrowers.

Surplus property will be offered for sale

for cash or terms that will provide the

best net return for the Government. The

term of financing extended may not be

longer than the period for which the

property will serve as adequate security.

All credit sales on ineligible terms will

be identified as NP loans.

17. Section 1955.108 is revised to read

as follows:

§1955.108 Sale of (CONACT) property

other than FSA property.

Program officials will immediately

contact the National Office whenever

they acquire real property to obtain

further instructions on the time frames

and procedures for advertising and

disposing of such property.

§ 1955.109 [Amended]

18. Section 1955.109 is amended by

adding the word ‘‘FSA’’ before the word

‘‘applicants’’ in the second sentence of

paragraph (a) and by removing the

words ‘‘Farmer Credit Programs’’ and

adding in their place the word ‘‘FSA’’ in

the third sentence of paragraph (a).

§ 1955.122 [Amended]

19. Section 1955.122 is amended by

removing paragraph (b) and

redesignating paragraphs (c) through (g)

as paragraphs (b) through (f),

respectively.

§ 1955.130 [Amended]

20. Section 1955.130 is amended by

adding the words ‘‘and surplus FSA’’

before ‘‘CONACT’’ in the heading and

revising the reference ‘‘§ 1955.106’’ to

read ‘‘§ 1955.107’’ in paragraph (c)(5),

and revising the heading ‘‘Surplus

CONACT’’ to read ‘‘Suitable and

Surplus Non-FSA CONACT’’ and

revising the reference ‘‘§ 1955.107’’ to

read ‘‘§ 1955.108’’ in paragraph (c)(6).

21. Section 1955.137 is revised to read

as follows:

§ 1955.137 Real property located in special

areas or having special characteristics.

(a) Real property located in flood,

mudslide hazard, wetland or Coastal

Barrier Resources System (CBRS). (1)

Use restrictions. Executive Order 11988,

‘‘Floodplain Management,’’ and

Executive Order 11990, ‘‘Protection of

Wetlands,’’ require the conveyance

instrument for inventory property

containing floodplains or wetlands

which is proposed for lease or sale to

specify those uses that are restricted

under identified Federal, State and local

floodplains or wetlands regulations as

well as other appropriate restrictions.

The restrictions shall be to the uses of

the property by the lessee or purchaser

and any successors, except where

prohibited by law. Applicable

restrictions will be incorporated into

quitclaim deeds in a format similar to

that contained in Exhibits H and I of RD

Instruction 1955–C (available in any

Agency office). A listing of all

restrictions will be included in the

notices required in paragraph (a)(2) of

this section.

(2) Notice of hazards. Acquired real

property located in an identified special

flood or mudslide hazard area as

defined in, subpart B of part 1806 of this

chapter will not be sold for residential

purposes unless determined by the

county official or district director to be

safe (that is, any hazard that exists

would not likely endanger the safety of

dwelling occupants).

(3) Limitations placed on financial

assistance. (i) Financial assistance is

limited to property located in areas

where flood insurance is available.

Flood insurance must be provided at

closing of loans on program-eligible and

nonprogram (NP)-ineligible terms.

Appraisals of property in flood or

mudslide hazard areas will reflect this

condition and any restrictions on use.

Financial assistance for substantial

improvement or repair of property

located in a flood or mudslide hazard

area is subject to the limitations

outlined in, paragraph 3b (1) and (2) of

Exhibit C of subpart G of part 1940.

(ii) Pursuant to the requirements of

the Coastal Barrier Resources Act

(CBRA) and except as specified in

paragraph (a)(3)(v) of this section, no

credit sales will be provided for

property located within a CBRS where:

(A) It is known that the purchaser

plans to further develop the property;

(B) A subsequent loan or any other

type of Federal financial assistance as

defined by the CBRA has been requested

for additional development of the

property;

(C) The sale is inconsistent with the

purpose of the CBRA; or

(D) The property to be sold was the

subject of a previous financial

transaction that violated the CBRA.

