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.

Rules and Regulations Federal Register

13117 

Vol. 87, No. 46 

Wednesday, March 9, 2022 

1The loan limit for Guaranteed FOs and OLs are 

adjusted annually based on the Prices Paid by 

Farmers Index that is published by the USDA 

National Agricultural Statistics Service. The loan 

limits specified in the 2018 Farm Bill are being 

included in the regulation to show the base 

amounts. If the loan limit is increased as a result 

of the annual adjustment, the new loan limit will 

be announced on the FSA web page 

(www.fsa.usda.gov); the loan limit will not be 

decreased based on the annual adjustment. The 

current adjusted loan limit for Guaranteed FOs and 

OLs is $1,825,000. 

DEPARTMENT OF AGRICULTURE 

Farm Service Agency 

7 CFR Parts 761, 762, 764, 765, 766, 

768, and 785 

[Docket No. FSA–2019–0005] 

RIN 0560–AI43 

Farm Loan Programs; Direct and 

Guaranteed Loan Changes, Certified 

Mediation Program, and Guaranteed 

Loans Maximum Interest Rates 

AGENCY: Farm Service Agency, 

Department of Agriculture (USDA). 

ACTION: Final rule. 

SUMMARY: The Farm Service Agency 

(FSA) amends the Farm Loan Programs 

(FLP) regulations to implement certain 

provisions authorized by the 

Agricultural Improvement Act of 2018 

(2018 Farm Bill). This rule revises the 

provisions on FLP loan limits, allows 

additional flexibility for loan applicants 

to meet the required farming experience, 

provides higher guarantee rates for 

lenders to provide credit to beginning 

farmers and socially disadvantaged 

farmers, provides additional program 

benefits for veterans, provides equitable 

relief to certain borrowers, allows 

borrowers who have received debt 

restructuring with a write down to 

receive Emergency loans (EM), and 

expands those issues that are covered 

under the agricultural Certified 

Mediation Program. In addition to the 

2018 Farm Bill changes, FSA also 

amends the regulations for loan 

servicing relating to accepting cash 

payments and establishing a fee for 

dishonored checks; these are 

discretionary changes. The result of 

these changes will increase loan limits 

or improve the various loan programs to 

relieve some restrictions to participation 

or otherwise encourage participation. 

This rule also revises the way FSA will 

establish the maximum interest rates in 

response to the discontinuing 

publication of the London Interbank 

Offered Rate (LIBOR) interest rates. The 

result of these changes will enable FSA 

to provide clearer guidance on 

maximum interest rates and allow for 

more consistency across all lenders 

participating in the guaranteed loan 

program. In addition, this rule corrects 

references to supervised credit in the 

regulations. 

DATES: Effective: March 9, 2022. 

FOR FURTHER INFORMATION CONTACT: 

Steven K. Ford; telephone: (202) 304– 

7932; email: steven.ford2@usda.gov. 

Persons with disabilities or who require 

alternative means for communications 

should contact the U.S. Department of 

Agriculture (USDA) Target Center at 

(202) 720–2600 (voice). 

SUPPLEMENTARY INFORMATION: 

Background 

FSA makes and services a variety of 

direct and guaranteed loans to farmers 

who are temporarily unable to obtain 

private commercial credit. FSA also 

provides credit counseling and 

supervision to direct loan borrowers, so 

they have a better chance for success. 

FSA loan applicants are often: 

• Beginning farmers (BF) and socially 

disadvantaged (SDA) farmers who do 

not qualify for conventional loans 

because of insufficient net worth; or 

• Established farmers who have 

suffered financial setbacks due to 

natural disasters or economic 

downturns. 

FSA loans are tailored to a farmer’s 

needs and may be used to buy farmland 

and to finance agricultural production. 

2018 Farm Bill Changes 

The following amendments made by 

this rule are non-discretionary and are 

mandated by the 2018 Farm Bill (Pub. 

L. 115–334). The majority of the changes 

were self-enacting and previously 

implemented by FSA; this rule updates 

the regulations to be consistent. The 

changes to the regulation will: 

• Modify the existing 3-year farming 

experience requirement for Direct Farm 

Ownership loans (FO) by including 

additional items as acceptable 

experience; 

• Increase the loan limit to $600,000 

for Direct FOs and increase the loan 

limit to $1,750,000 for Guaranteed FOs 

(these are the base loan limit amounts 

as specified in the 2018 Farm Bill); 

• Increase the Direct Operating loan 

(OL) limit to $400,000 and increase the 

Guaranteed OL limit to $1,750,000 

(these are the base loan limit amounts 

as specified in the 2018 Farm Bill); 

• Allow SDA farmers and BF 

applicants to receive a guarantee equal 

to 95 percent, rather than the otherwise 

applicable 90 percent guarantee; 

• Expand the definition of and 

provide additional benefits for veteran 

farmers; 

• Provide for equitable relief to 

certain direct loan borrowers acting in 

good faith who have not complied with 

loan program requirements after relying 

on a material action, advice, or nonaction from an FSA official; 

• Allow borrowers who have received 

restructuring with a write down to 

maintain eligibility for an EM; and 

• Expand the scope of eligible issues 

and persons covered under the 

agricultural Certified Mediation 

Program. 

The Guaranteed FO and Guaranteed 

OL limits described above are base 

amounts and have increased as a result 

of annual inflation adjustments since 

the 2018 Farm Bill became effective.1 In 

addition to the 2018 Farm Bill changes, 

FSA is making additional discretionary 

policy changes including the removal of 

cash as an option for payments of FSA 

fees and loan installments and the 

inclusion of a fee for dishonored 

payments. 

Throughout this rule, any reference to 

‘‘farm’’ or ‘‘farmer’’ also includes 

‘‘ranch’’ or ‘‘rancher,’’ respectively. 

Farm Ownership Experience 

Requirement 

Section 5101 of the 2018 Farm Bill 

amends section 302(b) of the 

Consolidated Farm and Rural 

Development Act (CONACT) (7 U.S.C. 

1922(b)) to expand what can be 

considered when evaluating whether 

the applicant meets the existing 3-year 

experience requirement for Direct FOs. 


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13118 Federal Register / Vol. 87, No. 46 / Wednesday, March 9, 2022 / Rules and Regulations 

To qualify for a Direct FO, 7 CFR 

764.152(d) states that applicants must 

have participated in the business 

operations of a farm for at least 3 out of 

the 10 years prior to the date the 

application is submitted. 

The authorizing legislation in 7 U.S.C. 

1922(b)(1) provides FSA with the 

general authority to substitute the 3-year 

management experience requirement 

with other acceptable experience. Prior 

to this rule, 7 CFR 764.152(d) specified 

that, for all applicants, 1 of these 3 years 

could be substituted with one of the 

following experiences: 

• Postsecondary education in 

agriculture business, horticulture, 

animal science, agronomy, or other 

agricultural related fields; 

• Significant business management 

experience; or 

• Leadership or management 

experience while serving in any branch 

of the military. 

Section 5101 expands these 

allowances, including additional 

education options, experience with 

another farm operation, mentorships in 

day-to-day farm management, honorable 

discharge from service in the armed 

forces, and similar experiences for BFs. 

These options address the different 

ways in which farmers can learn about 

managing a farm operation. Given the 

general authority under 7 U.S.C. 

1922(b)(1)(iv), FSA chooses to allow 

these alternative experiences to apply to 

all farmers, not just BFs. Section 5101 

also allows any two of these allowances 

to be substituted for 2 years instead of 

1 year. Furthermore, this experience 

requirement may be waived altogether if 

the farmer has at least 1-year experience 

as hired farm labor with substantial 

management responsibilities and has a 

documented established relationship 

with an individual who has experience 

in farming and is a mentor with a 

Service Corps of Retired Executives 

(SCORE) program. In the alternative to 

SCORE, section 5101 allows other 

individuals or organizations that are 

committed to mentoring, are local, and 

approved by the Secretary, to serve as a 

mentor. FSA will approve documented 

mentorships on a case-by-case basis and 

requires mentors to be local individuals 

who are experienced farmers or farmrelated businesspersons able to provide 

individualized assistance to FSA’s 

borrowers. 

This rule amends the eligibility 

requirement in § 764.152(d) to list the 

alternatives that can be substituted to 

meet the farm experience requirement. 

These additions provide flexibility for 

BF applicants to meet FSA’s Direct FO 

eligibility rules and access the credit 

needed to finance farm operations 

without compromising the managerial 

standards this requirement was 

designed to ensure. 

FO Limits 

Section 5103 of the 2018 Farm Bill 

amends section 305 of the CONACT (7 

U.S.C. 1925) to increase the maximum 

limits for the Direct and Guaranteed FO 

programs. The loan limits have 

increased to $600,000 for Direct FOs 

and $1,750,000 for Guaranteed FOs. 

Prior to the 2018 Farm Bill the loan 

limit for Direct FOs was $300,000. Loan 

limits for Guaranteed FOs, which 

increase annually based on inflation, 

were at $1,429,000 prior to the 2018 

Farm Bill. 

