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

43381 

Vol. 86, No. 150 

Monday, August 9, 2021 

DEPARTMENT OF AGRICULTURE 

Farm Service Agency 

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

and 769 

[Docket ID FSA–2021–0002] 

RIN 0560–AI44 

Heirs’ Property Relending Program 

(HPRP), Improving Farm Loan Program 

Delivery, and Streamlining Oversight 

Activities 

AGENCY: Farm Service Agency, USDA. 

ACTION: Final rule. 

SUMMARY: The Farm Service Agency 

(FSA) is implementing a new Heirs’ 

Property Relending Program (HPRP) 

authorized in the Agricultural 

Improvement Act of 2018 (the 2018 

Farm Bill). HPRP provides loans to 

eligible entities to relend with the 

purpose of assisting heirs with 

undivided ownership interests resolve 

ownership and succession issues on 

farms that are owned in common by 

multiple heirs. The loan funds may be 

used by an ultimate recipient to 

purchase and consolidate fractional 

interests held by other heirs in jointlyowned property to pay for costs and fees 

associated with developing and 

implementing a succession plan, and to 

pay for costs associated with buying out 

fractional interests held in tenancy in 

common by other heirs in jointly-owned 

property to clear the title (for example 

closing costs, appraisals, title searches, 

surveys, preparing documents, 

mediation, and legal services). FSA is 

also amending the Farm Loan Programs 

(FLP) regulations to revise its rules 

related to loan making and servicing to 

improve program delivery and 

consolidate value-added oversight 

activities. 

DATES: 

Effective date: August 9, 2021. 

Comment due date: We will consider 

comments that we receive by October 8, 

2021. 

ADDRESSES: We invite you to submit 

comments on the rule. You may submit 

comments by either of the following 

methods, although FSA prefers that you 

submit comments electronically through 

the Federal eRulemaking Portal: 

• Federal Rulemaking Portal: http://

www.regulations.gov and search for 

Docket ID FSA–2021–0002. Follow the 

instructions for submitting comments. 

• Mail: Md Mutaleb, Senior Loan 

Officer, Loan Making Division, Deputy 

Administrator for Farm Loan Programs, 

FSA, U.S. Department of Agriculture, 

1400 Independence Avenue SW, Stop 

0522, Washington, DC 20250–0522. In 

your comment, specify Docket ID FSA– 

2021–0002. 

Comments will be available online at 

http://www.regulations.gov. A copy of 

this rule is available through the FSA 

home page at http://www.fsa.usda.gov/. 

FOR FURTHER INFORMATION CONTACT: Md 

Mutaleb; Telephone; telephone: (202) 

720–3168; email: md.mutaleb@

usda.gov. Persons with disabilities or 

who require alternative means for 

communication should contact the 

USDA Target Center at (202) 720–2600 

(voice). 

SUPPLEMENTARY INFORMATION: 

Background of HPRP 

FSA is implementing HPRP as 

authorized in section 5104 of the 2018 

Farm Bill (Pub. L. 115–334), codified in 

7 U.S.C. 1936c. FSA will loan funds to 

eligible entities, including cooperatives, 

credit unions, and nonprofit 

organizations certified to operate as a 

lender, to serve as intermediaries that 

will relend the funds to individuals and 

entities for purposes that assist heirs 

with undivided ownership interests to 

resolve ownership and succession 

issues on a farm that has multiple 

owners (commonly referred to as ‘‘Heirs’ 

Property’’). 

In developing HPRP, FSA relied 

heavily on the design of Rural 

Development’s (RD) relending programs, 

which have a long history of success, 

including the Intermediary Relending 

Program (IRP) found in 7 CFR part 4274. 

FSA considers the IRP to be a successful 

relending program and a good model for 

achieving the goals of HPRP. In 

developing HPRP, FSA relied on RD’s 

rules, forms, and framework as a model 

for establishing a relending program, 

while adapting provisions to ensure 

they were workable for HPRP’s 

intermediaries and ultimate recipients. 

FSA considers heirs’ property to be 

land that has been passed down to 

subsequent generations via intestate 

succession (that is, without a will) or via 

a will that divides real estate assets 

equally among all heirs. When a 

landowner dies without a last will and 

testament or estate plan, state law 

determines which heirs or classes of 

family members inherit the land of the 

deceased, and the ownership share for 

each heir. 

This form of property ownership 

results in the land being owned in 

common by all heirs-at-law, each of 

which owns a fractional interest in the 

land. As a result, the absence of clear 

title prevents the owners who farm the 

land and pay real estate taxes from 

gaining access to the legal, financial, 

and managerial transactions needed to 

effectively manage the land. 

FSA is amending 7 CFR part 769 to 

designate the regulations for the Highly 

Fractionated Indian Land Loan Program 

as subpart A, and to add subpart B to 

specify the requirements for HPRP. 

FSA is adding definitions for the 

terms ‘‘Heirs’ Property,’’ ‘‘HPRP Loan 

Agreement,’’ ‘‘HPRP Loan Funds,’’ 

‘‘HPRP Revolving Loan Fund,’’ 

‘‘Intermediary,’’ ‘‘Revolved Funds,’’ 

‘‘Succession Plan,’’ ‘‘Ultimate 

Recipient,’’ and ‘‘Undivided Ownership 

Interest’’ relating to HPRP to 7 CFR 

761.2. 

This rule implements HPRP in order 

to provide a way for heirs to obtain 

assistance resolving property issues 

through intermediaries. 

Administrative and National Policy 

Requirements 

Intermediaries will request 

demographics data from ultimate 

recipients on race, sex (gender), and 

ethnicity (national origin). The response 

to the data request will be voluntary. 

Intermediaries will maintain the data 

when voluntarily submitted to them by 

the ultimate recipients. Race and 

ethnicity data will be collected in 

accordance with the OMB notice 

published in the Federal Register on 

October 30, 1997 (62 FR 58782–58790), 

‘‘Revisions to the Standards for the 

Classification of Federal Data on Race 

and Ethnicity’’ and Title VI of the Civil 

Rights Act of 1964 (42 U.S.C. 2000d–1– 


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2000d–7). Sex (gender) data will be 

collected in accordance with Title IX of 

the Education Amendments of 1972 (20 

U.S.C. 1681–1688). The intermediary 

does not need to submit these 

documents with the application, but 

will need to make these documents 

available when requested by FSA. See 

the Paperwork Reduction Act section 

below for more information. 

HPRP is subject to environmental 

compliance provisions, which are 

specified in 7 CFR part 799. Therefore, 

each intermediary is required to provide 

FSA with documentation of its process 

to address environmental issues. 

Ultimate Recipient 

An ultimate recipient is an individual 

or entity that receives a loan from an 

intermediary’s HPRP revolving loan 

fund. The eligibility requirements of an 

ultimate recipient are specified in 7 CFR 

part 769 and mirror the requirements 

that are specified in 7 U.S.C. 1936c. As 

authorized by 7 U.S.C. 1936c(e)(3), 

individual heirs and entities who have 

an undivided ownership interest in a 

farm that are willing to complete a 

succession plan as a condition of the 

loan are eligible to be an ultimate 

recipient of HPRP loan funds. The 

intent of HPRP is to help families 

resolve titles issues on heirs’ property. 

