This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

76115

Vol. 65, No. 235

Wednesday, December 6, 2000

DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Parts 773 and 774

RIN 0560–AG23

Implementation of the Special Apple

Loan Program and Emergency Loan

for Seed Producers Program

AGENCY: Farm Service Agency, USDA.

ACTION: Final rule.

SUMMARY: This action is being taken to

implement provisions of the

Agricultural Risk Protection Act of 2000

(Act). The intended effect is to assist

producers of apples suffering economic

loss as a result of low prices and by

making low cost loans available to seed

producers adversely affected by the

bankruptcy filing of AgriBiotech.

DATES: Effective December 6, 2000.

FOR FURTHER INFORMATION CONTACT: Pat

Elzinga, Senior Loan Officer, USDA/

FSA/DAFLP/STOP 0522, 1400

Independence Avenue, SW.,

Washington, DC 20250–0522; telephone

(202) 720–3889; facsimile (202) 690–

1117; electronic mail:

pelzinga@wdc.usda.gov; and Orlando C.

Kilcrease, Senior Loan Officer, USDA/

FSA/DAFLP/STOP 0522, Independence

Avenue, SW., Washington, DC 20250–

0522; telephone (202) 720–1472;

facsimile: 202–720–6797; electronic

mail: Orlando Kilcrease@wdc.usda.gov.

SUPPLEMENTARY INFORMATION:

Notice and Comment

Section 263 of the Agricultural Risk

Protection Act requires that these

regulations be promulgated without

regard to the notice and comment

provisions of 5 U.S.C. 553 or the

Statement of Policy of the Secretary of

Agriculture effective July 24, 1971 (36

FR 13804) related to notices of proposed

rulemaking and public participation in

the rulemaking process. This rule is

thus issued as final and is effective

immediately.

Executive Order 12866

This rule has been determined to be

significant for purposes of Executive

Order 12866 and, therefore, has been

reviewed by the Office of Management

and Budget.

Regulatory Flexibility Act

The Farm Service Agency (Agency)

certifies that this rule will not have a

significant economic effect on a

substantial number of small entities

and, therefore, is not required to

perform a Regulatory Flexibility

Analysis as required by the Regulatory

Flexibility Act, as amended (5 U.S.C.

601). This rule does not impact the

small entities to a greater extent than the

large entities.

Environmental Evaluation

National Environmental Policy Act

The Agency has determined that this

action does not constitute a major

Federal action significantly affecting the

quality of the human environment, and

in accordance with the National

Environmental Policy Act of 1969, (42

U.S.C. 4321 et seq.) neither an

Environmental Impact Statement nor an

environmental assessment is required.

Environmental Justice, Executive Order

12898

This rule is subject to the

requirements of Executive Order 12898,

Federal Actions to Address

Environmental Justice in Minority

Populations and Low-Income

Populations. Implementation of these

requirements will occur at the time of

actions performed hereunder.

Executive Order 12988

The rule has been reviewed in

accordance with E.O. 12988, Civil

Justice Reform. The provisions of this

rule are not retroactive and preempt

State laws to the extent such laws are

inconsistent with the provisions of this

rule. In accordance with section 212(e)

of the Department of Agriculture

Reorganization Act of 1994, before any

judicial action may be brought

concerning the provisions of this rule,

administrative review under 7 CFR part

11 must be exhausted.

Executive Order 12372

This program is not subject to the

provisions of Executive Order 12372,

which require intergovernmental

consultation with State and local

officials. See the notice related to 7 CFR

part 3015, subpart V, published at 48 FR

29115 (June 24, 1983).

Unfunded Mandates

Title II of the Unfunded Mandates

Reform Act of 1995 (UMRA), establishes

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, the

Agency 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

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 the

Agency to identify and consider a

reasonable number of regulatory

alternatives and adopt the least costly,

more cost-effective or least burdensome

alternative that achieves the objectives

of the rule.

This rule contains no Federal

mandates, under the regulatory

provisions of title II of the UMRA, for

State, local, and tribal governments or

the private sector. Therefore, this rule is

not subject to the requirements of

sections 202 and 205 of the UMRA.

Paperwork Reduction Act

Section 263 of the Act provides that

this rule will be promulgated without

regard to the Paperwork Reduction Act

contained in chapter 35 of title 44,

United States Code. This means that the

information to be collected from the

public to implement these programs and

the burden, in time and money, the

collection of the information would

have on the public does not have to be

approved by the Office of Management

and Budget or be subject to the normal

requirement for a 60-day public

comment period.

Background

This rule will implement sections

§ 203(f) and 253 of the Act (Pub. L. 106–

224) enacted June 20, 2000, related to

the Special Apple Loan Program and

76116 Federal Register / Vol. 65, No. 235 / Wednesday, December 6, 2000 / Rules and Regulations

Emergency Loan for Seed Producers

Program, respectively.

1. 7 CFR Part 773—Special Apple Loan

Program

Apple prices in the 1998–1999

growing season fell to their lowest levels

in nearly 10 years. The average U.S.