(iii) For purposes of this section,

additional development means the

expansion, but not maintenance,

replacement-in-kind, reconstruction, or

repair of any roads, structures or

facilities. Water and waste disposal

facilities as well as community facilities

may be repaired to the extent required

to meet health and safety requirements,

but may not be improved or expanded

to serve new users, patients or residents.

(iv) A sale which is not in conflict

with the limitations in paragraph

(a)(3)(ii) of this section shall not be

completed until the approval official

has consulted with the appropriate

Regional Director of the U.S. Fish and

Wildlife Service and the Regional

Director concurs that the proposed sale

does not violate the provisions of the

CBRA.

(v) Any proposed sale that does not

conform to the requirements of

paragraph (a)(3)(ii) of this section must

be forwarded to the Administrator for

review. Approval will not be granted

unless the Administrator determines,

through consultation with the

Department of Interior, that the

proposed sale does not violate the

provisions of the CBRA.

(b) Wetlands located on FSA

inventory property. Perpetual wetland

conservation easements (encumbrances

in deeds) to protect and restore

wetlands or converted wetlands that

exist on suitable or surplus inventory

property will be established prior to sale

of such property. The provisions of

paragraphs (a) (2) and (3) of this section

also apply, as does paragraph (a)(1) of

this section insofar as floodplains are

concerned. This requirement applies to

either cash or credit sales. Similar

restrictions will be included in leases of

inventory properties to beginning

farmers or ranchers. Wetland

conservation easements will be

established as follows:

(1) All wetlands or converted

wetlands located on FSA inventory

property which were not considered

cropland on the date the property was

acquired and were not used for farming

at any time during the period beginning

on the date 5 years before the property

was acquired and ending on the date the

property was acquired will receive a

wetland conservation easement.

(2) All wetlands or converted

wetlands located on FSA inventory

property that were considered cropland

on the date the property was acquired

or were used for farming at any time

during the period beginning on the date

5 years before the property was acquired

and ending on the date the property was

acquired will not receive a wetland

conservation easement.
44402 Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations

(3) The following steps should be

taken in determining if conservation

easements are necessary for the

protection of wetlands or converted

wetland on inventory property:

(i) NRCS will be contacted first to

identify the wetlands or converted

wetlands and wetland boundaries of

each wetland or converted wetland on

inventory property.

(ii) After receiving the wetland

determination from NRCS, the FSA

county committee will review the

determination for each inventory

property and determine if any of the

wetlands or converted wetlands

identified by NRCS were considered

cropland on the date the property was

acquired or were used for farming at any

time during the period beginning on the

date 5 years before the property was

acquired and ending on the date the

property was acquired. Property will be

considered to have been used for

farming if it was primarily used for

agricultural purposes including but not

limited to such uses as cropland,

pasture, hayland, orchards, vineyards

and tree farming.

(iii) After the county committee has

completed their determination of

whether the wetlands or converted

wetlands located on an inventory

property were used for cropland or

farming, the U.S. Fish and Wildlife

Service (FWS) will be contacted. Based

on the technical considerations of the

potential functions and values of the

wetlands on the property, FWS will

identify those wetlands or converted

wetlands that require protection with a

wetland conservation easement along

with the boundaries of the required

wetland conservation easement. FWS

may also make other recommendations

if needed for the protection of important

resources such as threatened or

endangered species during this review.

(4) The wetland conservation

easement will provide for access to

other portions of the property as

necessary for farming and other uses.

(5) The appraisal of the property must

be updated to reflect the value of the

land due to the conservation easement

on the property.

(6) Easement areas shall be described

in accordance with State or local laws.

If State or local law does not require a

survey, the easement area can be

described by rectangular survey, plat

map, or other recordable methods.

(7) In most cases the FWS shall be

responsible for easement management

and administration responsibilities for

such areas unless the wetland easement

area is an inholding in Federal or State

property and that entity agrees to

assume such responsibility, or a State

fish and wildlife agency having

counterpart responsibilities to the FWS

is willing to assume easement

management and administration

responsibilities. The costs associated

with such easement management

responsibilities shall be the

responsibility of the agency that

assumes easement management and

administration.