To ensure the HPRP loans are used for 

this purpose rather than by investors to 

acquire land, FSA has specified the 

requirement that an ultimate recipient 

must be a family member or heir-at-law 

related by blood or marriage to the 

previous owner of the real property. 

Intermediaries 

As specified in 7 U.S.C. 1936c(c), 

HPRP provides loan funds to 

intermediaries who will re-lend loan 

funds to individuals and entities with 

undivided ownership interests in order 

to resolve ownership and succession 

issues relating to a farm owned in 

common by multiple owners. To 

address these issues, FSA has 

determined that HPRP loan funds may 

be used for the following: 

• To buy out fractional interests held 

in tenancy in common by other heirs in 

jointly-owned property, and 

• To pay for costs associated with 

developing and implementing a 

succession plan (such as closing costs, 

appraisals, title searches, surveys, 

preparing documents, mediation, and 

legal services). 

After researching the heirs’ property 

issue, FSA believes these loan purposes 

will help ultimate recipients resolve 

title issues by financing the purchase of 

property interests and paying to finance 

the many related costs associated with 

implementing a succession plan. 

In 7 CFR part 769, and as specified in 

7 U.S.C. 1936c(b), FSA requires that the 

intermediary have experience working 

with socially disadvantaged or 

beginning farmers. As 7 U.S.C. 1936c(d) 

requires, preference is given to 

intermediaries with not less than 10 

years’ experience serving socially 

disadvantaged farmers and ranchers and 

is also given to intermediaries located in 

states that have adopted a statute 

consisting of an enactment or adoption 

of the Uniform Partition of Heirs 

Property Act. 

Under 7 CFR 769.156, intermediaries 

are required to determine the rates, 

terms, and payment structure for loans 

to ultimate recipients in an amount 

sufficient to cover the cost of operating 

and sustaining the revolving loan fund; 

and must clearly and publicly disclose 

the loan terms and conditions to 

qualified ultimate recipients. FSA will 

review the annual monitoring reports of 

intermediaries, as well as provide 

oversight of the intermediary’s loan 

processes and procedures. 

Use of HPRP Loan Funds 

The HPRP funds can only be used for 

the purposes specified in 7 CFR 769.154 

and as explained above. 

Loan limitations are specified in 7 

CFR 769.155. FSA is establishing 

maximum limits for loans to 

intermediaries and ultimate recipients 

to help manage risk and ensure funds 

are available for multiple 

intermediaries. For ultimate recipients, 

FSA is establishing maximum limits to 

help ensure that loans are used by 

family farms rather than larger entities. 

For each application period, loans to 

intermediaries will not exceed $5 

million for each intermediary, and loans 

to ultimate recipients will not exceed 

the loan limit for a Direct Farm 

Ownership loan as specified in 7 CFR 

761.8(a)(1)(i) (which is currently 

$600,000). 

In 7 CFR 769.156, the rates and terms 

for HPRP loans are specified. For loans 

to intermediaries, the FSA 

Administrator will set the interest rate 

as a fixed rate over the term of the loan 

of 1 percent or less; the repayment term 

for HPRP loans will not exceed 30 years; 

and annual payments will be 

established. For loans to ultimate 

recipients, the interest rate will be set by 

the intermediary within the limits 

established by the intermediary’s 

relending plan approved by FSA; and 

the repayment period may not exceed 

30 years. 

Intermediary’s Relending Plan 

FSA will provide flexibility to the 

intermediary to develop a relending 

plan to be approved by FSA that 

governs the use of the HPRP revolving 

loan fund. The relending plan must be 

approved by FSA prior to closing the 

initial HPRP loan to the intermediary 

and must include a detailed explanation 

of the intermediary’s fund 

administration policies and procedures, 

and planned use of the HPRP revolving 

loan fund after the funds in the 

revolving loan fund have revolved. The 

required elements of the relending plan 

are specified in 7 CFR 769.157; and the 

relending plan must contain, in detail, 

the policies and procedures that the 

intermediary must follow with respect 

to the HPRP loan. 

The rates, terms, and payment 

structure for loans approved by an 

intermediary to an ultimate recipient 

must be an amount sufficient to cover 

the cost of operating and sustaining the 

revolving loan fund; and must be clearly 

and publicly disclosed to qualified 

ultimate recipients. In addition, the 

proposed rates, terms, and payment 

structure of any loan made by the 

intermediary to an ultimate recipient 

must be reasonable and prudent 

considering the purpose of the loan, 

expected repayment ability of the 

ultimate recipient, the useful life of the 

collateral, and must adhere to the terms 

of the approved HPRP loan agreement. 

Processing HPRP Loan Applications 

The opening and closing date for the 

HPRP application submission will be 

announced in a notice in the Federal 

Register. The initial application period 

will open August 30, 2021 and will 

close on October 29, 2021. If funds are 

not sufficient to fully fund all approved 

applications from intermediaries, 7 CFR 

769.159 specifies the priorities used to 

allocate loan funds to intermediaries. In 

7 U.S.C. 1936c(e), it specifies that 

intermediaries with not less than 10 

years’ experience serving socially 

disadvantaged farmers and ranchers, 

and that are located in states that have 

adopted a statute consisting of an 

enactment or adoption of the Uniform 

Partition of Heirs Property Act will 

receive first priority. After funding has 

been provided to those listed in 7 U.S.C. 

1936c(e), FSA will then give priority to 

intermediaries that have applications 

from ultimate recipients already in 

process, or intermediaries that have a 

history of fully relending previous 

HPRP funds. Multiple applications in 

the same priority tier will be processed 

based on the date received. Finally, any 


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Federal Register / Vol. 86, No. 150 / Monday, August 9, 2021 / Rules and Regulations 43383 

remaining eligible applications will be 

funded based on the date received. 

HPRP Loan Agreement 

An HPRP loan agreement must be 

executed by the intermediary and FSA 

at loan closing for each loan. The HPRP 

loan agreement will specify the terms of 

each loan (such as the loan amount, 

interest rate, term and repayment 

schedule, disbursement procedure, 

provisions for late charges, provisions 

regarding default, and insurance 

requirements). As a condition of 

receiving HPRP funds, the intermediary 

agrees to seek prior written approval 

from FSA before making changes to its 

articles of incorporation, charter, by 

laws, draft loan documents, security 

policy, or relending policies when any 

of these are related to HPRP loans. In 

addition, 7 CFR 769.165 states that the 

intermediary must agree to maintain a 

separate ledger and segregated account 

for the HPRP revolving loan fund; 

comply with FSA’s annual monitoring 

reporting requirements on HPRP 

activities; and pledge the HPRP 

revolving loan fund and any other form 

of security that FSA may require. 

HPRP Revolving Loan Fund 

Primary security for HPRP will be in 

the form of a first lien on the 

intermediary’s HPRP revolving loan 

fund. Additional security will be 

required if needed to fully secure the 

loan. 

The intermediary will be required to 

establish a revolving loan fund that 

must be maintained for as long as an 

HPRP loan to an intermediary remains 

unpaid. All HPRP loan funds received 

by an intermediary must be deposited 

into an HPRP revolving loan fund 

account to be used by the intermediary 

to provide direct loans to eligible 

ultimate recipients. Such accounts must 

be fully covered by Federal deposit 

insurance or fully collateralized with 

other securities in accordance with 

normal banking practices and all 

applicable State laws. Maintenance 

requirements of the revolving loan fund 

are specified in 7 CFR 769.164. 