1998–1999 farm price for fresh market

apples was estimated to be down more

than 20 percent from the previous

growing season, resulting in a 16

percent drop in total farm revenue. Even

with a possible improvement in the

coming growing seasons, the serious

economic impact of the earlier

economic losses will result in ongoing

financial difficulties for apple

producers.

Section 203(f) of the Act directed the

Secretary to make loans to producers of

apples that are suffering economic loss

as a result of low prices for apples. To

ensure that the borrowers under this

program are those that most likely are

suffering economic loss, the Agency

restricted applicants to those that

produced apples, on not less than 10

acres, for sale in 1999 or 2000. This

restriction excludes hobby apple

producers. Funds allocated will most

effectively assist those most directly

affected by the economic crisis in the

apple industry since those eligible will

have been dependent on apple

production for a primary source of

income. In addition, this program is

intended to assist producers recover

from economic losses and enable them

to continue their farming operations.

Therefore, loan funds must be used for

specified purposes related to the

production and marketing of apples.

Distribution of funds has been

determined to be on a per acre basis to

provide the most equitable access to

assistance for all affected producers, and

to best meet the intent of the authorizing

statute.

Congress allocated a limited amount

of funds for this program so certain

limits are necessary to help ensure that

loan funds are distributed equitably to

all interested producers. In addition,

this program is intended to assist

producers through a period of low apple

prices, not replace the producers’

established sources of credit. For these

reasons, the regulation limits loan size

to a maximum of $300.00 per acre of

apples in production and a maximum

indebtedness of $500,000 per producer.

To expedite funding of eligible requests,

the Agency will waive the application

requirements of historical production

and financial information, and cash

flow projections, for applicants

requesting $30,000 or less. The Agency,

however, will require these applicants

to provide cash flow projections later to

show repayment if their balance sheet

shows a net worth of less than three

times the loan amount. This additional

documentation is needed to minimize

the credit risk to the Government. For

loans for more than $30,000, repayment

will always be based on the applicant’s

projected cash flow budget.

To minimize the credit risk to the

Government, the Agency requires that

the applicants have an acceptable credit

history and demonstrate an ability to

repay the proposed loan. The Agency

cannot make a loan to an applicant who

is delinquent on a non-tax Federal debt

(31 U.S.C. 3720B), or has an outstanding

non-tax Federal judgment (28 U.S.C.

3201(e)). The restrictions will not apply

if the Federal delinquency and

judgment are cured on or before the loan

closing date. Applicants who have

provided the Agency false or misleading

information are also not eligible for this

program.

The Agency has established rates,

terms, and collateral requirements for

Special Apple Loans to allow for

maximum flexibility. The Act allows the

Agency to require collateral in an

amount adequate to protect the

Government’s interest and to minimize

potential loss. The Agency therefore,

will take a lien on available assets as

necessary to adequately secure the loan.

The level of documentation of collateral

value will depend on the risk of loss, as

determined by a review of the

applicant’s financial condition, and the

size of the loan. For loans over $30,000,

applicants with net worth of at least

three times the loan amount have

demonstrated an ability to successfully

manage the finances of their operation

and have accumulated assets to protect

against adverse conditions. Applicants

with those characteristics generally

represent significantly less potential

loss, so Agency will place less emphasis

on collateral when evaluating the

soundness of the loan request.

Therefore, these applicants will be

allowed to provide documentation of

collateral value in the form of

assessments or depreciation schedules.

For loans over $30,000, applicants with

net worth of less than three times the

loan amount will be required to provide

current appraisals, at the applicant’s

expense, to document collateral values.

All appraisals must be completed by a

knowledgeable appraiser, acceptable to

the Agency. Real estate appraisals must

be prepared by a state certified general

appraiser in compliance with the

Uniform Standards of Professional

Appraisal Practices (USPAP). For loans

of $30,000 or less, collateral value will

be based on the best available, verifiable

information. In addition, debtors will be

subject to the collection authorities of

31 U.S.C. chapter 37.

All persons approved for such loan

assistance must execute loan

instruments and legal documents to

secure the loan and reduce the risk to

the Government. For entity applicants,

the loan instruments and legal

documents must be executed in the

name of the entity and by each

individual member. This requirement is

necessary to minimize the credit risk.

The Agency will service Special

Apple Loans like nonprogram loans

under 7 CFR part 1951, subpart J. These

borrowers have not been required at

loan origination to meet the more

stringent eligibility requirements of

Agency loans under the Consolidated

Farm and Rural Development Act

(CONACT), and the Act does not

provide CONACT servicing benefits to

Special Apple Loan program borrowers.

2. 7 CFR Part 774—Emergency Loans for

Seed Producers Program

Seed producers have suffered

economic hardships as a result of the

bankruptcy filing of AgriBiotech.

AgriBiotech, one of the largest single

turf, forage, and alfalfa seed companies

in the country, filed for protection

under chapter 11 of the bankruptcy code

affecting over 1,200 farmer growers in

39 States. The growers are the largest

segment of creditors in the bankruptcy

proceedings. AgriBiotech cannot pay

these growers for their 1999 produced

crop as a result of the bankruptcy filing.