These increased loan limits are 

necessary to assist farmers in their 

ability to respond to the rising costs of 

farmland. The loan limit changes also 

will enable more farmers to participate 

in loan programs. Direct loan limits 

were last increased in the Food, 

Conservation, and Energy Act of 2008 

(2008 Farm Bill; Pub. L. 110–246). 

Rising farmland prices since that time 

have made it increasingly difficult for 

BFs to purchase farmland within the 

previous $300,000 Direct FO limit. 

Many FSA loans are made in 

conjunction with financing from 

commercial lenders; however, as prices 

continue to rise joint financing 

arrangements have become less effective 

to meet demand, particularly from BFs 

looking to purchase real estate. 

This rule amends 7 CFR 761.8 to 

increase the Direct and Guaranteed FO 

loan limits. In addition, § 761.8(a)(4) 

and (6) are being amended to increase 

the limits for combined program 

assistance reflecting these increased 

loan limits. The increase will help 

family farmers better compete with 

larger, more financially secure farmers 

when purchasing farmland. The amount 

of the increase is modest and will not 

change the type of farm operation 

receiving FSA loans. 

Farm OL Limits 

Section 5201 of the 2018 Farm Bill 

amends section 313 of the CONACT (7 

U.S.C. 1943) to increase the loan limits 

for the Direct and Guaranteed OL 

programs. The loan limits have 

increased to $400,000 for Direct OLs 

and $1,750,000 for Guaranteed OL. 

Prior to the 2018 Farm Bill the loan 

limit for Direct OLs was $300,000. The 

loan limits for Guaranteed OLs, which 

increase annually based on inflation, 

were at $1,429,000 prior to the 2018 

Farm Bill. 

The 2018 Farm Bill modified the loan 

limits to better assist farmers with the 

increasing cost of operating and family 

living expenses. Direct and Guaranteed 

OLs are critical for farmers when 

purchasing crop inputs, livestock feed, 

farm equipment, and other operating 

expenses. Since direct loan limits were 

last increased in the 2008 Farm Bill, the 

cost for farm equipment and operating 

expenses have risen significantly. The 

additional operating credit available to 

farmers will assist in responding to this 

inflation and help them to continue to 

operate. 

This rule amends 7 CFR 761.8 to 

increase the loan limits for Direct and 

Guaranteed OLs. The increase in the 

loan limits will give BFs access to the 

credit necessary to finance farm 

operations at today’s costs. 

95 Percent Guarantee for SDA Farmers 

and BF Applicants 

Section 5306 of the 2018 Farm Bill 

amends the CONACT by adding section 

367 (7 U.S.C. 2008b), which increases 

the percent of the FSA guarantee for 

Guaranteed FOs and OLs from 90 

percent to 95 percent for a qualified BF 

or SDA farmer. 

Previously, lenders could only receive 

a 95 percent guarantee (rather than the 

typical 90 percent) under limited 

circumstances such as refinancing FSA 

direct loan debt or participating in the 

Direct FO Down Payment Loan Program. 

The increase in the guaranteed loan 

percentage will give lenders more 

incentive to extend credit to BFs and 

SDA farmers, a traditionally 

underserved segment of farmers. 

This rule amends § 762.129 to 

increase the Guaranteed FO and OL 

guarantee percentage on loans made to 

all applicants meeting the definition of 

‘‘beginning farmer’’ or ‘‘socially 

disadvantaged applicant or farmer.’’ 

Veteran Farmers 

Section 12306 of the 2018 Farm Bill 

amends section 2501 of the Food, 

Agriculture, Conservation, and Trade 

Act of 1990 (7 U.S.C. 2279) and expands 

the definition of veteran farmer to 

include veterans who have first 

obtained status as a veteran during the 

most recent 10-year period, regardless of 

their previous farming experience. 

Specifically, this expanded definition 

includes any veteran who served in the 

active military, naval, or air service; and 

who was discharged or released from 

service under conditions other than 

dishonorable; and whose discharge was 

during the most recent 10-years from the 

date of application for a direct or 

guaranteed loan. 

Section 12306 also amends section 

310E of the CONACT (7 U.S.C. 1935) to 

include veteran farmers as eligible 

borrowers to receive direct Down 


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Federal Register / Vol. 87, No. 46 / Wednesday, March 9, 2022 / Rules and Regulations 13119 

Payment loans, a program previously 

limited to BF applicants and SDA 

farmers. To encourage program 

participation and expand benefits for 

targeted groups, Down Payment Loan 

Program participants are not charged a 

fee when they receive a guaranteed loan 

in conjunction with a Down Payment 

loan. This change will ensure guarantee 

fees are also waived for veteran farmers 

obtaining a direct Down Payment loan. 

This rule amends 7 CFR 761.2, 762.130, 

764.201, and 764.202 to include these 

changes. 

EMs 

Section 5307 of the 2018 Farm Bill 

amends section 373(b)(2)(B) of the 

CONACT (7 U.S.C. 2008h(b)(2)(B)) to 

allow borrowers who have received debt 

restructuring with a write down to 

maintain eligibility for an EM. 

Prior to the 2018 Farm Bill, borrowers 

who had received debt forgiveness were 

ineligible for EM. This change addresses 

the concern that borrowers who have 

experienced a disaster, through no fault 

of their own, are suddenly unable to 

receive financial assistance and 

continue their operations. Borrowers 

who have received prior debt 

forgiveness through restructuring with a 

write down still have viable operations 

and FSA can now extend assistance to 

those current and past borrowers who 

have suffered from a disaster. While 

there are other ways debt forgiveness 

can be obtained through FSA, the 2018 

Farm Bill expands EM eligibility only to 

those whose debt forgiveness was in 

conjunction with an approved debt 

restructuring plan. 

This rule amends § 764.352 to allow 

borrowers who have received certain 

debt forgiveness to remain eligible for 

EM loans, allowing them access to the 

necessary credit to continue their 

operations. 

Equitable Relief 

Section 5305 of the 2018 Farm Bill 

amends the CONACT (7 U.S.C. 2008a) 

by adding provisions to provide FSA the 

authority to consider equitable relief 

under certain circumstances for FLP 

borrowers. Previously, there were no 

statutory provisions for equitable relief 

for FLP. 

FSA is adding the definition of 

equitable relief to 7 CFR 761.2. 

Equitable relief, as included in the 2018 

Farm Bill, allows FSA flexibility in 

working with existing borrower loan 

accounts that are determined to be in 

non-compliance with loan program 

requirements, if the borrower acted in 

good faith and relied on a material 

action of, advice of, or non-action from 

an FSA official. Adding the equitable 

relief definition will provide a common 

understanding of the term and allow 

reference to the term in other portions 

of the regulation while the specific 

details and process are provided in a 

newly added part of the regulation. 

FSA is adding a new part, 7 CFR part 

768, to address the requirements and 

conditions under which equitable relief 

can be provided. Under existing 

regulations, FSA has been required to 

determine noncompliant accounts as 

having received unauthorized assistance 

regardless of cause. Borrowers are then 

required to immediately repay the loan 

or convert it to a non-program loan 

subject to higher interest rates, less 

favorable terms, and limited loan 

servicing. Instances have arisen and 

may arise where borrowers are 

negatively impacted due to good faith 

reliance on a material action, advice, or 

non-action of an FSA official. The new 

provision allows FSA to consider relief 

in these specific instances to allow for 

more equitable rates, terms, and 

conditions to be applied to 

noncompliant accounts. The action, 

advice, or lack of action should be 

material to the non-compliance for the 

reliance to be in good faith as required 

by the 2018 Farm Bill. For example, it 

could be determined reasonable, given a 

certain set of facts, for a borrower to 

interpret the failure of a farm loan 

officer to respond to a borrower’s 

statement that the borrower plans to sell 

FSA collateral as an approval of that 

action. Depending on the circumstances, 

the failure of the farm loan officer to 

advise of the consequences of such an 

action (non-compliance) in response to 

that information from the borrower may 

constitute a material lack of action 

under the regulation. In contrast, minor 

customer service issues, such as a 

failure by FSA to make a courtesy 

reminder phone call under FSA policy 

to a borrower would not rise to the 

requisite level of materiality. Repeated 

or more significant customer service 

failures could rise to the level of 

material failures based on a case-by-case 

determination, but such customer 

service issues, especially where 

disparate levels of service arise across 

FSA’s customer base, should also be 

addressed through other technical 

service initiatives and outreach 

programs. 

The action, advice, or lack of action 

relied upon by the borrower should also 

ordinarily be documented, but there 

may be situations where documentation 

is not reasonably available (for example, 

where the interaction with FSA was 

verbal). In those situations, the FSA 

official with authority to grant equitable 

relief may determine that 

contemporaneous documentation is not 

necessary. A lack of documentation on 

its own should not be held against the 

borrower. All determinations of 

equitable relief, however, must be 

documented with an explanation of the 

determining official’s basis for 

providing that relief. 