Post Award Requirements 

FSA determined that annual 

monitoring reports would be both 

necessary for the success of HPRP and 

to ensure intermediaries’ compliance 

with HPRP rules; therefore, FSA will 

require the intermediary to provide 

reports that include a description of the 

use of loan funds, information regarding 

the acreage, the number of heirs both 

before and after loan was made, audit 

findings, disbursement transactions, and 

any other information required by FSA. 

Transfer and Assumption of HPRP 

Loans 

As specified in 7 CFR 769.166, FSA 

will allow for transfer and assumptions 

of the HPRP loans if an intermediary 

must discontinue participation in HPRP. 

Background of Improving Farm Loan 

Program Delivery and Streamlining 

Oversight Activities 

The Consolidated Farm and Rural 

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

1921–2009cc–18) authorizes FSA’s 

Direct and Guaranteed Farm Loan 

Programs. FSA makes and services a 

variety of direct and guaranteed loans to 

farmers who are unable to obtain private 

commercial credit with reasonable rates 

and terms. FSA also provides direct 

loan borrowers with credit counseling 

and oversight. 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. 

This rule streamlines and 

consolidates to improve program 

delivery, to improve the oversight of 

direct loan servicing activities, and to 

eliminate requirements that are costly, 

repetitive, or do not further the 

program’s goals. These changes will 

reduce burden on farmers, ranchers, and 

FSA staff. 

The loan making and servicing 

revisions included in this rule are 

intended to improve delivery of farm 

loans. More specifically, as explained in 

further detail below, this rule: 

• Corrects the spelling of ‘‘down 

payment’’ throughout the regulations; 

• Revises the family farm definition 

to ensure applicants are the operator of 

a farm; 

• Adds a definition of non-monetary 

default. 

• Authorizes the use of appraisals 

completed within the previous 18 

months for loan making and servicing 

actions; 

• Provides additional guidance on the 

use of supervised bank accounts; 

• Modifies operating plan 

development rules to authorize realistic 

county or state average yields to be used 

in place of actual producer yields 

during disaster years; 

• Modifies the requirement to verify 

applicant debts for loan program 

participants; 

• Clarifies that entity members 

holding at least 50 percent interest in 

the entity must be the owners and 

operators of the farm; 

• Clarifies that costs associated with 

compliance of the Occupational Safety 

and Health Act of 1970 are an eligible 

use of guaranteed Operating Loan (OL) 

funds; 

• Corrects an existing cross reference 

to crop insurance regulations; 

• Revises direct loan application 

review and response timeframes; 

• Exempts non-essential assets valued 

up to $15,000 from being pledged as 

security for direct loan applicants; 

• Authorizes fixtures as an authorized 

use of funds for direct operating loans; 

• Authorizes an annual OL and 

Emergency Loan (EM) to carry a 

repayment term of 24 months; 

• Authorizes a waiver of previously 

required borrower training 

requirements; 

• Eliminates obsolete supervisory 

language and replaces it with language 

to better reflect FSA’s current resources 

and mission; 

• Ties the assessment to the 

frequency of required classification or 

graduation reviews; 

• Eliminates year end analysis 

requirement for borrowers who received 

a direct loan, chattel subordination, or 

primary loan servicing action during the 

previous year; 

• Changes the limited resource 

review requirement from annually to 

every 2 years; 

• Adds sole member LLCs to the 

protections for borrowers entering the 

armed forces; 

• Prohibits large-scale surface leases 

for non-agricultural purposes; 

• Eliminates appraisal requirement 

on release of property without monetary 

consideration where FSA is well 

secured; 

• Raises the estimated value for the 

appraisal requirement from $25,000 to 

$50,000; 

• Increases the processing time for 

Primary Loan Servicing applications 

from 60 days to 90 days when a real 

estate appraisal is required; and 

• Allows a borrower to accept a nonwritedown offer and waive the need for 

a writedown offer when an appraisal 

would be required for the writedown 

offer. 

Spelling of ‘‘Down Payment’’ 

Currently, the regulations use the 

term ‘‘downpayment’’ as one word in 

twelve locations. As ‘‘downpayment’’ is 

a misspelling, this rule corrects the term 

to ‘‘down payment’’ as two separate 

words. 

Family Farm Definition 

Eligibility criteria for most direct and 

guaranteed farm loans requires an 

applicant to operate a ‘‘family farm.’’ 


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43384 Federal Register / Vol. 86, No. 150 / Monday, August 9, 2021 / Rules and Regulations 

The definition of a ‘‘family farm’’ is 

provided in 7 CFR 761.2(b). 

It is commonly understood that the 

borrower themselves will provide 

substantial labor and make the majority 

of daily operating decisions and all 

strategic business decisions associated 

with the operation. However, the 

existing definition allows operational 

inputs to be provided by the borrower 

and relatives, with no delineation as to 

how much management or labor is 

specifically expected of the borrower or 

the relative. This can result in an 

individual obtaining a farm loan with 

the intention of having a relative operate 

the farm for all practical purposes, 

essentially relegating the borrower to a 

minor role. 

This rule amends the definition of 

‘‘family farm’’ to close the unintended 

loophole that would create a scenario 

where the borrower has only a minor 

role in actually operating the farm, 

while maintaining the ability of a 

borrower to rely on management and 

labor input from relatives. Specifically, 

this rule amends the definition of 

‘‘family farm’’ to require the borrower to 

be the one to provide the required 

substantial labor, and make the majority 

of daily operating decisions, and all 

strategic management decisions; while 

the relatives can provide input and 

assistance with both the labor to operate 

the farm and daily operating and 

strategic management decisions. 

Addition of Non-Monetary Default 

Definition 

FSA is adding the definition of ‘‘nonmonetary default’’ to the general 

program definitions in 7 CFR 761.2. 

Previously, certain FSA documents 

contained this definition, and FSA is 

incorporating it into its regulations. No 

change is being made to the definition. 

Use of Appraisals Issued Within 18 

Months 

Appraisals of proposed real estate 

loan security are necessary to ensure 

farm loans are adequately collateralized. 

Currently in 7 CFR 761.7, an appraisal 

can be relied upon to determine security 

values if it was completed within the 

previous 12 months and if market 

values have remained stable since the 

original appraisal was completed. 

Many applicants apply for additional 

loan making or servicing benefits at the 

end of a crop year, typically within 12 

to 18 months of when initial loan 

benefits were obtained. If subsequent 

loan making or servicing benefits 

require appraised values of real estate 

collateral, an updated appraisal 

typically needs to be obtained as the 

original appraisal was completed more 

than 12 months prior. This results in 

significant additional time and cost to 

obtain an updated appraisal that often 

results in only minor changes in value. 

This rule amends 7 CFR 761.7(c) and 

766.202(a) to allow the use of real estate 

appraisals completed within the 

previous 18 months if FSA determines 

market values have remained stable. 

Supervised Bank Account Guidance 

Supervised bank accounts are 

accounts with financial institutions 

established through a deposit agreement 

entered into between the borrower, FSA, 

and the financial institution. To ensure 

direct loan funds are used for 

authorized purposes, 7 CFR 761.51(a) 

describes the various uses of a 

supervised bank account. 