The courts have estimated the total

value of seed growers’ claims to be

approximately $50 million.

Section 253 of the Act directed the

Secretary to make no-interest loans to

producers of the 1999 crop of grass,

forage, vegetable, or sorghum seed that

have not received payments for the seed

as a result of bankruptcy proceedings

involving AgriBiotech. The funds

allocated for the program are believed to

be adequate for all eligible producers. If

demand does exceed the allocation,

funds will be paid in order of

application approval. For the producer

to be eligible, the seed producer must

have a valid claim in the bankruptcy

proceeding arising from a contract to

grow seeds in the United States.

The Agency has established terms and

collateral requirements for Emergency

Loans for Seed Producers to allow for

maximum flexibility. The Agency will

take as security an assignment on the

bankruptcy claim, and any seed still

held in the applicant’s possession, as

provided by the Act to secure loans

made to producers under this program.

The Agency will obtain a balance sheet

Federal Register / Vol. 65, No. 235 / Wednesday, December 6, 2000 / Rules and Regulations 76117

and any other financial information

needed to determine if there are liens

impacting the collateral. In addition,

debtors will be subject to the debt

collection authorities of 31 U.S.C.

chapter 37. For example, in cases of

default, the Agency may seek to attach

additional assets by filing judgments or

refer the debt to the Department of

Treasury for offset and cross-servicing.

In light of the Government’s limited

exposure on these small loans and

desire for simple administration, the

Agency believes that no further security

requirements are needed.

The Agency cannot make a loan to an

applicant who is delinquent on a nontax Federal debt (31 U.S.C. 3720B) or

has an outstanding non-tax Federal

judgment (28 U.S.C. 3201(e)). These

restrictions will not apply if the Federal

delinquency and judgment are cured on

or before the loan closing date.

Applicants who have provided false or

misleading information also are not

eligible for this program. The above

restrictions are needed to minimize

credit risk and comply with statutory

requirements.

All persons approved for such loan

assistance must execute the Agency’s

loan instruments and legal documents.

For entity applicants, the loan

instruments and legal documents must

be executed in the name of the entity

and by each individual member. This

requirement is necessary to minimize

risk and protect the Government’s

interest should default occur.

In accordance with § 253 of the Act,

the loan interest rate for Emergency

Loans for Seed Producers will be zero

initially. Upon completion and

disbursal of the estate in bankruptcy or

18 months after the date of the note,

whichever comes first, the note will

convert any outstanding balance to the

then current Farm Operating loan-direct

interest rate over an additional 7 years.

Interest rates are specified in exhibit B

of Agency Instruction 440.1 (available in

any Agency office) by loan type. If the

loan is not paid in full during this term

and default occurs, servicing will

proceed in accordance with existing

Agency regulations (7 CFR part 1951,

subpart J, Management and Collection of

Nonprogram Loans, specifically

§ 1951.468). The loan will be serviced as

a nonprogram loan because the program

is not authorized by the CONACT and,

therefore, does not receive the benefits

of CONACT program loans. The

borrowers also have not been required

to meet the more stringent CONACT

requirements.

Section 263 of the Act directed the

Secretary to implement this program as

soon as practicable and without regard

to the notice and comment provisions of

section 553 of title 5, United States Code

and the Statement of Policy of the

Secretary of Agriculture effective July

24, 1971, relating to notices of proposed

rulemaking and public participation in

rulemaking. Publication of this rule for

immediate effect without prior notice

and comment as a final rule, therefore,

is warranted.

List of Subjects

7 CFR Part 773

Fruits, Loan programs-agriculture.

7 CFR Part 774

Seeds, Loan programs-agriculture.

For reasons set out in the preamble,

7 CFR chapter VII is amended as set

forth below.

1. Part 773 is added to read as follows:

PART 773—SPECIAL APPLE LOAN

PROGRAM

Sec.

773.1 Introduction.

773.2 Definitions.

773.3 Appeals.

773.4–773.5 [Reserved]

773.6 Eligibility requirements.

773.7 Loan uses.

773.8 Limitations.

773.9 Environmental compliance.

773.10 Other Federal, State, and local

requirements.

773.11–773.17 [Reserved]

773.18 Loan application.

773.19 Interest rate, terms, security

requirements, and repayment.

773.20 Funding applications.

773.21 Loan decision, closing and fees.

773.22 Loan servicing.

773.23 Exception.

Authority: Pub. L. 106–224.

§ 773.1 Introduction.

This part contains the terms and

conditions for loans made under the

Special Apple Loan Program. These

regulations are applicable to applicants,

borrowers, and other parties involved in

making, servicing, and liquidating these

loans. The program objective is to assist

producers of apples suffering from

economic loss as a result of low apple

prices.

§ 773.2 Definitions.

As used in this part, the following

definitions apply:

Agency is the Farm Service Agency,

its employees, and any successor

agency.

Apple producer is a farmer in the

United States or its territories that

produced apples, on not less than 10

acres, for sale in 1999 or 2000.

Applicant is the individual or

business entity applying for the loan.

Business entity is a corporation,

partnership, joint operation, trust,

limited liability company, or

cooperative.

