Federal Register / Vol. 63, No. 150 /Wednesday, August 5, 1998 /Rules and Regulations 41713

is cleaning to remove foreign material

and LSK’s. Any LSK’s removed by

cleaning must be accounted for as will

be specified by the Director.

Comments on this interim rule are

requested and will be considered

including comments directed at the

impact of this rule on other farmers

because of possible losses that could

occur on peanuts that are regraded but

after being pledged as collateral for a

price support loan at the higher quota

level are not found attractive to buyers

of peanuts for quota peanut uses. It has

been determined for the present that the

retesting will not be made using

chemical testing because of the cost

involved, and the lack of standards for

chemical testing at that stage of the

marketing process. Insofar as questions

of wholesomeness are concerned

chemical testing is conducted at a later

stage of the marketing process for the

purposes of insuring such

wholesomeness. The inspection

addressed in this rule is for purposes of

making certain price support value

determinations in the context of

operating a program that supports

peanuts throughout the country.

However, comments concerning

chemical testing during the inspection

for incoming producer peanuts at

buying points will be carefully

considered in determining whether to

amend the interim rule prior to making

that rule final. Such comments should

address the efficacy of such testing,

standards for such testing and the

assignment of costs for such testing.

That is, all interested parties should

provide comments expressing their view

on whether the option contained in the

interim rule, or some other option,

should be selected. All options will be

considered.

List of Subjects in 7 CFR part 1446

Loan programs—agriculture,

Reporting and recordkeeping

requirements

For the reasons set out in the

preamble, 7 CFR part 1446 is amended

as follows:

PART 1446—PEANUTS

1. The authority citation is amended

to read as follows:

Authority: 7 U.S.C. 7271; 15 U.S.C. 714b

and 714c

2. In § 1446.103 a new definition of

‘‘Director’’ is added in its proper

alphabetical sequence and in the

definition of Segregations, paragraph (3)

is revised to read as follows:

§ 1446.103 Definitions

* * * * *

Director. The Director, or Acting

Director, Tobacco and Peanuts Division,

Farm Service Agency, U.S. Department

of Agriculture.

* * * * *

Segregations. * * *

(3) Segregation 3. Segregation 3

peanuts are farmers stock peanuts

which, upon visible inspection, are

found to contain Aspergillus flavus

mold: Provided, further, however, that,

in accordance with such written

instructions as the Director may issue,

the Director shall permit producers at

approved buying points as specified by

the Director to have a Segregation 3 lot

reconditioned, one time only, so long as

the reconditioning is performed at the

buying point where the peanuts were

initially delivered, and then reinspected

visually. Such reinspection may not

occur more than 24 hours from the

initial inspection except as permitted by

the Director and the second grade shall

be considered the final grade for the

farmers stock peanuts.

* * * * *

Signed at Washington, D.C., on July 30,

1998.

Keith Kelly,

Executive Vice President, Commodity Credit

Corporation.

[FR Doc. 98–20896 Filed 7–31–98; 2:59pm]

BILLING CODE 3410–05–P

DEPARTMENT OF AGRICULTURE

Rural Housing Service

Rural Business-Cooperative Service

Rural Utilities Service

Farm Service Agency

7 CFR Part 1951

RIN 0572–AB23

Servicing of Community and Insured

Business Programs Loans and Grants

AGENCIES: Rural Housing Service; RuralBusiness Cooperative Service; Rural

Utilities Service; and Farm Service

Agency, USDA.

ACTION: Final rule.

SUMMARY: The Rural Utilities Service

(RUS) hereby amends the regulations

utilized to service loans and grants. The

final rule will permit loan

reamortization with interest rate

adjustment for eligible delinquent

borrowers. The final rule will provide

debt relief to troubled borrowers and

encourage these organizations to remain

in operation and resume scheduled loan

payments. The final rule will also

provide RUS greater flexibility to

service problem loans and permit a

viable, cost effective alternative to debt

write-offs.

EFFECTIVE DATE: August 5, 1998.

FOR FURTHER INFORMATION CONTACT: John

Purcell, Rural Utilities Service, Stop

1570, 1400 Independence Ave. SW,

Washington, DC 20250, telephone (202)

720–9634.