Impacted borrowers may be required 

to assist in the resolution of the 

noncompliance, provided the borrower 

agrees that these actions are not 

detrimental to the long-term viability of 

the borrower’s operation; by taking such 

actions as partially repaying debt, 

disposing of assets, changing operation 

or entity structure, and other necessary 

actions to return to compliance and or 

eligibility. The 2018 Farm Bill also 

specifies that equitable relief decisions 

are not subject to appeal or judicial 

review. 

Certified Mediation Program 

Section 5402 of the 2018 Farm Bill 

amends section 501(c) of the 

Agricultural Credit Act of 1987 (7 U.S.C. 

5101(c)) to expand the scope of issues 

for which mediation may be provided. 

Section 5402(a)(1)(A)(ii) of the 2018 

Farm Bill provides that in addition to 

compliance with farm programs and 

conservation programs, national organic 

program issues may now be mediated. 

Under the existing regulation, the 

Certified Mediation Program may 

mediate pesticide use issues that fall 

under the jurisdiction of USDA; this has 

not changed as a result of the 2018 Farm 

Bill. Under the 2018 Farm Bill’s new 

provision, issues involving pesticide use 

may be a covered issue for mediation 

when it involves organic producers 

outside of USDA programs. In addition, 

organic certification-related disputes 

with the local agencies that USDA has 

accredited to provide the certification 

may also be eligible for mediation. 

Section 5402(a)(1)(A)(iii) of the 2018 

Farm Bill provides that lease issues, 

including land and equipment leases, 

may be issues covered by mediation 

programs. As leasing is a common farm 

practice, disputes can and do occur 

between farmers and their landlords or 

lessors. Increased restrictions in 

agricultural leases or the loss of a lease 

can have negative impacts on a farm’s 

viability. Mediation may help resolve 

disputes at the early stages and enable 

farmers to retain land or property under 

their leases. 

Section 5402(a)(1)(A)(iii) of the 2018 

Farm Bill also includes family farm 

transition as an issue for which 

mediation services may be provided. 

Farm families are frequently involved in 

transition issues, which may include 

land division, asset and debt 


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13120 Federal Register / Vol. 87, No. 46 / Wednesday, March 9, 2022 / Rules and Regulations 

2There are two maximum interest rates that 

depend on the length of the loan—one is for shorter 

term loans and the other is for longer term loans. 

The maximum interest rates are set using a base rate 

plus an allowable markup. 

distribution, individual and business 

responsibility for repayment of farm 

loans, farm viability, managing interests 

and responsibilities of off-farm heirs, 

and intergenerational conflict and 

responsibilities. Unresolved family 

conflicts often complicate the process 

when FSA is considering making loans 

to an operation as well as taking loan 

servicing actions. Using mediation to 

resolve farm transition disputes has the 

potential to keep farms viable. Resolving 

such disputes and developing a sound 

business plan helps both FSA and the 

farmers, as FSA or other creditors may 

make loans and help keep farmers in 

compliance with loan or other program 

requirements. 

Section 5402(a)(1)(A)(iii) of the 2018 

Farm Bill further provides that 

mediation may be used to help resolve 

farmer-neighbor conflicts. As rural areas 

are developed, farmers are being 

increasingly faced with neighbors who 

are unfamiliar with, and at times 

unsympathetic to, typical and essential 

farming practices. Neighbors might 

complain about a farm’s noise, hours, 

dust, pesticide application, manure 

management, odors, and runoff. 

Conflicts may also occur with municipal 

ordinances, for example fence height 

limits, impervious cover limitations, 

and prohibitions on specific farming 

activities. Such disputes may escalate 

into conflicts involving multiple 

stakeholders that can result in legal fees, 

which may have a negative impact on a 

farm’s viability and ability to access 

credit and pay debts. 

Section 5402(a)(1)(A)(iii) of the 2018 

Farm Bill provides for mediation of 

such other issues as the USDA Secretary 

or head of a State Department of 

Agriculture of each participating State 

considers appropriate for better serving 

the agricultural community and persons 

eligible for mediation. This rule, 

therefore, amends 7 CFR 785.3 to 

provide that the list of additional issues 

to be mediated will be included in the 

certification and recertification request. 

Section 5402(a)(1)(B) of the 2018 

Farm Bill provides that mediation grant 

funding may be used to provide credit 

counseling to covered persons before 

the initiation of mediation for issues 

involving USDA or for issues unrelated 

to any ongoing dispute or mediation in 

which the USDA is a party. 

Further, section 5402(a)(2)(C) of the 

2018 Farm Bill expanded the universe 

of eligible persons to include any other 

person involved in an issue for which 

mediation services are provided by a 

Certified Mediation Program. The 

current definition provides that 

producers, their creditors (as 

applicable), and other persons directly 

affected by certain actions of USDA are 

considered ‘‘covered persons.’’ This 

rule, therefore, amends 7 CFR 785.2 to 

revise the definition of ‘‘covered 

persons.’’ 

This rule also amends 7 CFR 785.4(c) 

introductory text and (c)(1) to provide 

that grant funds may be used for 

allowable costs in mediating covered 

issues for covered persons. This rule 

amends the list of the covered issues in 

7 CFR 785.4(d) to reflect the additions 

made by the 2018 Farm Bill. 

In addition, a correction is being 

made in § 785.4(c); the reference to 

§ 785.3(b)(2) is being corrected to 

§ 785.3(a)(2), and in the introductory 

text in § 785.9, the reference to 2 CFR 

200.333 is being corrected to 2 CFR 

200.334. Also, in § 785.9, the 

recordkeeping requirement is being 

changed from 5 years to 3 years because 

that is standard for the Federal 

Government records. For consistency, 

edits are being made throughout 7 CFR 

part 785 for references to the Certified 

Mediation Program. 

Dishonored Payment Fee 

FSA is adding new section 7 CFR 

761.11 to add a penalty fee for payments 

made by monetary instruments, such as 

checks, that are later dishonored by the 

payer’s financial institution. Payments 

made to FSA that are later dishonored 

result in increased burdens on FSA 

payment system and the staff to make 

accounting corrections, notify 

borrowers, and reprocess payments. 

FSA will follow the U.S. Treasury 

statutory determination in 26 U.S.C. 

6657. By making this revision, FSA will 

offset some of the cost associated with 

returned checks and anticipates that it 

will serve as a deterrent against future 

infractions. 

Remove Cash as an Acceptable Form of 

Payment 

FSA is revising its Direct Loan 

Servicing regulations to remove 

references to cash payments as it will no 

longer accept cash as a form of payment 

on loans. This change will ensure 

borrower accounts are correctly credited 

for submitted payments since FSA 

payment systems are not designed to 

accept cash payments. In addition, the 

current process for cash payments is 

inefficient. Currently cash payments 

involve a two-step process. Employees 

have to travel to a financial institution 

to obtain a money order or cashier’s 

check and then have that money order 

or cashier’s check used for payment 

processing, resulting in risk or 

additional risk of loss when using 

paper-based money for employees and 

customers from, for example, improper 

handling and human error. The 

regulatory change will require that 

borrowers provide FSA with a form of 

payment that can be correctly and 

immediately processed into FSA’s 

payment system. FSA has analyzed the 

change to cash and determined that this 

change will result in minimal impact on 

customers, will save time and expense, 

eliminate risk, and is consistent with 

many electronic commerce initiatives 

being implemented throughout USDA. 

The change is consistent with the U.S. 

Department of the Treasury’s 

requirement to accept electronic 

payments and to meet Federal cashmanagement laws (see U.S. Treasury 

Bulletin No. 2017–12). 

This rule amends 7 CFR 765.151, 

765.152, and 765.155, and 766.355 to 

remove the term cash. 

Maximum Interest Rates 

The regulations in 7 CFR 762.124 

specify the interest rate rules governing 

guaranteed loan program loans. Prior to 

this rule, the regulation allowed lenders 

to charge a maximum interest rate at 

loan closing or restructuring no greater 

than the 3-month LIBOR for loans with 

rates fixed less than 5-years, or the 5- 

year Treasury note rate for loans with 

rates fixed for 5 or more years, plus an 

allowable markup.2 FSA had also 

included an alternative method for 

lenders using a risk-based pricing 

model. These lenders were allowed to 

charge a rate no greater than the rate one 

risk tier lower than the borrower would 

qualify for without a guarantee. 

In July 2017, the U.K. Financial 

Conduct Authority announced they 

would phase out LIBOR interest rates, 

ending publication in December 2021. 

Since 7 CFR 762.124 specifically 

included LIBOR as a rate that 

guaranteed loans may not exceed, FSA 

is amending § 762.124 to allow for a 

replacement rate comparison. 

FSA monitors the interest rates 

charged on its loans monthly, 

comparing closed loans’ rates to the 

LIBOR and Treasury thresholds. 

Historically, very few loans have been 

closed with an interest rate at or near 

the maximum rates allowed, regardless 

of the interest rate method the 

respective lenders operated under. 

FSA will replace use of the 3-month 

LIBOR rate with the Secured Overnight 

Financing Rate (which is also known as 

SOFR) which was established by the 

industry as an alternative to LIBOR 


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before LIBOR starts to phase out in 

December 2021. 