Cash flow budget is a projection

listing all anticipated cash inflows

(including all farm income, nonfarm

income and all loan advances) and all

cash outflows (including all farm and

nonfarm debt service and other

expenses) to be incurred by the

borrower during the period of the

budget. A cash flow budget may be

completed either for a 12 month period,

a typical production cycle or the life of

the loan, as appropriate.

Domestically owned enterprise is an

entity organized in the United States

under the law of the state or states in

which the entity operates and a majority

of the entity is owned by members

meeting the citizenship test.

False information is information

provided by an applicant, borrower, or

other source to the Agency which

information is known by the provider to

be incorrect, and was given to the

Agency in order to obtain benefits for

which the applicant or borrower would

not otherwise have been eligible.

Feasible plan is a plan that

demonstrates that the loan will be

repaid as agreed, as determined by the

Agency.

Security is real or personal property

pledged as collateral to assure

repayment of a loan in the event there

is a default on the loan.

USPAP is Uniform Standards of

Professional Appraisal Practice.

§ 773.3 Appeals.

A loan applicant or borrower may

request an appeal or review of an

adverse decision made by the Agency in

accordance with 7 CFR part 11.

§§ 773.4–773.5 [Reserved]

§ 773.6 Eligibility requirements.

Loan applicants must meet all of the

following requirements to be eligible for

a Special Apple Program Loan:

(a) The loan applicant must be an

apple producer;

(b) The loan applicant must be a

citizen of the United States or an alien

lawfully admitted to the United States

for permanent residence under the

Immigration and Nationalization Act.

For a business entity applicant, the

majority of the business entity must be

owned by members meeting the

citizenship test or, other entities that are

domestically owned. Aliens must

provide the appropriate Immigration

and Naturalization Service forms to

document their permanent residency;

(c) The loan applicant and anyone

who will execute the promissory note

76118 Federal Register / Vol. 65, No. 235 / Wednesday, December 6, 2000 / Rules and Regulations

must possess the legal capacity to enter

into contracts, including debt

instruments;

(d) At loan closing the loan applicant

and anyone who will execute the

promissory note must not be delinquent

on any Federal debt, other than a debt

under the Internal Revenue Code of

1986;

(e) At loan closing the loan applicant

and anyone who will execute the

promissory note must not have any

outstanding unpaid judgments obtained

by the United States in any court. Such

judgments do not include those filed as

a result of action in the United States

Tax Courts;

(f) The loan applicant, in past or

present dealings with the Agency, must

not have provided the Agency with false

information; and

(g) The individual or business entity

loan applicant and all entity members

must have acceptable credit history

demonstrated by debt repayment. A

history of failure to repay past debts as

they came due (including debts to the

Internal Revenue Service) when the

ability to repay was within their control

will demonstrate unacceptable credit

history. Unacceptable credit history will

not include isolated instances of late

payments which do not represent a

pattern and were clearly beyond the

applicant’s control or lack of credit

history.

§ 773.7 Loan uses.

Loan funds may be used for any of the

following purposes related to the

production or marketing of apples:

(a) Payment of costs associated with

reorganizing a farm to improve its

profitability;

(b) Payment of annual farm operating

expenses;

(c) Purchase of farm equipment or

fixtures;

(d) Acquiring, enlarging, or leasing a

farm;

(e) Making capital improvements to a

farm;

(f) Refinancing indebtedness;

(g) Purchase of cooperative stock for

credit, production, processing or

marketing purposes; or

(h) Payment of loan closing costs.

§ 773.8 Limitations.

(a) The maximum loan amount any

individual or business entity may

receive under the Special Apple Loan

Program is limited to $500,000.

(b) The maximum loan is further

limited to $300 per acre of apple trees

in production in 1999 or 2000,

whichever is greater.

(c) Loan funds may not be used to pay

expenses incurred for lobbying or

related activities.

(d) Loans may not be made for any

purpose which contributes to excessive

erosion of highly erodible land or to the

conversion of wetlands to produce an

agricultural commodity.

§ 773.9 Environmental compliance.

(a) Except as otherwise specified in

this section, prior to approval of any

loan, an environmental evaluation will

be completed by the Agency to

determine if the proposed action will

have any adverse impacts on the human

environment and cultural resources.

Loan applicants will provide all

information necessary for the Agency to

make its evaluation.

(b) The following loan actions were

reviewed for the purpose of compliance

with the National Environmental Policy

Act (NEPA), 40 CFR parts 1500 through

1508, and determined not to have a

significant impact on the quality of the

human environment, either individually

or cumulatively. Therefore the following

loan actions are categorically excluded

from the requirements of an

environmental evaluation:

(1) Payment of legal costs associated

with reorganizing a farm to improve its

profitability as long as there will be no

changes in the land’s use or character;

(2) Purchase of farm equipment which

will not be affixed to a permanent

mount or position;

(3) Acquiring or leasing a farm;

(4) Refinancing an indebtedness not

greater than $30,000;

(5) Purchase of stock in a credit

association or in a cooperative which

deals with the production, processing or

marketing of apples; and

(6) Payment of loan closing costs.