(8) County officials are encouraged to

begin the easement process before the

property is taken into inventory, if

possible, in order to have the program

completed before the statutory time

requirement for sale.

(c) Historic preservation. (1) Pursuant

to the requirements of the National

Historic Preservation Act and Executive

Order 11593, ‘‘Protection and

Enhancement of the Cultural

Environment,’’ the Agency official

responsible for the conveyance must

determine if the property is listed on or

eligible for listing on the National

Register of Historic Places. (See subpart

F of part 1901 of this chapter for

additional guidance.) The State Historic

Preservation Officer (SHPO) must be

consulted whenever one of the

following criteria are met:

(i) The property includes a structure

that is more than 50 years old.

(ii) Regardless of age, the property is

known to be of historical or

archaeological importance; has apparent

significant architectural features; or is

similar to other Agency properties that

have been determined to be eligible.

(iii) An environmental assessment is

required prior to a decision on the

conveyance.

(2) If the result of the consultations

with the SHPO is that a property may

be eligible or that it is questionable, an

official determination must be obtained

from the Secretary of the Interior.

(3) If a property is listed on the

National Register or is determined

eligible for listing by the Secretary of

Interior, the Agency official responsible

for the conveyance must consult with

the SHPO in order to develop any

necessary restrictions on the use of the

property so that the future use will be

compatible with preservation objectives

and which does not result in an

unreasonable economic burden to

public or private interest. The Advisory

Council on Historic Preservation must

be consulted by the State Director or

State Executive Director after the

discussions with the SHPO are

concluded regardless of whether or not

an agreement is reached.

(4) Any restrictions that are developed

on the use of the property as a result of

the above consultations must be made

known to a potential bidder or

purchaser through a notice procedure

similar to that in §1955.13(a)(2) of this

subpart.

(d) Highly erodible farmland. (1) The

FSA county official will determine if

any inventory property contains highly

erodible land as defined by the NRCS

and, if so, what specific conservation

practices will be made a condition of a

sale of the property.

(2) If the county official does not

concur in the need for a conservation

practice recommended by NRCS, any

differences shall be discussed with the

recommending NRCS office. Failure to

reach an agreement at that level shall

require the State Executive Director to

make a final decision after consultation

with the NRCS State Conservationist.

(3) Whenever NRCS technical

assistance is requested in implementing

these requirements and NRCS responds

that it cannot provide such assistance

within a time frame compatible with the

proposed sale, the sale arrangements

will go forward. The sale will proceed,

conditioned on the requirement that a

purchaser will immediately contact

(NRCS) have a conservation plan

developed and comply with this plan.

The county official will monitor the

borrower’s compliance with the

recommendations in the conservation

plan. If problems occur in obtaining

NRCS assistance, the State Executive

Director should consult with the NRCS

State Conservationist.

(e) Notification to purchasers of

inventory property with reportable

underground storage tanks. If the

Agency is selling inventory property

containing a storage tank which was

reported to the Environmental

Protection Agency (EPA) pursuant to the

provisions of §1955.57 of subpart B of

this part, the potential purchaser will be

informed of the reporting requirement

and provided a copy of the report filed

by the Agency.

(f) Real property that is unsafe. If the

Agency has in inventory, real property,

exclusive of any improvements, that is

unsafe, that is it does not meet the

definition of ‘‘safe’’ as contained in

§1955.103 of this subpart and which

cannot be feasibly made safe, the State

Director or State Executive Director will

submit the case file, together with

documentation of the hazard and a

recommended course of action to the

National Office, ATTN: appropriate

Deputy Administrator, for review and

guidance.

(g) Real property containing

hazardous waste contamination. All

inventory property must be inspected

for hazardous waste contamination

either through the use of a preliminary

hazardous waste site survey or
Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations 44403

Transaction Screen Questionnaire. If

possible contamination is noted, a Phase

I or II environmental assessment will be

completed per the advice of the State

Environmental Coordinator.