FSA will continue to analyze 

agricultural lending pricing policies and 

consider any changes in industry loan 

pricing practices as a result of the 

discontinuation of LIBOR, lender 

pricing practices, economic shocks, and 

financial market changes. Based on this 

analysis, FSA will determine 

appropriate short-term maximum 

interest rates going forward, whether 

using SOFR or another rate, and will 

post them on the FSA website. FSA 

does not plan to make any changes to 

the use of the 5-year Treasury rate basis 

plus markup for longer term loans. In 

order to be flexible in response to 

changes in financial markets and other 

related factors and to ensure the best 

rates are used to benefit borrowers and 

lenders to ensure the success of the farm 

loans, we have determined that the 

maximum interest rates are more 

appropriately announced through the 

FSA website instead of specifying the 

specific indexes that are being used by 

FSA in the regulation. 

FSA’s intent with this rule is not to 

reduce the rate charged to guaranteed 

loan borrowers, or to reduce lender’s 

profit margin on loans. Rather, the 

purpose of this rule change is to 

simplify maximum interest rate 

compliance for both lenders and FSA’s 

staff. FSA’s intent is to select a 

replacement rate as close to the current 

LIBOR rates as possible to minimize any 

impact on lenders and guaranteed loan 

borrowers. 

There has also been a concern from 

FSA staff and lenders about the 

effectiveness of the risk-based pricing 

method in the regulation. FSA included 

it as an alternative method to establish 

a maximum interest rate for lenders 

using a formal risk-based pricing 

method. FSA added the option to the 

regulation in 2013; both the agency and 

lenders have had difficulty in trying to 

use the option, as explained below. 

There are multiple approaches that 

lenders use to implement risk-based 

pricing and many are more complex 

than the simple tier system envisioned 

when this method was added to the 

regulation. Lender policies include 

other factors beyond loan risk. Many 

include separate tiers for default risk 

and loss risk, allow for considerable 

analyst judgement using subjective 

factors, and may allow exceptions to 

policies based on local market 

competition. 

Lenders have also expressed 

frustration with the risk-based pricing 

method in the regulation. Many are 

reluctant to share internal interest rate 

practices or formulas and their credit 

staff are not aware of the one tier better 

requirement, even several years later 

after considerable training. As a result, 

lender loan narratives frequently lack a 

description of the interest rate tier 

adjustment and FSA is unable to 

determine at loan approval whether or 

not the proposed interest rate complies 

with FSA rules. Therefore, FSA has 

relied primarily on post-closing lender 

file reviews to confirm compliance with 

interest rate regulations. 

This rule amends § 762.124 by 

removing the risk-based interest rate 

alternative and places all lenders under 

the same base rates plus allowable 

markup depending on the length of the 

loan. 

Crop Insurance Violations 

FSA is adding a paragraph to 

§ 762.120 to clarify that guaranteed loan 

applicants must not be ineligible for 

assistance due to disqualification 

resulting from a Federal Crop Insurance 

violation according to 7 CFR part 718. 

This restriction already applies to FSA 

guaranteed loan applicants; however, 

FSA is adding this provision to 7 CFR 

762.120 for consistency with an 

identical limitation in the regulations 

for FSA’s direct loan applicants in 7 

CFR 764.101(h). 

Corrections 

On August 9, 2021, FSA published a 

final rule titled ‘‘Heirs’ Property 

Relending Program (HPRP), Improving 

Farm Loan Program Delivery, and 

Streamlining Oversight Activities’’ (86 

FR 43381—43397) in which FSA 

replaced the outdated term ‘‘supervised 

credit,’’ with the term ‘‘progression 

lending’’ or similar pro-graduation 

terminology. While most references 

were updated, several references were 

inadvertently left unchanged. Therefore, 

the reference to ‘‘supervised credit’’ 

wherever it appears in § 761.1(c) is 

replaced with the term ‘‘progression 

lending,’’ the reference to ‘‘supervisory 

agreements’’ is replaced with the term 

‘‘progression lending plans’’ in 

§ 761.102(b)(1), and the term 

‘‘supervisory needs’’ is replaced with 

the term ‘‘progression lending needs’’ in 

§ 761.103(a)(2). 

That August 2021 final rule also 

amended the regulations concerning 

limited resource reviews in 7 CFR part 

765. As a result of that change, the 

paragraphs in 7 CFR 766.107 and 

766.108 concerning these reviews are no 

longer necessary and this rule is 

removing them. 

In reviewing the regulations, FSA 

noticed an inconsistency that needs to 

be addressed to avoid confusion and 

reduce program delivery errors. 

Specifically, 7 CFR 764.40(d) specifies 

that title insurance or final title opinion 

can be waived when, among other 

things, the loan amount is less than 

$10,000. FSA is amending the 

regulation to increase that amount to 

$25,000.00 to be consistent with EM 

title requirements in 7 CFR 764.355(d) 

and (e). 

Effective Date, Notice, and Comment 

The Administrative Procedure Act 

(APA, 5 U.S.C. 553) provides that the 

notice and comment and 30-day delay 

in the effective date provisions do not 

apply when the rule involves any 

specified actions, including matters 

related to loans. In addition, because 

this rule is exempt from the 

requirements in 5 U.S.C. 553, it is also 

exempt from the regulatory analysis 

requirements of the Regulatory 

Flexibility Act (5 U.S.C. 601–612), as 

amended by the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (SBREFA). The requirements for 

the regulatory flexibility analysis in 5 

U.S.C. 603 and 604 are specifically tied 

to the agency being required to issue a 

proposed rule by section 553 or any 

other law, and the definition of rule in 

5 U.S.C. 601 is also tied to the 

publication of a proposed rule. 

The rule is not a major rule under 

Congressional Review Act. Therefore, 

FSA is not required to delay the 

effective date for 60 days from the date 

of publication to allow for 

Congressional review. 

Therefore, this rule is effective when 

published in the Federal Register. 

Executive Orders 12866 and 13563 

Executive Order 12866, ‘‘Regulatory 

Planning and Review,’’ and Executive 

Order 13563, ‘‘Improving Regulation 

and Regulatory Review,’’ direct agencies 

to assess all costs and benefits of 

available regulatory alternatives and, if 

regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). Executive Order 13563 

emphasized the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. The 

requirements in Executive Orders 12866 

and 13563 for the analysis of costs and 

benefits to loans apply to rules that are 

determined to be significant. 

The Office of Management and Budget 

(OMB) designated this rule as not 

significant under Executive Order 12866 

and therefore, OMB has not reviewed 

this rule and an analysis of costs and 


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benefits to loans is not required under 

either Executive Order 12866 or 13563. 

Environmental Review 

This rule revises the provisions on 

FLP loan limits and servicing. The 

result of these changes will increase 

loan limits or improve the various loan 

programs and relieve some restrictions 

to participation or otherwise encourage 

participation. This rule includes 

changes mandated by the 2018 Farm 

Bill and discretionary technical 

amendments that are administrative in 

nature. All discretionary aspects of 

these loan actions are covered by the 

Categorical Exclusions in 7 CFR 

799.31(b). The discretionary provisions 

of this action are covered by the 

Categorical Exclusions, found in 7 CFR 

799.31(b)(2)(iii) for minor amendments 

or revisions to previously approved 

actions, and § 799.31(b)(3)(i), for the 

issuance of minor technical corrections 

to regulations. No Extraordinary 

Circumstances (§ 799.33) exist. As such, 

the implementation of the discretionary 

technical amendments provided in this 

rule does not constitute a major Federal 

action that would significantly affect the 

quality of the human environment, 

individually or cumulatively. Therefore, 

FSA will not prepare an environmental 

assessment or environmental impact 

statement for this regulatory action and 

this rule serves as the environmental 

screening documentation of the 

programmatic environmental 

compliance decision for this Federal 

action. 

Executive Order 12988 

This rule has been reviewed in 

accordance with Executive Order 12988, 

‘‘Civil Justice Reform.’’ This rule will 

not preempt State or local laws, 

regulations, or policies unless they 

represent an irreconcilable conflict with 

this rule. Before any judicial actions 

may be brought regarding the provisions 

of this rule the administrative appeal 

provisions of 7 CFR parts 11 and 780 are 

to be exhausted. 

Executive Order 13175 

This rule has been reviewed for 

compliance with Executive Order 

13175, ‘‘Consultation and Coordination 

with Indian Tribal Governments.’’ The 

Executive Order 13175 requires Federal 

agencies to consult and coordinate with 

Tribes on a government-to-government 

basis on policies that have tribal 

implications, including regulations, 

legislative comments or proposed 

legislation, and other policy statements 

or actions that have substantial direct 

effects on one or more Indian Tribes, on 

the relationship between the Federal 

Government and Indian Tribes or on the 

distribution of power and 

responsibilities between the Federal 

Government and Indian Tribes. 