This rule amends 7 CFR 761.51(a) to 

memorialize the current practice in the 

regulation and specify additional 

common uses of supervised bank 

accounts that are currently described in 

administrative handbook guidance 

including construction and site 

development work, and sale of basic 

security. 

Substituting Realistic County or State 

Yields To Develop Operating Plans 

Projected yields used to develop farm 

operating plans for direct loans are 

typically calculated using the applicant 

or borrower’s own production history 

for the previous 3 years. Currently, if an 

applicant for a direct loan has historical 

yields in the previous 3 years that are 

substantially affected by a qualifying 

declared disaster, 7 CFR 761.104(c)(4)(i) 

allows the applicant or borrower to 

choose to use county or state average 

yields in place of their actual disaster 

year yields when developing a farm 

operating plan. 

While the existing rule often ensures 

reasonable and accurate yield 

projections, substituting disaster year 

yields with county or state average 

yields does not always result in the 

development of realistic operating 

plans. While it is particularly rare, it can 

occur when county or state average 

yields are higher than an applicant’s 

yields in non-disaster years. 

Section 331E(a) of the CONACT (7 

U.S.C. 1981e(a)), requires farm operating 

plans be based on accurate projections. 

To ensure accurate plans are developed, 

this rule amends 7 CFR 761.104(c)(4)(i) 

to allow for the use of county or state 

yields only when those yields are 

realistic and reasonable compared to an 

applicant’s actual non-disaster year 

yields. 

If the agency approval official 

determines the county or state yields are 

not realistic and reasonable compared to 

an applicant’s actual non-disaster year 

yields, the applicant or borrower may 

no longer exercise the provision in 7 

CFR 761.104(c)(4)(i), but may continue 

to exercise the provision in 7 CFR 

761.104(c)(4)(ii), authorizing the 

exclusion of the production year with 

the lowest actual or county average 

yield if their yields are affected by 

disasters in at least 2 of the 3 years. 

This amendment will help ensure the 

success of an applicant or borrower by 

ensuring the development of farm 

operating plans based only on realistic 

and reasonable yield projections. 

Loan Debt Verification 

Guarantee loan applications and 

direct loan debt settlement applications 

require verification of all applicant 

debts over $1,000. However, direct loan 

making applications require verification 

of all applicant debts over $5,000. The 

direct loan making program increased 

this threshold from $1,000 to $5,000 

administratively in November 2020 as 

regulations governing the direct loan 

program do not identify the dollar 

threshold for requiring debt 

verifications. 

To ensure consistency among loan 

programs, this rule amends 7 CFR 

761.405(a)(6), 762.110(d) and 762.145(b) 

to allow FSA to administratively 

establish the minimum threshold for 

debt verification on guaranteed loans. 

FSA is setting the threshold at $5,000 

initially to be consistent with the direct 

loan making program. This change will 

improve program delivery by reducing 

the time required for an applicant to 

complete an application and reducing 

the time required by FSA to analyze an 

application. Program integrity will not 

be compromised as all significant debts 

will continue to be verified, and credit 

reports will continue to be obtained to 

verify debts of all sizes from lenders 

reporting to credit bureaus. 

Entity Owner and Operator 

Requirements 

The entity owner-operator rules for 

direct and guaranteed farm ownership 

loans are stated similarly and both have 

the same minor inconsistency. The rules 

initially state that when entity members 

are not related, the members holding a 

majority interest must own and operate 

the farm. However, the rule 

subsequently states that members of the 

farm entity (real estate) must own at 

least 50 percent of the family farm 

(operating entity). As 50 percent 

ownership does not constitute a 

majority, this minor inconsistency can 

cause confusion for applicants who are 

unsure if they can own the farm 


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Federal Register / Vol. 86, No. 150 / Monday, August 9, 2021 / Rules and Regulations 43385 

themselves if they only own 50 percent 

of the operating entity. 

This rule amends 7 CFR 762.120(i)(2) 

and (j)(2), 764.101(k), and 764.152(c) to 

ensure the rules consistently state that 

members owning at least 50 percent of 

the entity must own the farm. 

Guaranteed Operating Loan Use of 

Funds 

Direct and guaranteed operating loan 

funds may be used to cover the costs 

associated with compliance with the 

standards established by the 

Occupational Safety and Health Act of 

1970 (OSHA). Under 7 CFR 

764.251(a)(8), direct operating loan 

funds can be used for expenses 

involving OSHA compliance if the 

applicant demonstrates that compliance 

or non-compliance with the standards 

will cause substantial economic injury. 

This rule amends the guarantee 

operating loan use of funds regulation in 

7 CFR 762.121(a)(1)(ix) to match the 

regulation covering direct operating 

loan use of funds in 7 CFR 

764.251(a)(8). Specifically, this rule 

adds the term ‘‘or non-compliance’’ to 7 

CFR 764.121(a)(1)(ix) to clarify that the 

applicant may receive assistance if they 

demonstrate that the cost of compliance 

or resolving ‘‘non-compliance’’ with 

standards will cause substantial 

economic injury. This provides 

applicants additional flexibility to 

demonstrate the need for this assistance 

and encourages applicants to bring their 

operations into compliance with OSHA 

standards. 

Reference to Crop Insurance 

This rule amends 7 CFR 762.123(2)(i) 

to correct a cross reference to crop 

insurance requirements. The correct 

reference is 7 CFR 400.651. 

Timeframes for Direct Loan 

Application Processing 

Per 7 CFR 764.52(a), applicants for 

direct loan program benefits currently 

wait up to 10 calendar days from the 

date of application before they are 

notified whether their application for 

loan benefits is complete, or what 

additional information is required in 

order to complete the application. If 

additional information is required of the 

applicant, FSA provides written notice 

to the applicants that they must submit 

the information within 20 calendar days 

(see 7 CFR 764.52(a)). Should 

outstanding items still remain at the end 

of that 20-day period, 7 CFR 764.52(b) 

requires that FSA provides the applicant 

with an additional notification letter 

allowing for 10 additional days before 

the application would be withdrawn 

due to a lack of information. 

To improve customer service and 

reduce application processing times, 

this rule amends 7 CFR 764.52(a) and 

(b) to reduce application processing 

time from within 10 days to 7 days. FSA 

will review an initial application for 

completeness, and provide an applicant 

two 15-day opportunities to provide 

outstanding application items required 

to make an application complete. 

Applicants will still be provided a 

total of 30 days to submit outstanding 

items for a complete application. 

However, modifying the initial 

incomplete letter response date from 20 

to 15 days, and expanding the response 

timeframe of the second incomplete 

letter from 10 to 15 days, will result in 

improved processing timeframes as 

applicants will often make concerted 

efforts to ensure an application is 

completed within the timeframes 

provided in the initial response letter. 

Non-Essential Asset Security 

Requirements 

To reduce FSA credit needs or other 

outstanding obligations, direct loan 

applicants are required to liquidate or 

pledge non-essential assets with an 

aggregate value of over $5,000. An 

applicant may choose to not liquidate 

assets, and instead pledge the assets as 

security for the loan. The intent behind 

this rule is that FSA is assisting only 

those customers who truly require 

assistance. 