22. Section 1955.139 is amended by

revising the introductory text of

paragraph (a)(3) and paragraph (c) to

read as follows:

§1955.139 Disposition of real property

rights and title to real property.

(a) * * *

(3) For FSA properties only,

easements, restrictions, development

rights or similar legal rights may be

granted or sold separately from the

underlying fee or sum of all other rights

possessed by the Government if such

conveyances are for conservation

purposes and are transferred to a State,

a political subdivision of a State, or a

private nonprofit organization.

Easements may be granted or sold to a

Federal agency for conservation

purposes as long as the requirements of

§1955.139(c)(2) of this subpart are

followed. If FSA has an affirmative

responsibility such as protecting an

endangered species as provided for in

paragraph (a)(3(v) of this section, the

requirements in §1955.139(c) of this

subpart do not apply.

* * * * *

(c) Transfer of FSA inventory property

for conservation purposes. (1) In

accordance with the provisions of this

paragraph, FSA may transfer, to a

Federal or State agency for conservation

purposes (as defined in paragraph

(a)(3)(i) of this section), inventory

property, or an interest therein, meeting

any one of the following three criteria

and subject only to the homestead

protection rights of all previous owners

having been met.

(i) A predominance of the land being

transferred has marginal value for

agricultural production. This is land

that NRCS has determined to be either

highly erodible or generally not used for

cultivation, such as soils in classes IV,

V, VII or VIII of NRCS’s Land Capability

Classification, or

(ii) A predominance of land is

environmentally sensitive. This is land

that meets any of the following criteria:

(A) Wetlands, as defined in Executive

Order 11990 and USDA Regulation

9500.

(B) Riparian zones and floodplains as

they pertain to Executive Order 11988.

(C) Coastal barriers and zones as they

pertain to the Coastal Barrier Resources

Act or Coastal Zone Management Act.

(D) Areas supporting endangered and

threatened wildlife and plants

(including proposed and candidate

species), critical habitat, or potential

habitat for recovery pertaining to the

Endangered Species Act.

(E) Fish and wildlife habitats of local,

regional, State or Federal importance on

lands that provide or have the potential

to provide habitat value to species of

Federal trust responsibility (e.g.,

Migratory Bird Treaty Act, Anadromous

Fish Conservation Act).

(F) Aquifer recharges areas of local,

regional, State or Federal importance.

(G) Areas of high water quality or

scenic value.

(H) Areas containing historic or

cultural property; or

(iii) A predominance of land with

special management importance. This is

land that meets the following criteria:

(A) Lands that are in holdings, lie

adjacent to, or occur in proximity to,

Federally or State-owned lands or

interest in lands.

(B) Lands that would contribute to the

regulation of ingress or egress of persons

or equipment to existing Federally or

State-owned conservation lands.

(C) Lands that would provide a

necessary buffer to development if such

development would adversely affect the

existing Federally or State-owned lands.

(D) Lands that would contribute to

boundary identification and control of

existing conservation lands.

(2) When a State or Federal agency

requests title to inventory property, the

State Executive Director will make a

preliminary determination as to whether

the property can be transferred.

(3) If a decision is made by the State

Executive Director to deny a transfer

request by a Federal or State agency, the

requesting agency will be informed of

the decision in writing and informed

that they may request a review of the

decision by the FSA Administrator.

(4) When a State or Federal agency

requests title to inventory property and

the State Executive Director determines

that the property is suited for transfer,

the following actions must be taken

prior to approval of the transfer:

(i) At least two public notices must be

provided. These notices will be

published in a newspaper with a wide

circulation in the area in which the

requested property is located. The

notice will provide information on the

proposed use of the property by the

requesting agency and request any

comments concerning the negative or

positive aspects of the request. A 30-day

comment period should be established

for the receipt of comments.