(c) The loan actions listed in

paragraph (b) of this section were also

reviewed in accordance with section

106 of the National Historic

Preservation Act (NHPA). It was

determined that these loan actions are

non-undertakings with no potential to

affect or alter historic properties and

therefore, will not require consultation

with the State Historic Preservation

Officer, Tribal Historic Preservation

Officer, or other interested parties.

(d) If adverse environmental impacts,

either direct or indirect, are identified,

the Agency will complete an

environmental assessment in

accordance with the Council on

Environmental Quality’s Regulations for

Implementing the Procedural Provisions

of NEPA to the extent required by law.

(e) In order to minimize the financial

risk associated with contamination of

real property from hazardous waste and

other environmental concerns, the

Agency will complete an environmental

risk evaluation of the environmental

risks to the real estate collateral posed

by the presence of hazardous substances

and other environmental concerns.

(1) The Agency will not accept real

estate as collateral which has significant

environmental risks.

(2) If the real estate offered as

collateral contains significant

environmental risks, the Agency will

provide the applicant with the option of

properly correcting or removing the risk,

or offering other non-contaminated

property as collateral.

§ 773.10 Other Federal, State, and local

requirements.

Borrowers are required to comply

with all applicable:

(a) Federal, State, or local laws;

(b) Regulatory commission rules; and

(c) Regulations which are presently in

existence, or which may be later

adopted including, but not limited to,

those governing the following:

(1) Borrowing money, pledging

security, and raising revenues for

repayment of debt;

(2) Accounting and financial

reporting; and

(3) Protection of the environment.

§§ 773.11–773.17 [Reserved]

§ 773.18 Loan application.

(a) A complete application will

consist of the following:

(1) A completed Agency application

form;

(2) If the applicant is a business

entity, any legal documents evidencing

the organization and any State

recognition of the entity;

(3) Documentation of compliance

with the Agency’s environmental

regulations contained in 7 CFR part

1940, subpart G;

(4) A balance sheet on the applicant;

(5) The farm’s operating plan,

including the projected cash flow

budget reflecting production, income,

expenses, and loan repayment plan;

(6) The last 3 years of production and

income and expense information;

(7) Payment to the Agency for

ordering a credit report; and

(8) Any additional information

required by the Agency to determine the

eligibility of the applicant, the

feasibility of the operation, or the

adequacy and availability of security.

(b) Except as required in § 773.19(e),

the Agency will waive requirements for

a complete application, listed in

paragraphs (a)(5) and (a)(6) of this

section, for requests of $30,000 or less.

§ 773.19 Interest rate, terms, security

requirements, and repayment.

(a) Interest rate. The interest rate will

be fixed for the term of the loan. The

Federal Register / Vol. 65, No. 235 / Wednesday, December 6, 2000 / Rules and Regulations 76119

rate will be established by the Agency

and available in each Agency Office,

based upon the cost of Government

borrowing for loans of similar

maturities.

(b) Terms. The loan term will be for

up to 3 years, based upon the useful life

of the security offered.

(c) Security requirements. The Agency

will take a lien on the following

security, if available, as necessary to

adequately secure the loan:

(1) Real estate;

(2) Chattels;

(3) Crops;

(4) Other assets owned by the

applicant; and

(5) Assets owned and pledged by a

third party.

(d) Documentation of security value.

(1) For loans that are for $30,000 or

less, collateral value will be based on

the best available, verifiable

information.

(2) For loans of greater than $30,000

where the applicant’s balance sheet

shows a net worth of three times the

loan amount or greater, collateral value

will be based on tax assessment of real

estate and depreciation schedules of

chattels, as applicable, less any existing

liens.

(3) For loans of greater than $30,000

where the applicant’s balance sheet

shows a net worth of less than three

times the loan amount, collateral value

will be based on an appraisal. Such

appraisals must be obtained by the

applicant, at the applicant’s expense

and acceptable to the Agency.

Appraisals of real estate must be

completed in accordance with USPAP.

(e) Repayment. (1) All loan applicants

must demonstrate that the loan can be

repaid.

(2) For loans that are for $30,000 or

less where the applicant’s balance sheet

shows a net worth of three times the

loan amount or greater, repayment

ability will be considered adequate

without further documentation.

(3) For loans that are for $30,000 or

less where the applicant’s balance sheet

shows a net worth of less than three

times the loan amount, repayment

ability must be demonstrated using the

farm’s operating plan, including a

projected cash flow budget based on

historical performance. Such operating

plan is required notwithstanding

§ 773.18 of this part.

(4) For loans that are for more than

$30,000, repayment ability must be

demonstrated using the farm’s operating

plan, including a projected cash flow

budget based on historical performance.

(f) Creditworthiness. All loan

applicants must have an acceptable

credit history demonstrated by debt

repayment. A history of failure to repay

past debts as they came due (including

debts to the Internal Revenue Service)

when the ability to repay was within

their control will demonstrate

unacceptable credit history.

Unacceptable credit history will not

include isolated instances of late

payments which do not represent a

pattern and were clearly beyond the

applicant’s control or lack of credit

history.

§ 773.20 Funding applications.