This rule amends 7 CFR 764.103(e) to 

increase the allowable aggregate value of 

non-essential assets to be maintained by 

the borrower up to $15,000 without 

having to pledge those assets as 

security. This adjustment is necessary to 

account for inflationary increases value 

of goods and allow a reasonable amount 

of non-essential assets to be retained. 

Direct Operating Loan Use of Funds 

Direct and guaranteed operating loan 

funds may be used to cover the 

purchase of equipment, which 

sometimes can be construed as minor 

fixtures to real property, including but 

not limited to, irrigation equipment or 

small wind machines. While it is 

commonly understood that mechanical 

equipment that are fixtures are eligible 

for both direct and guaranteed operating 

loan purposes, currently only the 

guaranteed operating loan rules 

specifically state fixtures are an 

authorized use of funds. 

This rule amends the direct operating 

loan use of funds regulation in 7 CFR 

764.251(a)(2) to memorialize the current 

practice in the regulation by matching 

the rule covering guaranteed operating 

loan use of funds in 7 CFR 762.121(a). 

Specifically, this rule adds the term ‘‘or 

fixtures’’ to 7 CFR 764.251(a)(2) to 

specify that farm equipment or fixtures 

are an authorized use of direct operating 

loan funds. 

Annual OL and EM Repayment Terms 

Working capital requirements for 

farms have become increasingly 

complex with the advent of new 

commodities, production techniques, 

commodity storage technologies, and 

marketing systems. This has resulted in 

earlier preparation and plantings and 

extended marketing periods for a single 

crop. Currently, the repayment term of 

an annual direct OL and annual EM 

loan may not exceed 18 months, unless 

there are specific unusual circumstances 

and security other than the commodity 

available to fully secure the loan. As a 

result, loans to producers who would 

typically require an annual operating 

loan term of up to 24 months are limited 

to a term of just 18 months. This will 

sometimes result in the producer being 

unable to repay a loan at maturity, 

thereby requiring a restructure of their 

account to provide additional time to 

repay the loan. This is an unnecessary 

administrative burden for both the 

borrower and Agency. 

This rule amends 7 CFR 764.254(b)(1) 

and 764.354(b)(3) to allow the standard 

repayment term of an annual direct OL 

and annual EM to be up to 24 months. 

This will ensure producers whose 

industry includes unique commodities, 

technologies or marketing systems are 

not disenfranchised from farm loan 

program benefits. 

Borrower Training Waivers 

Currently, unless previously 

completed, an applicant must agree to 

financial and production training at the 

time of application. As specified in 7 

CFR 764.453, FSA may choose to waive 

training requirements should the 

applicant’s history suggest they have 

undergone similar training, if training 

would not be beneficial to the applicant, 

or if training is not available. Borrowers 

are required to complete assigned 

financial or production training within 

2 years from the date of loan closing, 

with the possibility of a 1-year 

extension in certain circumstances. 

However, a borrower cannot have 

previously required training 

requirements waived. 

There are numerous circumstances 

that might justify a waiver of previously 

required borrower training. For 

example, a borrower may have 

voluntarily completed training from a 

non-approved vendor that results in 

demonstratable increased knowledge of 

and proficiency in financial or 

production concepts. However, even if 


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it is clear the borrower will not benefit 

from an approved vendor’s training, 

there is no mechanism for FSA to 

provide a waiver of the previously 

required training. 

This rule amends 7 CFR 764.453 by 

adding a new provision to allow FSA to 

waive previously required borrower 

training, if warranted, by reviewing 

evidence already obtained from an 

applicant that demonstrates the 

applicant now possesses experience and 

training necessary for a successful and 

efficient operation. 

Progression Lending 

FSA is revising outdated provisions in 

the regulations. Historically, FSA and 

its predecessor Agency, the Farmers 

Home Administration, has used the 

term ‘‘supervised credit’’ to describe its 

role as serving as a temporary source of 

credit for farmers and ranchers unable 

to secure commercial credit, often 

beginning or underserved famers, or 

those who suffered financial setbacks 

due to adverse weather or economic 

conditions. FSA is seeking to modify 

this long-term description of its role 

with more customer friendly language 

that is reflective of our mission to serve 

as a temporary source of credit and 

assist the borrower in graduating to 

commercial credit. 

Therefore, FSA is replacing references 

to ‘‘supervision’’ throughout 7 CFR part 

761 with the term ‘‘progression lending’’ 

or similar pro-graduation terminology. 

Assessment 

Regulations at 761.103 provide FSA, 

in collaboration with the loan applicant, 

will assess the farming operation to 

determine the applicant’s financial 

condition organizational structure, and 

management strengths and weaknesses; 

identify and prioritize training needs; 

and develop a plan to assist the 

applicant in transitioning to commercial 

credit. As provided in 7 CFR 761.103(e), 

FSA reviews the assesment annually to 

determine the borrower’s progress. 

Additionally, FSA classifies accounts as 

required by the Consolidated Farm and 

Rural Development Act and reviews 

accounts classified as ‘‘commercial’’ or 

‘‘standard’’ for graduation to 

commercial credit. The regulation in 7 

CFR 761.103(e) is being revised to 

clarify that the assessment review will 

be completed simultaneously with the 

classification or graduation review every 

other year to improve the efficiency of 

interactions between FSA and 

borrowers by minimizing the number of 

meetings required to fulfill loan 

servicing requirements. 

Year-End Analyses 

The regulations in 7 CFR 761.105 

require FSA to conduct a year-end 

analysis (YEAs) if the borrower has 

received any direct loan (except for 

streamlined Conservation loans), chattel 

subordination, or primary loan servicing 

action within the last year. In order to 

better manage the limited time resources 

of FSA staff, FSA is revising 7 CFR 

761.105 to eliminate the requirement to 

complete YEAs on chattel 

subordinations that are current or paid 

in full and Primary Loan Servicing 

actions successfully completed in the 

last year. FSA would continue to 

complete YEAs on financially distressed 

or delinquent borrowers and on 

borrowers with deferred loan payments. 

YEAs would also be required for 

existing borrowers receiving new direct 

loans or new subordinations. 

Limited Resource Reviews 

The regulations in 7 CFR 761.51 

require FSA to conduct a review of each 

borrower receiving limited resource 

interest rates each year. Due to low 

interest rates, limited resource interest 

rates have been higher than the regular 

program interest rates, and have 

significantly reduced the demand for 

limited resource rates over the last 

decade. Also, cash flows for farming 

operations do not typically change 

significantly from year to year. 

Therefore, FSA is amending 7 CFR 

761.51 to require a limited resource 

review every 2 years. This will reduce 

the workload for the FSA field staff 

when interest rates rise again. 

Reviewing the rates every 2 years will 

also tie in with the current classification 

and graduation review requirements and 

permit FSA loan officials to continue to 

monitor the borrower’s progress, while 

reducing the number of appeals. 

Borrower Entering the Armed Forces 

Section 332 of the CONACT states 

that a mobilized military reservist is an 

‘‘individual;’’ but FSA’s regulations do 

not address whether FSA considers sole 

member operating entities to be 

individuals for the purposes of section 

332 of the CONACT. FSA is amending 

the regulations by adding a new 7 CFR 

765.161 to specify that a sole member 

operating entity falls under the 

protections provided by section 332 of 

the CONACT. 