USDA has assessed the impact of this 

rule on Indian Tribes and determined 

that this rule has Tribal implications 

that required Tribal consultation under 

Executive Order 13175. Tribal 

consultation for this rule was included 

in the 2018 Farm Bill consultation held 

on May 1, 2019, at the National Museum 

of the American Indian, in Washington, 

DC. The portion of the Tribal 

Consultation relative to this rule was 

conducted by USDA Farm Production 

and Conservation mission area, as part 

of the Title V session. There were no 

specific comments from Tribes on this 

rule during Tribal consultation. If a 

Tribe requests additional comments, 

FSA will work with the Office of Tribal 

Relations to ensure meaningful 

consultation is provided for 

modifications identified in this rule that 

are not expressly mandated by 

legislation. 

Unfunded Mandates 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA, Pub. L. 

104–4) requires Federal agencies to 

assess the effects of their regulatory 

actions on State, local, or Tribal 

governments or the private sector. 

Agencies generally must prepare a 

written statement, including a cost 

benefit analysis, for final rules with 

Federal mandates that may result in 

expenditures of $100 million or more in 

any 1 year for State, local, or Tribal 

governments, in the aggregate, or to the 

private sector. UMRA generally requires 

agencies to consider alternatives and 

adopt the more cost effective or least 

burdensome alternative that achieves 

the objectives of the rule. This rule 

contains no Federal mandates under the 

regulatory provisions of Title II for 

State, local, or Tribal governments, or 

private sector. Therefore, this rule is not 

subject to the requirements of sections 

202 and 205 of UMRA. 

Federal Assistance Programs 

The title and number of the Federal 

assistance programs, listed in the 

Catalog of Federal Domestic Assistance, 

to which this rule applies are: 

10.099 Conservation Loans; 

10.404 Emergency Loans; 

10.406 Farm Operating Loans; 

10.407 Farm Ownership Loans. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501– 

3520), this rule does not change the 

approved information collection under 

OMB control numbers 0560–0155, 

0560–0233, 0560–0236, 0560–0237, 

0560–0238 and 0560–0230. 

USDA Non-Discrimination Policy 

In accordance with Federal civil 

rights law and USDA civil rights 

regulations and policies, USDA, its 

Agencies, offices, and employees, and 

institutions participating in or 

administering USDA programs are 

prohibited from discriminating based on 

race, color, national origin, religion, sex, 

gender identity (including gender 

expression), sexual orientation, 

disability, age, marital status, family or 

parental status, income derived from a 

public assistance program, political 

beliefs, or reprisal or retaliation for prior 

civil rights activity, in any program or 

activity conducted or funded by USDA 

(not all bases apply to all programs). 

Remedies and complaint filing 

deadlines vary by program or incident. 

Persons with disabilities who require 

alternative means of communication for 

program information (for example, 

braille, large print, audiotape, American 

Sign Language, etc.) should contact the 

responsible Agency or USDA TARGET 

Center at (202) 720–2600 (voice and 

TTY) or (844) 433–2774 (toll-free 

nationwide). Additionally, program 

information may be made available in 

languages other than English. 

To file a program discrimination 

complaint, complete the USDA Program 

Discrimination Complaint Form, AD– 

3027, found online at https://

www.usda.gov/oascr/how-to-file-aprogram-discrimination-complaint and 

at any USDA office or write a letter 

addressed to USDA and provide in the 

letter all the information requested in 

the form. To request a copy of the 

complaint form, call (866) 632–9992. 

Submit your completed form or letter to 

USDA by mail to: U.S. Department of 

Agriculture, Office of the Assistant 

Secretary for Civil Rights, 1400 

Independence Avenue SW, Washington, 

DC 20250–9410 or email: OAC@

usda.gov. 

USDA is an equal opportunity 

provider, employer, and lender. 

List of Subjects 

7 CFR Part 761 

Accounting, Loan programs— 

agriculture, Rural areas. 

7 CFR Part 762 

Agriculture, Banks, Banking, Credit, 

Loan programs—agriculture. 

7 CFR Part 764 

Agriculture, Credit, Loan programs— 

agriculture. 


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7 CFR Part 765 

Agriculture, Agricultural 

commodities, Credit, Livestock, Loan 

programs—agriculture. 

7 CFR Part 766 

Agriculture, Agricultural 

commodities, Credit, Livestock, Loan 

programs—agriculture. 

7 CFR Part 768 

Agriculture, Credit, Loan programs— 

agriculture. 

7 CFR Part 785 

Agriculture, Federal-state relations, 

Grant programs—intergovernmental 

relations, Mediation programs. 

For the reasons discussed above, FSA 

amends 7 CFR parts 761, 762, 764, 765, 

766, 768, and 785 as follows: 

PART 761—FARM LOAN PROGRAMS; 

GENERAL PROGRAM 

ADMINISTRATION 

■ 1. The authority citation for part 761 

continues to read as follows: 

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

Subpart A—General Provisions 

§ 761.1 [Amended] 

■ 2. In § 761.1(c), remove ‘‘Parts 761 

through 767’’ and ‘‘supervised credit’’ 

wherever they appear and add ‘‘This 

part and parts 762 through 767 of this 

subchapter’’ and ‘‘progression lending’’ 

in their places, respectively. 

■ 3. Amend § 761.2(b) as follows: 

■ a. Add the definition of ‘‘Equitable 

relief’’ in alphabetical order; and 

■ b. In the definition of ‘‘Veteran 

farmer’’: 

■ i. Redesignate paragraphs (1) and (2) 

as paragraphs (i) and (ii); 

■ ii. In newly redesignated paragraph 

(i): 

■ A. Remove the word ‘‘has’’ and add 

‘‘Has’’ in its place; and 

■ B. Remove the word ‘‘or’’; and 

■ iii. In newly redesignated paragraph 

(ii), remove ‘‘has’’ and the period at the 

end and add ‘‘Has’’ and ‘‘; or’’ in their 

places, respectively; and 

■ iv. Add paragraph (iii). 

The additions read as follows: 

§ 761.2 Abbreviations and definitions. 

* * * * * 

(b) * * * 

Equitable relief means waiving a 

requirement for Direct Farm Ownership, 

Direct Farm Operating, or Direct 

Emergency loans when the borrower is 

not in compliance with loan program 

requirements, but acted in good faith 

and relied on a material action, advice, 

or non-action from an Agency official to 

the detriment of the borrower’s 

operation. 

* * * * * 

Veteran farmer * * * 

(iii) Is a veteran who served in the 

active military, naval, or air service, and 

who was discharged or released from 

that service under conditions other than 

dishonorable and who first obtained 

status as a veteran during the most 

recent 10-year period. 

* * * * * 

§ 761.8 [Amended] 

■ 4. Amend § 761.8 as follows: 

■ a. In paragraph (a)(1)(i), remove the 

dollar amount ‘‘$300,000’’ and add 

‘‘$600,000’’ in its place; 

■ b. In paragraphs (a)(1)(ii) and (iii), 

remove ‘‘$700,000’’ and ‘‘2000’’ and add 

‘‘$1,750,000’’ and ‘‘2019’’ in their 

places, respectively; 

■ c. In paragraph (a)(2)(i), remove the 

dollar amount ‘‘$300,000’’ and add 

‘‘$400,000’’ in its place; 

■ d. In paragraphs (a)(2)(ii) and (iii) and 

(a)(3), remove ‘‘$700,000’’ and ‘‘2000’’ 

and add ‘‘$1,750,000’’ and ‘‘2019’’ in 

their places, respectively; 

■ e. In paragraph (a)(4), remove the 

dollar amount ‘‘$300,000’’ and add 

‘‘$600,000’’ in its place; and 

■ f. In paragraph (a)(6), remove 

‘‘guaranteed Farm Ownership’’ and 

‘‘$800,000’’ and add ‘‘guaranteed Farm 

Ownership loan’’ and ‘‘$1,100,000’’ in 

their places, respectively. 

■ 5. Add § 761.11 to read as follows: 

§ 761.11 Dishonored payment fee. 

(a) The Agency will charge a fee for 

payment transactions that are returned 

for insufficient funds. 

(b) [Reserved] 

Subpart C—Progression Lending 

■ 6. In § 761.102, revise the section 

heading and paragraph (b)(1) to read as 

follows: 

§ 761.102 Borrower recordkeeping and 

reporting. 

* * * * * 

(b) * * * 

(1) Cooperate with the Agency and 

comply with all progression lending 

plans, farm assessments, farm operating 

plans, year-end analyses, and all other 

loan-related requirements and 

documents; 

* * * * * 

§ 761.103 [Amended] 

■ 7. In § 761.103(a)(2), remove the word 

‘‘supervisory’’ and add ‘‘progression 

lending’’ in its place. 

PART 762—GUARANTEED FARM 

LOANS 

■ 8. The authority citation for part 762 

continues to read as follows: 

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

■ 9. In § 762.120, add paragraph (o) to 

read as follows: 

§ 762.120 Applicant eligibility. 

* * * * * 

(o) Disqualification. The applicant, 

and all entity members in the case of an 

entity, must not be ineligible due to 

disqualification resulting from a Federal 

Crop Insurance violation, according to 7 

CFR part 718. 