Loan requests will be funded based on

the date the Agency approves the

application. Loan approval is subject to

the availability of funds.

§ 773.21 Loan decision, closing, and fees.

(a) Loan decision. (1) The Agency will

approve a loan if it determines that:

(i) The loan can be repaid;

(ii) The proposed use of loan funds is

authorized;

(iii) The applicant has been

determined eligible;

(iv) All security requirements have

been, or will be met at closing;

(vi) All other pertinent requirements

have been, or will be met at closing.

(2) The Agency will place conditions

upon loan approval as necessary to

protect its interest.

(b) Loan closing. (1) The applicant

must meet all conditions specified by

the loan approval official in the

notification of loan approval prior to

loan closing;

(2) There must have been no

significant changes in the plan of

operation or the applicant’s financial

condition since the loan was approved;

and

(2) The applicant will execute all loan

instruments and legal documents

required by the Agency to evidence the

debt, perfect the required security

interest in property securing the loan,

and protect the Government’s interests,

in accordance with applicable State and

Federal laws. In the case of an entity

applicant, all officers or partners and

any board members also will be

required to execute the promissory

notes as individuals.

(c) Fees. The applicant will pay all

loan closing fees including credit report

fees, fees for appraisals, fees for

recording any legal instruments

determined to be necessary, and all

notary, lien search, and similar fees

incident to loan transactions. No fees

will be assessed for work performed by

Agency employees.

§ 773.22 Loan servicing.

Loans will be serviced in accordance

with subpart J of part 1951, or its

successor regulation, during the term of

the loan. If the loan is not paid in full

during this term, servicing will proceed

in accordance with § 1951.468 of that

part.

§ 773.23 Exception.

The Agency may grant an exception to

the security requirements of this

section, if the proposed change is in the

best financial interest of the

Government and not inconsistent with

the authorizing statute or other

applicable law.

2. Part 774 is added to read as follows:

PART 774—Emergency Loan for Seed

Producers Program

Sec.

774.1 Introduction.

774.2 Definitions.

774.3 Appeals.

774.4–774.5 [Reserved]

774.6 Eligibility requirements.

774.7 [Reserved]

774.8 Limitations.

774.9 Environmental requirements.

774.10 Other Federal, State, and local

requirements.

774.11–774.16 [Reserved]

774.17 Loan application.

774.18 Interest rate, terms, and security

requirements.

774.19 Processing applications.

774.20 Funding applications.

774.21 [Reserved]

774.22 Loan closing.

774.23 Loan servicing.

774.24 Exception.

Authority: Pub. L. 106–224

§ 774.1 Introduction.

The regulations of this part contain

the terms and conditions under which

loans are made under the Emergency

Loan for Seed Producers Program. These

regulations are applicable to applicants,

borrowers, and other parties involved in

making, servicing, and liquidating these

loans. The program objective is to assist

certain seed producers adversely

affected by the bankruptcy filing of

AgriBiotech.

§ 774.2 Definitions.

As used in this part, the following

definitions apply:

Agency is the Farm Service Agency,

its employees, and any successor

agency.

Applicant is the individual or

business entity applying for the loan.

Business entity is a corporation,

partnership, joint operation, trust,

limited liability company, or

cooperative.

Domestically owned enterprise is an

entity organized in the United States

under the law of the state or states in

which the entity operates and a majority

76120 Federal Register / Vol. 65, No. 235 / Wednesday, December 6, 2000 / Rules and Regulations

of the entity is owned by members

meeting the citizenship test.

False information is information

provided by an applicant, borrower or

other source to the Agency that the

borrower knows to be incorrect, and that

the borrower or other source provided

in order to obtain benefits for which the

borrower would not otherwise have

been eligible.

Seed producer is a farmer that

produced a 1999 crop of grass, forage,

vegetable, or sorghum seed for sale to

AgriBiotech under contract.

§ 774.3 Appeals.

A loan applicant or borrower may

request an appeal or review of an

adverse decision made by the Agency in

accordance with 7 CFR part 11.

§§ 774.4–774.5 [Reserved]

§ 774.6 Eligibility requirements.

Loan applicants must meet all of the

following requirements to be eligible

under the Emergency Loan for Seed

Producers Program;

(a) The loan applicant must be a seed

producer;

(b) The individual or entity loan

applicant must have a timely filed proof

of claim in the Chapter XI bankruptcy

proceedings involving AgriBiotech and

the claim must have arisen from

acontract to grow seeds in the United

States;

(c) The loan applicant must be a

citizen of the United States or an alien

lawfully admitted to the United States

for permanent residence under the

Immigration and Nationalization Act.

For a business entity applicant, the

majority of the business entity must be

owned by members meeting the

citizenship test or, other entities that are

domestically owned. Aliens must

provide the appropriate Immigration

and Naturalization Service forms to

document their permanent residency;

(d) The loan applicant and anyone

who will execute the promissory note

must possess the legal capacity to enter

into contracts, including debt

instruments;

(e) At loan closing, the applicant and

anyone who will execute the promissory

note must not be delinquent on any

Federal debt, other than a debt under

the Internal Revenue Code of 1986;

(f) At loan closing, the applicant and

anyone who will execute the promissory

note must not have any outstanding

unpaid judgments obtained by the

United States in any court. Such

judgments do not include those filed as

a result of action in the United States

Tax Courts;

(g) The loan applicant, in past and

current dealings with the Agency, must

not have provided the Agency with false

information.