(ii) If requested, at least one public

meeting must be held to discuss the

request. A representative of the

requesting agency should be present at

the meeting in order to answer

questions concerning the proposed

conservation use of the property. The

date and time for a public meeting

should be advertised.

(iii) Written notice must be provided

to the Governor of the State in which

the property is located as well as at least

one elected official of the county in

which the property is located. The

notification should provide information

on the request and solicit any comments

regarding the proposed transfer. All

procedural requirements in paragraph

(c) (3) of this section must be completed

in 75 days.

(5) Determining priorities for transfer

or inventory lands.

(i) A Federal entity will be selected

over a State entity.

(ii) If two Federal agencies request the

same land tract, priority will be given to

the Federal agency that owns or controls

property adjacent to the property in

question or if this is not the case, to the

Federal agency whose mission or

expertise best matches the conservation

purposes for which the transfer would

be established.

(iii) In selecting between State

agencies, priority will be given to the

State agency that owns or controls

property adjacent to the property in

question or if that is not the case, to the

State agency whose mission or expertise

best matches the conservation

purpose(s) for which the transfer would

be established.

(6) In cases where land transfer is

requested for conservation purposes that

would contribute directly to the

furtherance of International Treaties or

Plans (e.g., Migratory Bird Treaty Act or

North American Waterfowl Management

Plan), to the recovery of a listed

endangered species, or to a habitat of

National importance (e.g., wetlands as

addressed in the Emergency Wetlands

Resources Act), priority consideration

will be given to land transfer for

conservation purposes, without

reimbursement, over other land disposal

alternatives.

(7) An individual property may be

subdivided into parcels and a parcel can

be transferred under the requirements of

this paragraph as long as the remaining

parcels to be sold make up a viable sales

unit, suitable or surplus.

23. Section 1955.140 is revised to read

as follows:

§1955.140 Sale in parcels.

(a) Individual property subdivided.

An individual property, other than Farm

Credit Programs property, may be

offered for sale as a whole or subdivided

into parcels as determined by the State

Director. For MFH property, guidance

will be requested from the National

Office for all properties other than RHS
44404 Federal Register / Vol. 62, No. 162 / Thursday, August 21, 1997 / Rules and Regulations

projects. When farm inventory property

is larger than a family-size farm, the

county official will subdivide the

property into one or more tracts to be

sold in accordance with §1955.107 of

this subpart. Division of the land or

separate sales of portions of the

property, such as timber, growing crops,

inventory for small business enterprises,

buildings, facilities, and similar items

may be permitted if a better total price

for the property can be obtained in this

manner. Environmental effects should

also be considered pursuant to subpart

G of part 1940 of this chapter. Any

applicable State laws will be set forth in

a State supplement and will be

complied with in connection with the

division of land. Subdivision of

acquired property will be reported on

Form RD 1955–3C, ‘‘Acquired

Property—Subdivision,’’ in accordance

with the FMI.

(b) Grouping of individual properties.

The county official for FCP cases, and

the State Director for all other cases,

may authorize the combining of two or

more individual properties into a single

parcel for sale as a suitable program

property.

24. Section 1955.148 is revised to read

as follows:

§1955.148 Auction sales.

This section provides guidance on the

sale of all inventory property by

auction, except FSA real property.

Before an auction, the State Director,

with the advice of the National Office

for organizational property, will

determine and document the minimum

sale price acceptable. In determining a

minimum sale price, the State Director

will consider the length of time the

property has been in inventory,

previous marketing efforts, the type

property involved, and potential

purchasers. Program financing will be

offered on sales of program and

property. For NP property, credit may

be offered to facilitate the sale. Credit,

however, may not exceed the market

value of the property nor may the term

exceed the period for which the

property will serve as adequate security.

For program property sales, no

preference will be given to program

purchasers. The State Director will also

consider whether an Agency employee

will conduct an auction or whether the

services of a professional auctioneer are

necessary due to the complexity of the

sale.