§ 762.124 [Amended] 

■ 10. Amend § 762.124 as follows: 

■ a. In paragraph (a)(3) introductory 

text, remove the words ‘‘the following, 

as applicable:’’ and adding ‘‘the rates 

established and announced by the 

Agency on the FSA website 

(www.fsa.usda.gov).’’; 

■ b. Remove paragraphs (a)(3)(i) through 

(iii); and 

■ c. Remove paragraph (a)(4) and 

redesignate paragraphs (a)(5) and (6) as 

paragraphs (a)(4) and (5). 

■ 11. Amend § 762.129 as follows: 

■ a. Revise paragraph (b)(1); and 

■ b. In paragraph (b)(2)(i), remove the 

acronym ‘‘SDA’’ and add ‘‘socially 

disadvantaged’’ in its place. 

The revision reads as follows: 

§ 762.129 Percent of guarantee and 

maximum loss. 

* * * * * 

(b) * * * 

(1) For OLs and FOs, the guarantee 

will be issued at 95 percent when: 

(i) The sole purpose of a guaranteed 

FO or OL is to refinance an Agency 

direct farm loan and when only a 

portion of the loan is used to refinance 

a direct Agency loan, a weighted 

percentage of a guarantee will be 

provided; 

(ii) The purpose of a guaranteed FO is 

to participate in the down payment loan 

program; 

(iii) A guaranteed OL is made to a 

farmer who is participating in the 

Agency’s down payment loan program. 

The guaranteed OL must be made 

during the period that a borrower has 

the down payment loan outstanding; 

(iv) A guaranteed OL is made to a 

farmer whose farm land is subject to the 

jurisdiction of an Indian tribe and 

whose loan is secured by one or more 

security instruments that are subject to 

the jurisdiction of an Indian tribe; 

(v) A guaranteed FO or OL is made to 

a qualified socially disadvantaged 

farmer; or 


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(vi) A guaranteed FO or OL is made 

to a qualified beginning farmer. 

* * * * * 

§ 762.130 [Amended] 

■ 12. In § 762.130(d)(4)(iii)(C), remove 

the words ‘‘beginning or socially 

disadvantaged’’ and adding ‘‘beginning, 

socially disadvantaged, or veteran’’ in 

their place. 

PART 764—DIRECT LOAN MAKING 

■ 13. The authority citation for part 764 

continues to read as follows: 

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

Subpart D—Farm Ownership Loan 

Program 

■ 14. In § 764.152, revise the section 

heading and paragraph (d) to read as 

follows: 

§ 764.152 General eligibility requirements. 

* * * * * 

(d) And in the case of an entity, one 

or more members constituting a majority 

interest, must have participated in the 

business operations of a farm for at least 

3 years out of the 10 years prior to the 

date the application is submitted. 

(1) The following experiences can 

substitute for up to 2 of the 3 years: 

(i) Not less than 16 credit hours of 

post-secondary education in an 

agriculture-related field; 

(ii) Successful completion of a farm 

management curriculum offered by a 

cooperative extension service, 

community college, adult vocational 

agriculture program, non-profit 

organization, or land-grant college or 

university; 

(iii) One (1)-year experience as a farm 

laborer with substantial management 

responsibility; 

(iv) Successful completion of an 

internship, mentorship, or 

apprenticeship in day-to-day farm 

management; 

(v) Significant business management 

experience; 

(vi) Honorable discharge from the 

armed forces of the United States; 

(vii) Successful repayment of an FSA 

financed youth loan; or 

(viii) Established relationship with a 

counselor in the Service Corps of 

Retired Executives (SCORE) program 

who has experience in farming or 

ranching, or with Agency-approved 

local individuals or organizations that 

are committed to providing mentorship 

in farming or ranching; or 

(2) The 3-year requirement in this 

paragraph (d) will be waived if the 

applicant meets the requirements of 

both paragraphs (d)(1)(iii) and (viii) of 

this section. 

* * * * * 

Subpart E—Downpayment Loan 

Program 

§ 764.201 [Amended] 

■ 15. In § 764.201, remove the words 

‘‘beginning farmer or socially 

disadvantaged’’ and adding ‘‘beginning 

farmer, socially disadvantaged farmer, 

or veteran farmer’’ in their place. 

■ 16. In § 764.202, revise paragraph (b) 

to read as follows: 

§ 764.202 Eligibility requirements. 

* * * * * 

(b) Be a beginning farmer, socially 

disadvantaged farmer, or veteran farmer. 

Subpart I—Emergency Loan Program 

■ 17. Amend § 764.352 as follows: 

■ a. In paragraphs (a) and (b), remove 

the semicolon and add a period it its 

place; 

■ b. In paragraph (c)(3)(i), remove the 

semicolon and add ‘‘; and’’ in its place; 

■ c. In paragraphs (c)(3)(ii), (d), and 

(e)(3) and (4), remove the semicolon and 

add a period in its place; and 

■ d. Revise paragraph (f). 

The revision reads as follows: 

§ 764.352 Eligibility requirements. 

* * * * * 

(f) And all entity members in the case 

of an entity, must not have received 

debt forgiveness from the Agency on 

more than one occasion on or before 

April 4, 1996, or any time after April 4, 

1996. A write down associated with a 

restructuring action under Section 353 

of the Act is not considered debt 

forgiveness for EM Loan purposes. 

* * * * * 

Subpart J—Loan Decision and Closing 

§ 764.402 [Amended] 

■ 18. In § 764.402(d)(1)(i), remove the 

dollar amount ‘‘$10,000’’ and add 

‘‘$25,000’’ in its place. 

PART 765—DIRECT LOAN 

SERVICING—REGULAR 

■ 19. The authority citation for part 765 

continues to read as follows: 

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

Subpart D—Borrower Payments 

■ 20. In § 765.151, revise paragraph (a) 

to read as follows: 

§ 765.151 Handling payments. 

(a) Borrower payments. Borrowers 

must submit their loan payments in a 

form acceptable to the Agency, such as 

checks and money orders. Forms of 

payment not acceptable to the Agency 

include, but are not limited to, cash, 

foreign currency, foreign checks, and 

sight drafts. 

* * * * * 

§ 765.152 [Amended] 

■ 21. In § 765.152(b)(4), remove the 

words ‘‘Cash proceeds’’ and adding 

‘‘Proceeds’’ in their place. 

§ 765.155 [Amended] 

■ 22. In § 765.155, remove paragraph 

(a)(1)(i) and redesignate paragraphs 

(a)(1)(ii) through (iv) as paragraphs 

(a)(1)(i) through (iii). 

PART 766—DIRECT LOAN 

SERVICING–SPECIAL 

■ 23. The authority citation for part 766 

continues to read as follows: 

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

1981d(c). 

Subpart C—Loan Servicing Programs 

§ 766.107 [Amended] 

■ 24. In § 766.107, remove paragraph 

(d)(4). 

§ 766.108 [Amended] 

■ 25. In § 766.108, remove paragraph 

(c)(4) and redesignate paragraph (c)(5) as 

paragraph (c)(4). 

Subpart H—Loan Liquidation 

■ 26. In § 766.355, revise paragraph 

(c)(1) to read as follows: 

§ 766.355 Acceleration of loans. 

* * * * * 

(c) * * * 

(1) Pay the account in full; 

* * * * * 

■ 27. Add part 768, consisting of 

§§ 768.1 and 768.2, to read as follows: 

PART 768—EQUITABLE RELIEF 

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

§ 768.1 Providing equitable relief. 

(a) If the Farm Service Agency 

(Agency or FSA) determines that a 

borrower is not in compliance with 

Agency loan requirements in this 

chapter, the Agency may consider 

equitable relief as specified in this 

section: 

(1) Requirements. After determination 

that a borrower is in noncompliance 

with loan program requirements in this 

chapter, the Agency may provide 

equitable relief to a borrower if it is 

determined that the borrower: 


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(i) Acted in good faith; and 

(ii) Relied on a material action, 

advice, or non-action from an Agency 

official to the detriment of the 

borrower’s operation or the action 

approved by the Agency official resulted 

in the borrower becoming noncompliant 

with the loan program requirements in 

this chapter. 

(2) Determination. The material 

action, advice, or response from an 

Agency official under paragraph (a)(1) of 

this section must be documented, unless 

the Agency official with authority to 

grant equitable relief determines that 

documentation is not reasonably 

available. Notwithstanding any 

delegations in this chapter, only the 

Secretary, FSA Administrator, Deputy 

Administrator for Farm Loan Programs, 

or any other official within U.S. 

Department of Agriculture (USDA) 

specifically designated by the Secretary, 

may make the determination for the 

Agency to grant equitable relief and 

must document the basis for that 

determination. 

(3) Relief. If the borrower meets the 

requirements in paragraph (a)(1) of this 

section, the Agency may provide to a 

borrower either or both of the following 

forms of equitable relief: 

(i) The borrower may choose to keep 

loans at current rates or other terms 

received in association with the loan 

which was determined to be 

noncompliant; or 

(ii) The borrower may receive other 

equitable relief for the loan as the 

Agency determines to be appropriate. 