§ 774.7 [Reserved]

§ 774.8 Limitations.

(a) The maximum loan amount any

individual or business entity may

receive will be 65% of the value of the

timely filed proof of claim against

AgriBiotech in the bankruptcy

proceeding as determined by the

Agency.

(b) Loan funds may not be used to pay

expenses incurred for lobbying or

related activities.

(c) Loans may not be made for any

purpose which contributes to excessive

erosion of highly erodible land or to the

conversion of wetlands to produce an

agricultural commodity.

§ 774.9 Environmental requirements.

The loan actions in this part were

reviewed for the purpose of compliance

with the National Environmental Policy

Act (NEPA), 40 CFR parts 1500 through

1508, and determined not to have a

significant impact on the quality of the

human environment, either individually

or cumulatively. These loan actions are

categorically excluded from the

requirements of an environmental

evaluation due to the fact that the loan

funds would be utilized to replace

operating capital the applicant would

have had if AgriBiotech had not filed

bankruptcy.

§ 774.10 Other Federal, State, and local

requirements.

Borrowers are required to comply

with all applicable:

(a) Federal, State, or local laws;

(b) Regulatory commission rules; and

(c) Regulations which are presently in

existence, or which may be later

adopted including, but not limited to,

those governing the following:

(1) Borrowing money, pledging

security, and raising revenues for

repayment of debt;

(2) Accounting and financial

reporting; and

(3) Protection of the environment.

§ 774.11–774.16 [Reserved]

§ 774.17 Loan application.

A complete application will consist of

the following:

(a) A completed Agency application

form;

(b) Proof of a bankruptcy claim in the

AgriBiotech bankruptcy proceedings;

(c) If the applicant is a business

entity, any legal documents evidencing

the organization and any State

recognition of the entity;

(d) Documentation of compliance

with the Agency’s environmental

regulations contained in 7 CFR part

1940, subpart G;

(e) A balance sheet on the applicant;

and

(f) Any other additional information

the Agency needs to determine the

eligibility of the applicant and the

application of any Federal, State or local

laws.

§ 774.18 Interest rate, terms and security

requirements.

(a) Interest rate. (1) The interest rate

on the loan will be zero percent for 18

months or until the date of settlement

of, completion of, or final distribution of

assets in the bankruptcy proceeding

involving AgriBiotech, whichever

comes first.

(2) Thereafter interest will begin to

accrue at the regular rate for an Agency

Farm operating-direct loan (available in

any Agency office).

(b) Terms. (1) Loans shall be due and

payable upon the earlier of the

settlement of the bankruptcy claim or 18

months from the date of the note.

(2) However, any principal remaining

thereafter will be amortized over a term

of 7 years at the Farm operating-direct

loan interest rate (available in any

Agency office). If the loan is not paid in

full during this term and default occurs,

servicing will proceed in accordance

with § 1951.468 of this title.

(c) Security Requirements. (1) The

Agency will require a first position

pledge and assignment of the

applicant’s monetary claim in the

AgriBiotech bankruptcy estate to secure

the loan.

(2) If the applicant has seed remaining

in their possession that was produced

under contract to AgriBiotech, the

applicant also will provide the Agency

with a first lien position on this seed. It

is the responsibility of the applicant to

negotiate with any existing lienholders

to secure the Agency’s first lien

position.

§ 774.19 Processing applications.

Applications will be processed until

such time that funds are exhausted, or

all claims have been paid and the

bankruptcy involving AgriBiotech has

been discharged. When all loan funds

have been exhausted or the bankruptcy

is discharged, no further applications

will be accepted and any pending

applications will be considered

withdrawn.

§ 774.20 Funding applications.

Loan requests will be funded based on

the date the Agency approves an

application. Loan approval is subject to

the availability of funds.

Federal Register / Vol. 65, No. 235 / Wednesday, December 6, 2000 / Rules and Regulations 76121

§ 774.21 [Reserved]

§ 774.22 Loan closing.

(a) Conditions. The applicant must

meet all conditions specified by the loan

approval official in the notification of

loan approval prior to closing.

(b) Loan instruments and legal

documents. The applicant will execute

all loan instruments and legal

documents required by the Agency to

evidence the debt, perfect the required

security interest in the bankruptcy

claim, and protect the Government’s

interest, in accordance with applicable

State and Federal laws. In the case of an

entity applicant, all officers or partners

and any board members also will be

required to execute the promissory

notes as individuals.

(c) Fees. The applicant will pay all

loan closing fees for recording any legal

instruments determined to be necessary

and all notary, lien search, and similar

fees incident to loan transactions. No

fees will be assessed for work performed

by Agency employees.

§ 774.23 Loan servicing.