SUPPLEMENTARY INFORMATION:

Classification

This rule has been determined to be

not significant for purposes of Executive

Order 12866 and, therefore, has not

been reviewed by the Office of

Management and Budget.

Regulatory Flexibility Act

Pursuant to § 605(b) of the Regulatory

Flexibility Act, 5 U.S.C. 605(b), the head

of the Agencies certify that this rule will

not have a significant economic impact

on a substantial number of small

entities.

Intergovernmental Review

This program is listed in the Catalog

of Federal Domestic Assistance under

number 10.760, Water and Waste

Disposal Systems for Rural

Communities, subject to the provisions

of Executive Order 12372 which

requires intergovernmental consultation

with State and local officials.

Environmental Impact Statement

This action has been reviewed in

accordance with 7 CFR part 1940,

subpart G, ‘‘Environmental Program.’’ It

has been determined that the 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, Pub.

L. 91–190, an Environmental Impact

Statement is not required.

Civil Justice Reform

This regulation has been reviewed

under Executive Order 12988, Civil

Justice Reform. When this regulation is

adopted: (1) unless otherwise

specifically provided all State and local

laws and regulations that are in conflict

with this rule will be preempted; (2) no

retroactive effect will be given to this

rule except as specifically prescribed in

the rule; and (3) administrative

proceedings of the National Appeals

Division (7 CFR part 11) must be

exhausted before bringing suit.

Paperwork Reduction Act

In accordance with the Paperwork

Reduction Act (44 U.S.C. 3507), the

information collection requirements

included in this rule have been
41714 Federal Register / Vol. 63, No. 150 /Wednesday, August 5, 1998 /Rules and Regulations

approved through 7 CFR part 1951,

subpart E. The assigned OMB number is

0575–0066. This rule does not revise or

impose any new information collection

or recordkeeping requirements from

those approved by the Office of

Management and Budget.

National Performance Review

This regulatory action is being taken

as part of the National Performance

Review program to eliminate

unnecessary regulations and improve

those that remain in force.

Unfunded Mandate Reform Act

Title II of the Unfunded Mandate

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

104–4, 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 costbenefit analysis, for proposed and final

rules with ‘‘Federal Mandates’’ that may

result in expenditures to State, local,

and tribal governments, in the aggregate,

or to the private sector, of $100 million

or more in any one 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. Thus today’s rule is

not subject to the requirements of

sections 202 and 205 of the UMRA.

Discussion

The Rural Utilities Service was

formed in connection with the

reorganization of programs administered

by the former Farmers Home

Administration and the former Rural

Development Administration. As

currently written, 7 CFR part 1951,

subpart E does not permit loan

reamortization with interest rate

adjustment on outstanding loans.

Accordingly, RUS is unable to provide

an interest rate adjustment to borrowers

that become seriously delinquent on

their loan payments. This final rule will

provide debt relief to troubled

borrowers and encourage these

organizations to remain in operation

and resume scheduled loan payments.

The final rule will also provide RUS

greater flexibility to service problem

loans and permit a viable, cost effective

alternative to debt write-offs.

Comments on the Proposed Rule

RUS published the proposed rule in

the Federal Register on June 2, 1997,

(62 FR 29678) and asked for written

comments on or before August 1, 1997.

The Agency received two comments

from the public review process. All

comments were considered when

preparing the final rule. No changes

have been made to the proposed rule as

a result of the comments received.

Responses to comments are listed

according to corresponding sections of

the rule and are as follows:

1. § 1951.223(d)—Define what a

‘‘seriously delinquent’’ borrower

represents.

Agency Response: The Agency made

no change. The Agency believes the

causes and circumstances attributed to

borrower delinquencies will vary

significantly and the number of

borrowers to qualify under this rule will

be limited. The Agency believes it

would be prohibitive to include specific

criteria for defining ‘‘seriously

delinquent’’.

2. § 1951.223(d)(1)(ii)—Define what

‘‘experiencing severe financial

problems’’ represents.

Agency Response: The Agency made

no change. The Agency believes the

financial conditions and the degree of

financial impact varies significantly

between borrowers. Therefore, it would

be prohibitive to include specific

criteria.

3. § 1951.223 (d)(2)(i)—Define what a

‘‘reasonable amount of cash or cash

reserves represents.

Agency Response: The Agency made

no change. The Agency believes the

financial resources necessary to

adequately operate a water and

wastewater facility vary significantly.