When the services of a professional

auctioneer are advisable, the services

will be procured by contract in

accordance with RD Instruction 2024-A

(available in any Agency Office). Chattel

property may be sold at public auction

that is widely advertised and held on a

regularly scheduled basis without

solicitation. Form RD 1955–46 will be

used for auction sales. At the auction,

successful bidders will be required to

make a bid deposit. For program and

suitable property, the bid deposit will

be the same as outlined in

§1955.130(e)(1) of this subpart. For NP

property sales, a bid deposit of 10

percent is required. Deposits will be in

the form of cashier’s check, certified

check, postal or bank money order or

bank draft payable to the Agency, cash

or personal checks may be accepted

when deemed necessary for a successful

auction by the person conducting the

auction. Where credit sales are

authorized, all notices and publicity

should provide for a method of prior

approval of credit and the credit limit

for potential purchasers. This may

include submission of letters of credit or

financial statements prior to the auction.

The auctioneer should not accept a bid

which requests credit in excess of the

market value. When the highest bid is

lower than the minimum amount

acceptable to the Agency, negotiations

should be conducted with the highest

bidder or in turn, the next highest

bidder or other persons to obtain an

executed bid at the predetermined

minimum. Upon purchaser’s default,

the approval official will remit the bid

deposit as a Miscellaneous Collection

according to RD Instruction 1951–B

(available in any agency office). The bid

deposit will be remitted only when the

bidder defaults; otherwise it will be

used at closing towards a down

payment or closing costs, as applicable.

The closing will be conducted in

accordance with the procedures

prescribed in this subpart for the type

property and program involved.

Dated: June 30, 1997.

James W. Schroeder,

Acting Under Secretary for Farm and Foreign

Agricultural Services.

Dated: July 8, 1997.

Jill Long Thompson,

Under Secretary for Rural Development.

[FR Doc. 97–22004 Filed 8–20–97; 8:45 am]

BILLING CODE 3410–05–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 97–CE–73–AD; Amendment 39–

10111; AD 97–17–08]

RIN 2120–AA64

Airworthiness Directives; Raytheon

Aircraft Company Model 1900D

Airplanes (Formerly Known as Beech

Aircraft Corporation Model 1900D

Airplanes)

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule; request for

comments.

SUMMARY: This amendment adopts a

new airworthiness directive (AD) that is

applicable to Raytheon Aircraft

Company (Raytheon) Model 1900D

airplanes (formerly known as Beech

Aircraft Corporation Model 1900D

airplanes) that have not had the

propeller removed and re-installed since

factory installation. This action requires

inspecting the propeller mounting bolts

for the proper torque and replacing or

re-torquing any propeller bolt with the

wrong torque level. The manufacturer

discovered some under-torqued

propeller mounting bolts during factory

installation of the propeller. The actions

specified by this AD are intended to

prevent fatigue cracking and failure of

the propeller mounting bolts, which if

not detected and corrected, could result

in loss of the propeller.

DATES: Effective September 24, 1997.

Comments for inclusion in the rules

docket must be received on or before

October 30, 1997.

ADDRESSES: Submit comments in

triplicate to the Federal Aviation

Administration (FAA), Central Region,

Office of the Assistant Chief Counsel,

Attention: Rules Docket 97–CE–73–AD,

Room 1558, 601 E. 12th Street, Kansas

City, Missouri 64106.

Service information that applies to

this AD may be obtained from Raytheon

Aircraft Company, 9709 E. Central, P.O.

Box 85, Wichita, Kansas 67201–0085.

This information may also be examined

at the Federal Aviation Administration

(FAA), Central Region, Office of the

Assistant Chief Counsel, Attention:

Rules Docket 97–CE–73–AD, Room

1558, 601 E. 12th Street, Kansas City,

Missouri 64106.

FOR FURTHER INFORMATION CONTACT: Mr.

Randy Griffith, Aerospace Engineer,

Wichita Aircraft Certification Office,

Room 100, 1801 Airport Rd., Wichita,

Kansas 67209; telephone (316) 946–

4145; facsimile (316) 946–4407.