(4) Conditions. As a condition of 

receiving relief, the Agency may require 

the borrower to take actions to remedy 

the noncompliance, provided the 

borrower agrees those actions do not 

adversely affect the long-term viability 

of the borrower’s operation. 

(b) A determination or action of the 

Agency under this section is final and 

not subject to administrative appeal or 

judicial review. 

§ 768.2 [Reserved] 

PART 785—CERTIFIED MEDIATION 

PROGRAM 

■ 28. The authority citation for part 785 

continues to read as follows: 

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

7 U.S.C. 5101–5104. 

■ 29. Revise the heading for part 785 to 

read as set forth above. 

§ 785.1 [Amended] 

■ 30. Amend § 785.1 as follows: 

■ a. In paragraph (b), remove ‘‘USDA’’, 

‘‘certified State mediation program’’, 

‘‘State’s certified mediation program’’, 

and ‘‘appeals regulations’’ and add 

‘‘U.S. Department of Agriculture 

(USDA)’’, ‘‘Certified Mediation 

Program’’, ‘‘State’s Certified Mediation 

Program’’, ‘‘appeals regulations in this 

chapter’’ in their places, respectively; 

■ b. In paragraph (d), remove the words 

‘‘program certified’’ and add ‘‘Certified 

Mediation Program’’ in their place; and 

■ c. In paragraph (e), remove the words 

‘‘program certified’’ and ‘‘This 

provision’’ and add ‘‘Certified 

Mediation Program’’ and ‘‘This 

paragraph (e)’’ in their places, 

respectively. 

■ 31. Amend § 785.2 as follows: 

■ a. Remove the definition for ‘‘Certified 

State mediation program’’ and add the 

definition for ‘‘Certified Mediation 

Program’’ in its place; 

■ b. Revise the definition of ‘‘Covered 

persons’’; 

■ c. In the definition for ‘‘Mediation 

services’’, remove the words ‘‘State 

mediation program’’ and add ‘‘Certified 

Mediation Program’’ in their place; and 

■ d. In the definition for ‘‘Qualifying 

State’’, remove the words ‘‘State 

mediation program’’ and add ‘‘Certified 

Mediation Program’’ in their place. 

The addition and revision read as 

follows: 

§ 785.2 Definitions. 

* * * * * 

Certified Mediation Program means a 

program providing mediation services 

that has been certified in accordance 

with § 785.3. 

* * * * * 

Covered persons means agricultural 

producers, their creditors (as 

applicable), persons directly affected by 

actions of the USDA, and any other 

persons involved in covered issues 

under § 785.4(d); for which mediation 

services are provided by a Certified 

Mediation Program. 

* * * * * 

■ 32. In § 785.3, revise the section 

heading, the introductory text, and 

paragraphs (a) introductory text and 

(a)(2)(vi) to read as follows: 

§ 785.3 Annual certification of a State’s 

Certified Mediation Program. 

To obtain certification from FSA for 

the Certified Mediation Program, the 

State must meet the requirements of this 

section. 

(a) New request for certification. A 

new request for certification of a State 

mediation program must include 

descriptive and supporting information 

regarding the mediation program and a 

certification that the mediation program 

meets certain requirements as 

prescribed in this section. If a State is 

also qualifying its mediation program to 

request a grant of Federal funds under 

the Certified Mediation Program, the 

State must submit with its request for 

certification additional information as 

specified in § 785.4. 

* * * * * 

(2) * * * 

(vi) That the State’s Certified 

Mediation Program ensures, in the case 

of other issues covered by the Certified 

Mediation Program, that: 

(A) USDA receives adequate 

notification of those issues by the 

deadline specified in § 785.6(a)(1); and 

(B) Persons directly affected by 

actions of USDA receive adequate 

notification of the Certified Mediation 

Program; and 

* * * * * 

■ 33. Amend § 785.4 as follows: 

■ a. Revise the section heading; 

■ b. In paragraph (a) introductory text, 

remove the words ‘‘State mediation 

program’’ and add ‘‘State’s Certified 

Mediation Program’’ in their place; 

■ c. In paragraph (b)(1), remove the 

words ‘‘in any FSA office and on the 

internet,’’ and add ‘‘at’’ in their place; 

■ d. Revise paragraph (b)(2); 

■ e. Revise paragraphs (c) introductory 

text, (c)(1) introductory text, and 

(c)(2)(iv); and 

■ f. Add paragraph (d). 

The revisions and addition read as 

follows: 

§ 785.4 Grants to States with a Certified 

Mediation Program. 

* * * * * 

(b) * * * 

(2) A budget with supporting details 

providing estimates of the cost of 

operation and administration of the 

Certified Mediation Program. Proposed 

direct expenditures will be grouped in 

the categories of allowable direct costs 

under the Certified Mediation Program 

as specified in paragraph (c)(1) of this 

section; 

* * * * * 

(c) Grant purposes. Grants made 

under this part will be used only to pay 

the allowable costs of operation and 

administration of the components of a 

qualifying State’s Certified Mediation 

Program that have been certified as 

specified in § 785.3(a)(2). Costs of 

services other than mediation services 

to covered issues and covered persons 

within the State are not considered part 

of the cost of operation and 

administration of the Certified 

Mediation Program for the purpose of 

determining the amount of a grant 

award. 

(1) Allowable costs. Subject to 

applicable cost principles in 2 CFR part 


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13126 Federal Register / Vol. 87, No. 46 / Wednesday, March 9, 2022 / Rules and Regulations 

200, subpart E, allowable costs for 

operations and administration are 

limited to those that are reasonable and 

necessary to carry out the State’s 

Certified Mediation Program in 

providing mediation services for 

covered issues and covered persons 

within the State. Specific categories of 

costs allowable under the State’s 

Certified Mediation Program include, 

and are limited to: 

* * * * * 

(2) * * * 

(iv) Services provided by a State’s 

Certified Mediation Program that are not 

consistent with the features of the 

Certified Mediation Program as 

specified in this part including 

advocacy services on behalf of a 

mediation participant, such as 

representation of a mediation client 

before an administrative appeals entity 

of the USDA or other Federal 

Government department or Federal or 

State Court proceeding. 

(d) Covered issues. Covered issues 

include: 

(1) Agricultural loans, regardless of 

whether the loans are made or 

guaranteed by USDA or made by a third 

party—mediation services must be 

provided; and 

(2) The following issues for which 

mediation services may be provided to 

covered persons that are involved in one 

or more of the following: 

(i) Wetlands determinations; 

(ii) Compliance with farm programs, 

conservation programs, and the National 

Organic Program established under the 

Organic Foods Production Act of 1990; 

(iii) Rural water loan programs; 

(iv) Grazing on National Forest 

System lands; 

(v) Pesticides; 

(vi) Lease issues, including land 

leases and equipment leases; 

(vii) Family farm transition; 

(viii) Farmer-neighbor disputes; 

(ix) Such other issues as the Secretary 

or the head of the Department of 

Agriculture of each participating State 

considers appropriate for better serving 

the agricultural community and persons 

eligible for mediation; or 

(x) Credit counseling: 

(A) Prior to the initiation of any 

mediation involving the USDA; or 

(B) Unrelated to any ongoing dispute 

or mediation in which the USDA is a 

party. 

■ 33. Revise § 785.5 to read as follows: 

§ 785.5 Fees for mediation services. 

A requirement that non-USDA parties 

who elect to participate in mediation 

pay a fee for mediation services will not 

preclude certification of a State’s 

mediation program or its eligibility for 

a grant; however, if participation in 

mediation is mandatory for a USDA 

agency, a State’s Certified Mediation 

Program may not require the USDA 

agency to pay a fee to participate in a 

mediation. 

■ 34. In § 785.6, revise paragraph (a)(3) 

to read as follows: 

§ 785.6 Deadlines and address. 

(a) * * * 

(3) Requests for additional grant 

funds during a fiscal year. Any request 

by a State’s Certified Mediation 

Program, that is eligible for grant 

funding as of the beginning of the fiscal 

year, for additional grant funds during 

that fiscal year for additional, 

unbudgeted demands for mediation 

services must be submitted on or before 

March 1 of the fiscal year. 

* * * * * 

■ 35. Amend § 785.7 as follows: 

■ a. In paragraph (a), remove the words 

‘‘certified State mediation program’’ and 

add ‘‘State’s Certified Mediation 

Program’’ in their place; 

■ b. In paragraph (b)(3) introductory 

text, remove the words ‘‘State program’’ 

and add ‘‘State’s Certified Mediation 

Program’’ in their place; 

■ c. Revise paragraph (c)(1); 

■ d. In paragraph (c)(2), remove the 

words ‘‘certified State mediation 

program’’ and add ‘‘State’s Certified 

Mediation Program’’ in their place; 

■ e. In paragraph (d)(1)(iii), remove the 

words ‘‘certified State mediation 

programs’’ and add ‘‘Certified Mediation 

Program’’ in their place; and 

■ f. Revise paragraph (e)(1). 

The revisions read as follows: 

§ 785.7 Distribution of Federal grant funds. 