Surface Leases 

The regulations in 7 CFR 765.252 

address surface and mineral leases, but 

do not specifically address large scale 

surface leases for non-agricultural 

purposes, such as solar farms, that take 

many acres out of agriculture 

production. FSA is experiencing 

increased demand for these types of 

leases from borrowers, which remove 

large tracts of land from agricultural 

production. This can significantly 

impact the market value of FSA loan 

security, including the value of nonfarm tracts and can potentially place the 

borrower in non-monetary default for 

not farming the loan security. FSA is 

amending 7 CFR 765.252 to prohibit 

leases for purposes such as developing 

a solar farm. Leases for nonfarm 

purposes which do not require acreage 

to be taken out of agricultural 

production or on non-productive land 

may be considered. 

Release Without Compensation 

The regulations in 7 CFR 765.351 

allow FSA to release collateral without 

monetary consideration in cases where 

the agency is well-secured, and the 

borrower has not had a disaster set-aside 

or primary loan servicing in the 

previous 3 years. The regulation states 

that the value of retained and released 

security will be evaluated. FSA is 

amending 7 CFR 765.351 to eliminate 

the appraisal requirement on the 

property being released. This will 

reduce workload on field offices, 

improve customer service by reducing 

the time it takes to process releases, and 

result in cost savings to the Government 

since FSA pays for these appraisals. 

Appraisal Waiver 

The regulations in 7 CFR 765.353 

permits FSA to waive an appraisal 

requirement when the estimated value 

is less than $25,000. This waiver has 

been in place since 2004. With inflation, 

the value of the $25,000 is now $34,000. 

In addition, there is a considerable 

amount of comparable sale information 

available to allow loan officials to obtain 

an accurate estimate of property value. 

FSA is amending 7 CFR 765.353 to 

increase the limit to $50,000. The 

amendment will improve customer 

service by reducing the time it takes to 

process releases. More importantly, it 

will provide significant cost savings to 

the Government since FSA pays for 

these appraisals. 

PLS Notification Timeframe 

CONACT section 353(c)(4) provides 

FSA with 90 days to process primary 

loan servicing (PLS) and to notify 

borrower of its decision. Primary loan 

servicing includes debt consolidation, 

restructuring, reamortization, deferral, 

and debt writedown. The regulations in 

7 CFR 766.106 reduced the PLS 

processing timeframe to 60 days. 

Increasing the timeframe to 90 days for 

cases where a real estate appraisal is 


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1 ‘‘In real property law: Title is the means 

whereby the owner of lands has the just possession 

of his property. Co. Litt 345; 2 Bl. Comm. 195. Title 

is the mean whereby a person’s right to property is 

established. Code Ga. 1S82.’’ (Black’s Law 

Dictionary). Proof of title to land is usually shown 

by a deed filed in real estate records in the county 

where the land is located. ‘‘Clear title’’ means that 

there is no competing claim of ownership or 

interest in the property—that is, no other person or 

entity can claim a superior right of ownership or 

financial interest in the property. 

required (typically for debt writedown 

or conservation contract) will permit the 

local FSA agency official an additional 

30 days to complete PLS processing. 

Real estate appraisals often take weeks 

to obtain, which causes delay to the 

final PLS decision. Therefore, FSA is 

amending 7 CFR 766.106 to increase 

this timeframe to 90 days when a real 

estate appraisal is required. 

Writedown and Non-Writedown Offers 

The regulations in 7 CFR 766.111 

require that a borrower be offered both 

a writedown and non-writedown 

restructuring offer when both result in 

a feasible plan, even though the 

writedown offer can take longer to 

develop and requires additional 

appraisals. Often, the borrower does not 

request the writedown consideration 

since it results in debt forgiveness and 

can negatively impact eligibility for 

future loan assistance. Because FSA is 

required to complete the appraisals to 

determine a writedown amount, in 

many cases unnecessary time and 

expense is incurred for this process to 

be completed. As a result, FSA is 

amending 7 CFR 766.111 to allow the 

borrower to waive the writedown offer 

when the non-writedown offer results in 

a feasible plan. The change will result 

in a significant savings of FSA time and 

cost of obtaining appraisals in instances 

where the borrower does not request a 

writedown. FSA will discuss the 

alternatives with the borrower and will 

consider a writedown if desired. This 

modification will allow borrowers to 

make an informed decision regarding a 

writeddown and limitations established 

by Section 355 of the CONACT which 

only allows a borrower one writedown, 

not to exceed $300,000. 

Notice, Comment, and Effective Date 

The Administrative Procedure Act (5 

U.S.C. 553) provides that the notice and 

comment and 30-day delay in the 

effective date of the provisions do not 

apply when the rule involves a matter 

relating to agency management or 

personnel or to public property, loans, 

grants, benefits, or contracts (5 U.S.C. 

553(a)(2)). This rule involves loans and 

therefore falls within that exemption. In 

addition, because this rule is exempt 

from the requirements in 5 U.S.C. 553, 

is it 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, further, the definition of rule 

in 5 U.S.C. 601 is tied to the publication 

of a proposed rule. 

This rule is not a major rule for 

purposes of the 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. Consequently, 

this rule is effective upon publication 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 13573 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 

significant under Executive Order 

12866, and therefore, OMB has 

reviewed this rule. The costs and 

benefits of this rule are summarized 

below. The full cost benefit analysis is 

available on regulations.gov. 

Cost Benefit Analysis Summary 

HPRP assists in the resolution of 

heirs’ property issues through 

intermediary lenders (experienced nongovernmental non-profit organizations). 

HPRP assists intermediary lenders in 

the establishment of revolving funds for 

the purpose of financing owners of 

heirs’ property seeking to resolve land 

titles. 

The benefits are derived from clearly 

identifying the titles or deeds 1 to 

agricultural land by assisting with legal 

services and providing funding for heirs 

to buy out other heirs’ interest in jointly 

held land, resulting in improved 

participants’ financial standing. 

Landowners with a clear title will have 

greater access to credit and will be able 

to more easily participate in Federal and 

State farm and conservation programs, 

leading to increased land values. The 

net benefit of HPRP is estimated using 

a present value analysis of the beneficial 

cash flows for an average program 

participant. This estimate is then 

summed over the total number of heirs’ 

properties traditionally used for 

agriculture in Uniform Partition of Heirs 

Property Act states. 

Over the course of a 20-year period, 

when all the estimated impacts of HPRP 

are summed up, there are a little over 

$1.109 billion in benefits compared to 

total costs of $869 million for a total net 

benefit of $239.7 million. 

ECONOMIC BENEFIT AND COST OF HPRP TO USDA 

[In millions] 

Total Benefits ....................................................................................................................................................................................... $1,108.7 

Total Costs ........................................................................................................................................................................................... (869.0) 

Net Benefit of HPRP ............................................................................................................................................................................ 239.7 

Heirs’ property values are expected to 

be restored to fair market value resulting 

in a benefit of $365 million that 

includes a $209 million effect to access 

to direct government payments that 

accrue primarily to socially 

disadvantaged landowners (see table 

below). The increase in credit made 

available from the ability to collateralize 

the market value of heirs’ property is 

estimated to lead to incremental cash 

flows in farm income worth a little over 

$122 million. In addition, clear title 

allows increased opportunity for 

enrollment in farm programs, which has 


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a direct value of almost $299 million. 