Loans will be serviced in accordance

with subpart J of part 1951 of this title,

or its successor regulation. If the loan is

not repaid as agreed and default occurs,

servicing will proceed in accordance

with section 1951.468 of that part.

§ 774.24 Exception.

The Agency may grant an exception to

any of the requirements of this section,

if the proposed change is in the best

financial interest of the Government and

not inconsistent with the authorizing

statute or other applicable law.

Signed at Washington, D.C., on November

29, 2000.

August Schumacher, Jr.,

Under Secretary for Farm and Foreign

Agricultural Services.

[FR Doc. 00–30977 Filed 12–5–00; 8:45 am]

BILLING CODE 3410–05–P

DEPARTMENT OF JUSTICE

Immigration and Naturalization Service

8 CFR Part 208

[INS Order No. 1865–97; AG Order No.

2340–2000]

RIN 1115–AE93

Asylum Procedures

AGENCY: Immigration and Naturalization

Service, Justice; and Executive Office for

Immigration Review, Justice.

ACTION: Final rule.

SUMMARY: This final rule amends the

Department of Justice regulations

implementing the provisions of the

Illegal Immigration Reform and

Immigrant Responsibility Act of 1996

(IIRIRA), governing asylum claims.

Additionally, this rule amends portions

of the regulations governing cases in

which an applicant has established past

persecution or in which an applicant

may be able to avoid persecution in a

particular country by relocating to

another area of that country. Finally, the

rule identifies factors that may be

considered in the exercise of discretion

in asylum cases in which the alien has

established past persecution but may

not have a well-founded fear of future

persecution. This final rule will ensure

that asylum applications are processed

in accordance with the Immigration and

Nationality Act (Act), as amended by

IIRIRA, as well as with international

instruments.

DATES: This rule is effective January 5,

2001.

FOR FURTHER INFORMATION CONTACT: For

matters relating to the Immigration and

Naturalization Service—Joanna Ruppel,

International Affairs, Department of

Justice, Immigration and Naturalization

Service, 425 I Street NW., ULLICO third

floor, Washington, DC 20536, telephone

(202) 305–2663. For matters relating to

the Executive Office for Immigration

Review—Charles Adkins-Blanch,

General Counsel, Executive Office for

Immigration Review, Suite 2400, 5107

Leesburg Pike, Falls Church, Virginia

22041, telephone (703) 305–0470.

SUPPLEMENTARY INFORMATION:

I. Background

Regulations To Implement the Illegal

Immigration Reform and Immigrant

Responsibility Act of 1996

On March 6, 1997, the Service and

EOIR jointly published in the Federal

Register, at 62 FR 10312, an interim rule

to implement Public Law 104–208 (110

Stat. 3546) (IIRIRA). That legislation

significantly amended several parts of

the Immigration and Nationality Act

(‘‘Act’’ or ‘‘INA’’), including part 208.

The interim regulations implementing

IIRIRA were preceded by a notice of

proposed rulemaking, published in the

Federal Register on January 3, 1997, at

62 FR 444, and providing a 30-day

comment period. The interim rule

provided a 120-day comment period.

The Department of Justice (Department)

received 39 comments on the interim

rule in addition to the 124 comments

already received as a result of the

proposed rule. This final rule reflects

further changes resulting from

comments received in response to both

the original proposed rule and the

interim rule.

Proposed Rule Regarding Past

Persecution, Internal Relocation, and

Discretion (Past Persecution Rule)

On June 11, 1998, at 63 FR 31945, the

Service and EOIR jointly published in

the Federal Register a proposed rule to

change portions of 8 CFR 208.13 and

208.16 in order to provide further

guidance on adjudicating asylum cases

and withholding of removal cases when

an applicant has established past

persecution and when the applicant

may be able to avoid persecution in his

or her home country by relocating to

another area of that country. The rule

proposed to establish new guidelines

concerning the Attorney General’s

exercise of discretion in cases in which

past persecution is established, and the

types of evidence that may be

considered in determining whether an

applicant has a well-founded fear of

future persecution. Additionally, the

rule proposed to identify new factors

that could be considered in the

determination whether to grant asylum

when an applicant has established past

persecution but no longer has a wellfounded fear of future persecution. The

Department received 35 comments on

the proposed past persecution rule.

The Department has elected to split

part 208 from the rest of the IIRIRA

interim regulations and to incorporate

amendments to part 208 into this final

rule based both on comments to the

IIRIRA interim rule and on comments to

the June 1998 proposed rule regarding

past persecution. In the future, the

Department will publish a proposed

rule concerning the definition of

‘‘persecution’’ and the definition of

‘‘particular social group.’’ Those new

proposals are based in part on certain of

the provisions being made final in this

rule.

II. Comments

Most of the commenters on both the

interim IIRIRA rule and proposed past

persecution rule represented either

attorney organizations or voluntary

organizations predominantly involved

with refugees and asylum claimants.

The Department also received

comments from individual attorneys

and the regional representative of

United Nations High Commissioner for

Refugees (UNHCR). Since many of the

comments were duplicative or endorsed

the submissions of other commenters,

the Department will address the

comments by section and topic, rather

than reference each comment and

commenter. The following discussion