* * * * * 

(c) * * * 

(1) Grant funds will be paid in 

advance, in installments throughout the 

Federal fiscal year as requested by a 

State’s Certified Mediation Program and 

approved by FSA. The initial payment 

to a Certified Mediation Program in a 

qualifying State eligible for grant 

funding as of the beginning of a fiscal 

year will represent at least one-fourth of 

the State’s annual grant award. The 

initial payment will be made as soon as 

practicable after certification, or recertification, after grant funds are 

appropriated and available. 

* * * * * 

(e) * * * 

(1) States receiving Certified 

Mediation Program grant funds are 

encouraged to obligate award funds 

within the Federal fiscal year of the 

award. A State may, however, carry 

forward any funds disbursed to its 

Certified Mediation Program that remain 

unobligated at the end of the fiscal year 

of award for use in the next fiscal year 

for costs resulting from obligations in 

the subsequent funding period. Any 

carryover balances plus any additional 

obligated fiscal year grant will not 

exceed the lesser of 70 percent of the 

State’s budgeted allowable costs of 

operation and administration of the 

State’s Certified Mediation Program for 

the subsequent fiscal year, or $500,000. 

* * * * * 

■ 36. Amend § 785.8 as follows: 

■ a. Revise paragraph (a) introductory 

text; 

■ b. In paragraphs (a)(1) introductory 

text and (a)(1)(i), remove the words 

‘‘certified State mediation program’’ and 

add ‘‘State’s Certified Mediation 

Program’’ in their place; 

■ c. In paragraph (a)(2) introductory 

text, remove the words ‘‘certified 

mediation program’’ and add ‘‘State’s 

Certified Mediation Program’’ in their 

place; and 

■ d. In paragraph (a)(2)(ii)(B), remove 

the word ‘‘certified’’. 

The revision reads as follows: 

§ 785.8 Reports by qualifying States 

receiving mediation grant funds. 

(a) Annual report by the State on its 

Certified Mediation Program. No later 

than 30 days following the end of a 

fiscal year during which a qualifying 

State received a grant award under this 

part, the State must submit to the 

Administrator an annual report on its 

Certified Mediation Program. The 

annual report must include the 

following: 

* * * * * 

■ 37. In § 785.9, revise the introductory 

text and paragraph (c) to read as follows: 

§ 785.9 Access to program records. 

The regulations in 2 CFR 200.334 

through 200.338 provide general record 

retention and access requirements for 

records pertaining to grants. In addition, 

the State must maintain and provide the 

Government access to pertinent records 

regarding services delivered by the 

State’s Certified Mediation Program for 

purposes of evaluation, audit and 

monitoring of the State Certified 

Mediation Program as follows: 

* * * * * 

(c) All participants in a mediation 

must sign and date an acknowledgment 

of receipt of such notice from the 

mediator. The State’s Certified 

Mediation Program must maintain 

originals of such acknowledgments in 

its mediation files for at least 3 years. 


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Federal Register / Vol. 87, No. 46 / Wednesday, March 9, 2022 / Rules and Regulations 13127 

■ 38. In § 785.10, revise paragraphs (a) 

introductory text, (a)(1), (2), and (5), and 

(b) to read as follows: 

§ 785.10 Penalty for non-compliance. 

(a) The Administrator is authorized to 

withdraw the certification of a State’s 

Certified Mediation Program, terminate 

or suspend the grant to the State’s 

Certified Mediation Program, require a 

return of unspent grant funds, a 

reimbursement of grant funds on 

account of expenditures that are not 

allowed, and may impose any other 

penalties or sanctions authorized by law 

if the Administrator determines that: 

(1) The State’s Certified Mediation 

Program, at any time, does not meet the 

requirements in this part for 

certification; 

(2) The State’s Certified Mediation 

Program is not being operated in a 

manner consistent with the features of 

the program as certified by FSA, with 

the regulations in this part, or the grant 

agreement; 

* * * * * 

(5) Reports submitted by a State on its 

Certified Mediation Program as required 

by § 785.8 are false, contain 

misrepresentations or material 

omissions, or are otherwise misleading. 

(b) In the event that FSA gives notice 

to the State of its intent to enforce any 

withdrawal of certification or other 

penalty for non-compliance, USDA 

agencies will cease to participate in any 

mediation conducted by the State’s 

Certified Mediation Program 

immediately upon delivery of such 

notice to the State. 

§ 785.11 [Amended] 

■ 39. In § 785.11, remove the words 

‘‘State mediation program’’ and adding 

‘‘State’s Certified Mediation Program’’ 

in their place wherever they appear. 

§ 785.12 [Amended] 

■ 40. In § 785.12, remove the cross 

reference ‘‘parts 15, 15b and 1901, 

subpart E, of’’ and adding ‘‘parts 15 and 

15b of’’ in their place. 

Zach Ducheneaux, 

Administrator, Farm Service Agency. 

[FR Doc. 2022–04858 Filed 3–8–22; 8:45 am] 

BILLING CODE 3410–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 25 

[Docket No. FAA–2017–1141; Special 

Conditions No. 25–710A–SC] 

Special Conditions: Dassault Aviation 

Model Falcon 6X Airplanes; NonRechargeable Lithium-Ion Battery 

Installations 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final special conditions, 

amendment. 

SUMMARY: These amended special 

conditions are issued for nonrechargeable lithium-ion battery 

installations on the Dassault Aviation 

(Dassault) Model Falcon 6X airplane. 

Non-rechargeable lithium-ion batteries 

are a novel or unusual design feature 

when compared to the state of 

technology envisioned in the 

airworthiness standards for transportcategory airplanes. The applicable 

airworthiness regulations do not contain 

adequate or appropriate safety standards 

for this design feature. These special 

conditions contain the additional safety 

standards that the Administrator 

considers necessary to establish a level 

of safety equivalent to that established 

by the existing airworthiness standards. 

DATES: This action is effective on 

Dassault on March 9, 2022. 

FOR FURTHER INFORMATION CONTACT: 

Nazih Khaouly, AIR–623, Aircraft 

Systems Section, Technical Innovation 

Policy Branch, Policy and Innovation 

Division, Federal Aviation 

Administration, 2200 S 216th Street, 

Des Moines, Washington, 98198; 

telephone and fax 206–231–3171, email 

nazih.khaouly@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

On July 1, 2012, Dassault applied for 

special conditions for non-rechargeable 

lithium-ion batteries installed in the 

Model Falcon 5X airplane. Special 

conditions were issued for that design 

on January 16, 2018 (83 FR 2032). 

However, Dassault has decided not to 

release an airplane under the model 

designation Falcon 5X, instead choosing 

to change that model designation to 

Falcon 6X. 

In February of 2018, due to engine 

supplier issues, Dassault extended the 

type certificate application date for its 

Model Falcon 5X airplane under new 

Model Falcon 6X. This amendment to 

the original special conditions reflects 

the model-name change. This airplane is 

a twin-engine business jet with seating 

for 19 passengers and a maximum 

takeoff weight of 77,460 pounds. The 

Dassault Model Falcon 6X airplane 

design remains unchanged from the 

Model Falcon 5X in all material respects 

other than different engines. 

The FAA is issuing these special 

conditions for non-rechargeable lithiumion battery installations on the Dassault 

Model Falcon 6X airplane. The FAA’s 

design standards in title 14, Code of 

Federal Regulations (14 CFR) part 25 are 

inadequate for addressing an airplane 

with non-rechargeable lithium-ion 

batteries. 

Type Certification Basis 

Under the provisions of 14 CFR 21.17, 

Dassault must show that the Model 

Falcon 6X airplane meets the applicable 

provisions of part 25, as amended by 

Amendments 25–1 through 25–146. 

If the Administrator finds that the 

applicable airworthiness regulations 

(i.e., 14 CFR part 25) do not contain 

adequate or appropriate safety standards 

for the Dassault Model Falcon 6X 

airplane because of a novel or unusual 

design feature, special conditions are 

prescribed under the provisions of 

§ 21.16. 

Special conditions are initially 

applicable to the airplane model for 

which they are issued. Should the type 

certificate for that model be amended 

later to include any other model that 

incorporates the same novel or unusual 

design feature, these special conditions 

would also apply to the other model 

under § 21.101. 

In addition to the applicable 

airworthiness regulations and special 

conditions, the Dassault Model Falcon 

6X airplane must comply with the fuelvent and exhaust-emission requirements 

of 14 CFR part 34, and the noisecertification requirements of 14 CFR 

part 36. 

The FAA issues special conditions, as 

defined in 14 CFR 11.19, in accordance 

with § 11.38, and they become part of 

the type certification basis under 

§ 21.17. 

Novel or Unusual Design Feature 

The Dassault Model Falcon 6X 

airplane will incorporate the following 

novel or unusual design feature: 

Installation of non-rechargeable lithiumion batteries. 

For the purpose of these special 

conditions, the FAA refers to a battery 

and battery system as a battery. A 

battery system consists of the battery 

and any protective, monitoring, and 

alerting circuitry or hardware inside or 


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