The legal costs and interest charges on 

the loans used to pay them reduce this 

amount by almost $295 million. 

Additionally, untitled co-tenants, who 

are typically family members of the heir 

gaining title, gain $171 million when 

they are bought out. However, this is 

also a cost to the titled heir and so has 

a neutral effect on the participants’ costs 

and benefits. Therefore, net expected 

benefits to HPRP participants are 

estimated at $654 million. 

Net benefits of nearly $133 million 

also accrue to the intermediary lenders. 

This results from $158 million in 

returns to lending minus $25 million in 

servicing and marketing costs. 

Costs to the Federal Government are 

estimated to be $547 million, but $508 

million are direct Farm Program 

payments and their impact on the sales 

value of properties that are transfers 

from a society-wide perspective 

(included in the table below as both a 

benefit and a cost of HPRP, so they 

become a net cost of zero). Actual 

program costs to the Federal 

Government are estimated to be only 

$39 million over 20 years. This includes 

the 20 years of appropriations and 

administrative costs of HPRP. When all 

costs are considered, the net benefit of 

HPRP is estimated to be $240 million. 

ECONOMIC BENEFIT AND COST OF HPRP LIFE OF PROGRAM (20 YEARS) BY STAKEHOLDER

[$ millions] 

HPRP Participants 

Benefits: 

Restoration of Sales Value (without USDA payments) ................................................................................................................ $147.3 

Net Increase in Sales Value of Properties due to USDA payments ........................................................................................... 209.1 

Increase in Net Farm Income (without USDA payments) ............................................................................................................ 122.4 

Benefit to Untitled Co-tenants from Buy-outs .............................................................................................................................. 170.9 

Direct Government Payments ...................................................................................................................................................... 298.6 

Total Benefits ........................................................................................................................................................................ 948.3 

Costs: 

Legal Services .............................................................................................................................................................................. (117.9) 

Purchasing Interests of Co-tenants .............................................................................................................................................. (170.9) 

Loan Application Paperwork ......................................................................................................................................................... (5.7) 

Total Costs ............................................................................................................................................................................ (294.5) 

Net Expected Benefit ............................................................................................................................................................ 653.8 

Intermediary Lenders 

Benefit—Returns to Loans .................................................................................................................................................................. 157.6 

Cost—Non-interest Expense ............................................................................................................................................................... (12.0) 

Cost—Communication Expense .......................................................................................................................................................... (12.6) 

Net Expected Benefit .................................................................................................................................................................... 133.0 

FSA 

Cost—Budget and Subsidy Costs ....................................................................................................................................................... (41.4) 

Cost—Administrative Costs ................................................................................................................................................................. (0.8) 

Benefit—Offset Returns to Loans ........................................................................................................................................................ $2.8 

Total—Administrative and Budget Costs ............................................................................................................................................. (39.4) 

Transfer—Direct USDA Payments ...................................................................................................................................................... (298.6) 

Transfer—Impact to Sales Value due to USDA payments ................................................................................................................. (209.1) 

Net Expected Cost ....................................................................................................................................................................... (547.1) 

Net Benefit of HPRP ............................................................................................................................................................. 239.7 

Separate from heirs’ property 

considerations, the final rule also 

streamlines and consolidates various 

loan-making processes, thereby 

reducing unnecessary burdens on 

customers and FSA personnel. These 

changes are minor and are not expected 

to affect budget considerations 

associated with farm loan program 

lending authorities. As a result, no 

further analysis of these changes is 

provided in the cost benefit analysis for 

this rule. 

Environmental Review 

The environmental impacts of this 

final rule have been considered in a 

manner consistent with the provisions 

of the National Environmental Policy 

Act (NEPA, 42 U.S.C. 4321–4347), the 

regulations of the Council on 

Environmental Quality (40 CFR parts 

1500–1508), and the FSA regulations for 

compliance with NEPA (7 CFR part 

799). This rule implements the new 

HPRP, as authorized by the 2018 Farm 

Bill. 

The discretionary provisions needed 

to implement HPRP, specifically those 

relating to FSA loans to the 

intermediaries include the loan making 

and servicing rules. One discretionary 

provision that will not mirror current 

FSA direct and guaranteed loan 

programs rules is that implementation 

will be through an intermediary that 

will relend the HPRP funds. HPRP 

funds may not be used for new 

development or change in land use. All 

discretionary aspects of these loan 

actions are covered by the Categorical 

Exclusions in 7 CFR 799.31(b). 

FSA will continue to require sitespecific reviews for each loan 

application, as defined in §§ 799.31, 

799.32, and 799.33. As such, FSA will 

not prepare an environmental 

assessment or environmental impact 

statement for this regulatory action. 


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Federal Register / Vol. 86, No. 150 / Monday, August 9, 2021 / Rules and Regulations 43389 

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. The rule does not have 

retroactive effect. The administrative 

appeal provisions of 7 CFR parts 11 and 

780 are to be exhausted before any 

judicial action may be brought regarding 

the provisions of this rule. 

Executive Order 13175 

This rule has been reviewed in 

accordance with the requirements of 

Executive Order 13175, ‘‘Consultation 

and Coordination with Indian Tribal 

Governments.’’ 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. 

The USDA’s Office of Tribal Relations 

(OTR) has assessed the impact of this 

rule on Indian Tribes and determined 

that this rule does have Tribal 

implications. OTR has determined that 

Tribal consultation under Executive 

Order 13175 is not required at this time 

and two different opportunities were 

afforded to consult on this topic. If a 

tribe requests consultation, FSA will 

work with OTR to ensure meaningful 

consultation is provided where changes, 

additions, and modifications identified 

in this rule are not expressly mandated 

by law. OTR strongly suggests that the 

FSA Outreach plan be implemented as 

soon as possible for our tribal 

stakeholders. 

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 Bill Northey, as 

the USDA Under Secretary for the Farm 

Production and Conservation mission 

area at that time, as part of the Title I 

session. There were no specific 

comments from Tribes on this rule 

during Tribal consultation. 

There was a second Tribal 

Consultation on the Implementation of 

the 2018 Farm Bill held at the National 

Congress for the American Indian 

conference on June 26, 2019, in Sparks, 

Nevada. This rule was not raised as an 

issue by the Tribal leaders. Tribes can 

request consultation at any time. FSA 

will work with OTR to ensure 

meaningful consultation is provided 

where changes, additions, and 

modifications identified in this rule are 

not expressly mandated by law. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandate 

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 proposed and final 

rules with Federal mandates that may 

result in expenditures of $100 million or 

more in any 1 year for State, local, or 

Tribal governments, in the aggregate, or 

to the private sector. UMRA generally 

requires agencies to consider alternative 

methods 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 of the Unfunded Mandates Reform 

Act of 1995 for State, local, or Tribal 

governments, or the private sector. 

Therefore, this rule is not subject to the 

requirements of sections 202 and 205 of 

UMRA. 