Therefore, it would be prohibitive to

include specific criteria.

4. § 1951.223 (d)(2)(ii)—The Agency

should determine if the original interest

rate can be restored if financial

conditions improve; and the interest

rate reduction should be for a limited

period of time.

Agency Response: The Agency made

no change. The Agency has a loan

provision that requires borrowers to

refinance their RUS debt with

commercial or private credit if financial

conditions permit. Each borrower’s

financial condition is reviewed on a

regular basis and those financially able

to refinance their RUS debt are

requested to do so.

5. § 1951.223(d)(3)—Does an eligible

borrower have to comply with the

health or sanitary standards and median

household income conditions for

poverty rate loans?

Agency Response: The Agency made

no change. Borrowers that qualify for an

interest rate adjustment under this rule

will not have to comply with the stated

criteria for poverty interest rates.

6. § 1951.223(d)(3)—Include provision

to review borrowers financial condition

and restore original interest rate if a

borrower’s financial conditions permit.

Agency Response: The Agency made

no change. The Agency has a loan

provision that requires borrowers to

refinance their RUS debt with

commercial or private credit if financial

conditions permit. Each borrower’s

financial condition is reviewed on a

regular basis and those financially able

to refinance their RUS debt are

requested to do so.

List of Subjects in 7 CFR Part 1951

Accounting, Grant programs-housing

and community development, Reporting

and recordkeeping requirements, Rural

areas.

Accordingly, Chapter XVIII, title 7,

Code of Federal Regulations is amended

as follows:

PART 1951—SERVICING AND

COLLECTIONS

1. The authority citation for part 1951

continues to read as follows:

Authority: 5 U.S.C. 301; 7 U.S.C. 1981; 42

U.S.C. 1480.

Subpart E—Servicing of Community

and Direct Business Programs Loans

and Grants

2. Section 1951.223(d) is added to

read as follows:

§ 1951.223 Reamortization.

* * * * *

(d) Reamortization with interest rate

adjustment—Water and waste borrowers

only. A borrower that is seriously

delinquent in loan payments may be

eligible for loan reamortization with

interest rate adjustment. The purpose of

loan reamortization with interest rate

adjustment is to provide relief for a

borrower that is unable to service the

outstanding loan in accordance with its

existing terms and to enhance recovery

on the loan. A borrower must meet the

conditions of this subpart to be

considered eligible for this provision.

(1) Eligibility determination. The State

Director, Rural Development, may

submit to the Administrator for

approval an adjustment in the rate of

interest charged on outstanding loans

only for those borrowers who meet the

following requirements:
Federal Register / Vol. 63, No. 150 /Wednesday, August 5, 1998 /Rules and Regulations 41715

(i) The borrower has exhausted all

other servicing provisions contained in

this subpart;

(ii) The borrower is experiencing

severe financial problems;

(iii) Any management deficiencies

must have been corrected or the

borrower must submit a plan acceptable

to the State Office to correct any

deficiencies before an interest rate

adjustment may be considered;

(iv) Borrower user rates must be

comparable to similar systems. In

addition, the operating expenses

reported by the borrower must appear

reasonable in relation to similar system

expenses;

(v) The borrower has cooperated with

Rural Development in exploring

alternative servicing options and has

acted in good faith with regard to

eliminating the delinquency and

complying with its loan agreements and

agency regulations; and

(vi) The borrower’s account must be

delinquent at least one annual debt

payment for 180 days.

(2) Conditions of approval. All

borrowers approved for an adjustment

in the rate of interest by the

Administrator shall agree to the

following conditions:

(i) The borrower shall agree not to

maintain cash or cash reserves beyond

what is reasonable at the time of interest

rate adjustment to meet debt service,

operating, and reserve requirements.

(ii) A review of the borrower’s

management and business operations

may be required at the discretion of the

State Director. This review shall be

performed by an independent expert

who has been recommended by the

State Director and approved by the

National Office. The borrower must

agree to implement all

recommendations made by the State

Director as a result of the review.

(iii) If requested, a copy of the latest

audited financial statements or

management report must be submitted

to the Administrator.

(3) Reamortization. At the discretion

of the Administrator, the interest rate

charged on outstanding loans of eligible

borrowers may be adjusted to no less

than the poverty interest rate and the

term of the loans may be extended up

to a new 40 year term or the remaining

useful life of the facility, whichever is

less.

Dated: June 18, 1998.

Jill Long Thompson,

Under Secretary Rural Development.

[FR Doc. 98–20914 Filed 8–4–98; 8:45 am]

BILLING CODE 3410–XV–U

DEPARTMENT OF AGRICULTURE

Rural Housing Service

Rural Business-Cooperative Service

Rural Utilities Service

Farm Service Agency

7 CFR Part 1955

Property Management

AGENCIES: Rural Housing Service, Rural

Business-Cooperative Service, Rural

Utilities Service, and Farm Service

Agency, USDA.

ACTION: Final rule.

SUMMARY: The Agencies are revising

their Property Management regulations

to clarify changes in definitions that

only affect Real Estate Owned (REO) by

the Agency, and not a customer’s

account. This action is being taken to

update and correct the definitions of the

terms ‘‘nonrecoverable’’ and

‘‘recoverable.’’ The intended effect is to

improve the Agencies’ recordkeeping

systems.

EFFECTIVE DATE: August 5, 1998.

FOR FURTHER INFORMATION CONTACT: Carl

Muhlbauer, Program Support Staff,

Rural Housing Service, U.S. Department

of Agriculture, Stop 0761, South

Agriculture Building, 1400

Independence Avenue SW.,

Washington, DC 20250–0761; telephone

(202) 690–2141.

SUPPLEMENTARY INFORMATION:

Classification and Summary of Changes

This action is not subject to the

provisions of Executive Order 12866

since it only involves a change in the

way the Agencies perform their

accounting. In pre-Credit Reform

practice, taxes were paid out of the

revolving funds, making it impossible to

identify and credit later tax payment

reimbursements to the properties

affected. This change will allow the

Agencies to more precisely charge and

credit tax payments related to Real

Estate Owned (REO) property by

associating them with the specific

properties on which taxes are invoiced.

Property management regulation

definitions of ‘‘nonrecoverable’’ and

‘‘recoverable’’ and policy and procedure

for related Agency expenditures are

being revised to conform to certain

definitions and cost accounting

developed under the Credit Reform Act

as implemented through the Office of

Management and Budget Circular A–34.

Definitions developed under OMB

guidance, intended to distinguish

between administrative expenses

directly related to program operations

(nonrecoverable), and expenses directly

related to and chargeable to a borrower

or REO account (recoverable), including

the costs of foreclosing, managing, and

selling collateral, have been in use

under unpublished internal Agency

policy (RD Instruction 2024-A). Property

Management regulations were never

revised to reflect the change in

definitions. These revisions do not

affect the legal or actual recoverability

of a charge from a borrower. The

replacement of the term

‘‘nonrecoverable costs’’ with

‘‘recoverable costs’’ in §§ 1955.67,

1955.68, and 1955.69 affects only REO

property, not a borrower account. Since

the public is not affected by this

rulemaking change, publication for

notice and comment is not necessary.

Programs Affected

These programs or activities are listed

in the Catalog of Federal Domestic

Assistance and are subject to the

provisions of Executive Order 12372

which require intergovernmental

consultation with State and local

officials under the following numbers:

10.405—Farm Labor Housing Loans and

Grants

10.407—Farm Ownership Loans

10.411—Rural Housing Site Loans

10.415—Rural Rental Housing Loans

10.416—Soil and Water Loans

10.421—Indian Tribes and Tribal

Corporation Loans

10.760—Water and Waste Disposal

Systems for Rural Communities

10.764—Resource Conservation and

Development Loans

10.765—Watershed Protection and

Flood Prevention Loans

10.766—Community Facilities Loans

10.767—Intermediary Relending

Program

10.768—Business and Industrial Loans

10.770—Water and Waste Disposal

Loans and Grants

The following programs or activities

are excluded from the scope of

Executive Order 12372 which requires

intergovernmental consultation with

State and local officials, under the

following numbers:

10.404—Emergency Loans

10.406—Farm Operating Loans

10.443—Outreach and Assistance

Grants for Socially Disadvantaged

Farmers and Ranchers

10.850—Rural Electrification Loans and

Loan Guarantees

Paperwork Reduction Act

The information collection

requirements contained in this

regulation have been approved by the