Paperwork Reduction Act 

FSA expects to have fewer than 10 

intermediary lenders eligible to 

participate in HPRP annually. There are 

limited entities that will qualify to be 

intermediary lenders for HPRP. Current 

appropriations will not fund a 

significant number of intermediary 

lenders. Therefore, HPRP would not 

require OMB approval under the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501–3520). The annual 

monitoring reports and the agreements 

approved by FSA that were discussed 

above will be provided by the 

intermediary lenders. We will provide 

the USDA form for the voluntary 

collection of race, ethnicity, and gender 

from the ultimate recipients (form AD– 

2106, Form to Assist in Assessment of 

USDA Compliance with Civil Rights 

Laws). As noted above, the 

intermediaries will request the 

information and maintain it. The public 

burden for the use of the form is covered 

under OMB control number 0503–0019. 

The program delivery and oversight 

changes will not impact the burden 

estimate for the information collection 

for FSA’s farm loans. 

Additionally, FSA will not be 

collecting any information from the 

ultimate recipients who receive funds 

pursuant to Heirs’ Property Relending. 

There are application and reporting 

requirements on HPRP activities from 

intermediaries to FSA. The 

intermediaries must allow FSA to 

review the ultimate recipients’ records; 

the intermediary’s records are expected 

to be a part of customary and usual 

business practices for processing loans. 

Therefore, the burden associated with 

recordkeeping is excluded. FSA will 

lend funds to an eligible entity, which 

will then relend directly to an 

individual or an entity. The 

intermediary lender will be an entity 

that meets certain criteria to be 

established by FSA. Examples of such 

criteria include requirements that the 

intermediary lender: 

(1) Is certified as a community 

development financial institution under 

12 CFR 1805.201 (or successor 

regulations) to operate as a lender; and 

(2) Has the requisite experience and 

capability to make and service 

agricultural and commercial loans that 

are similar in nature to HPRP. 

Federal Assistance Programs 

The title and number of each Federal 

Assistance Program found 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; and 

10.128 Heirs’ Property Relending 

Program. 

USDA Non-Discrimination Policy 

In accordance with Federal civil 

rights law and U.S. Department of 

Agriculture (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 


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responsible Agency or USDA TARGET 

Center at (202) 720–2600 (voice and 

TTY) or contact USDA through the 

Federal Relay Service at (800) 877–8339. 

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. 

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 769 

Loan program—Agriculture, Land. 

For the reasons discussed above, FSA 

amends 7 CFR chapter VII 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 

■ 2. Amend § 761.2: 

■ a. In paragraph (a), by adding an entry 

for the acronym ‘‘HPRP’’ in alphabetical 

order; and 

■ b. In paragraph (b): 

■ i. By removing the definition of 

‘‘Downpayment loan’’; 

■ ii. By adding in alphabetical order a 

definition for ‘‘Down payment loan’’; 

■ iii. In the definition of ‘‘Family farm’’, 

in paragraphs (2)(i)(A) and (2)(ii)(A), by 

removing the words ‘‘borrower and’’ 

and adding ‘‘borrower, with input and 

assistance allowed from’’ in their place; 

and 

■ iv. By adding in alphabetical order 

definitions for ‘‘Heirs’ property’’; ‘‘HPRP 

loan agreement’’, ‘‘HPRP loan funds’’; 

‘‘HPRP revolving loan fund’’; 

‘‘Intermediary’’; ‘‘Non-monetary 

default’’; ‘‘Revolved funds’’; 

‘‘Succession plan’’; ‘‘Ultimate 

recipient’’; and ‘‘Undivided ownership 

interest’’. 

The additions read as follows: 

§ 761.2 Abbreviations and definitions. 

* * * * * 

(a) * * * 

HPRP The Heirs’ Property Relending 

Program. 

* * * * * 

(b) * * * 

Down payment loan is a type of FO 

loan made to beginning farmers and 

socially disadvantaged farmers to 

finance a portion of a real estate 

purchase under part 764, subpart E of 

this chapter. 

* * * * * 

Heirs’ property means a farm that is 

jointly held by multiple heirs as tenants 

in common as a result of inheriting title 

from a relative. 

* * * * * 

HPRP loan agreement means the 

signed agreement between FSA and the 

intermediary that specifies the terms 

and conditions of the HPRP loan. 

HPRP loan funds means cash 

proceeds of a loan obtained through 

HPRP, including the portion of an HPRP 

revolving loan fund directly provided 

by the HPRP loan as well as the 

proceeds advanced to an ultimate 

recipient. HPRP loan funds are Federal 

funds. 

HPRP revolving loan fund means a 

group of assets, obtained through or 

related to an HPRP loan and recorded by 

the intermediary in a bookkeeping 

account or set of accounts and 

accounted for, along with related 

liabilities, revenues, and expenses, as an 

entity or enterprise separate from the 

intermediary’s other assets and financial 

activities. 

* * * * * 

Intermediary means the entity 

requesting or receiving HPRP loan funds 

for establishing a revolving loan fund 

and relending to ultimate recipients. 

* * * * * 

Non-monetary default means a 

situation where a borrower is not in 

compliance with the covenants or 

requirements of the loan documents, 

program requirements, or loan. 

* * * * * 

Revolved funds means the cash 

portion of an HPRP revolving loan fund 

that is not composed of HPRP loan 

funds, including funds that are 

repayments of HPRP loans and 

including fees and interest collected on 

such loans. 

* * * * * 

Succession plan means a general plan 

to address the continuation of the farm, 

which may include specific intra-family 

succession agreements or strategies to 

address business asset transfer planning 

to create opportunities for farmers and 

ranchers. 

* * * * * 

Ultimate recipient means an entity or 

individual that receives a loan from an 

intermediaries’ HPRP revolving loan 

fund. 

* * * * * 

Undivided ownership interest means a 

common interest in the whole parcel of 

land that is owned by two or more 

people. Undivided ownership interest 

does not include those who own a 

specific piece of a parcel of land; rather 

they own a percentage interest in a 

parcel of land as a whole. 

* * * * * 

§ 761.7 [Amended] 

■ 3. Amend § 761.7 in paragraphs (c)(1) 

introductory text and (c)(2) by removing 

the number ‘‘12’’ and adding the 

number ‘‘18’’ in its place. 

§ 761.8 [Amended] 

■ 4. Amend § 761.8 in paragraph (a)(1) 

introductory text by removing the word 

‘‘Downpayment’’ and adding the words 

‘‘Down payment’’ in its place. 

Subpart B—Supervised Bank 

Accounts 

■ 5. Amend § 761.51 by revising 

paragraph (a)(1) to read as follows: 

§ 761.51 Establishing a supervised bank 

account. 

(a) * * * 

(1) Assure correct use of funds are 

planned and released for capital 

purchases, construction projects, site 

development work, debt refinancing, or 

proceeds from the sale of basic security, 

and perfection of the Agency’s security 

interest in assets purchased or 

refinanced when electronic funds 

transfer or treasury check processes are 

not practicable; 

* * * * * 


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Subpart C—Progression Lending 

■ 6. Revise the subpart C heading to 

read as set forth above. 

■ 7. Amend § 761.103: 

■ a. In paragraph (a)(3), by removing the 

words ‘‘plan of supervision’’ and adding 

the words ‘‘progressive lending plan’’ in 

their place; 

■ b. In paragraphs (b)(8) and (c)(5), by 

removing the word ‘‘Supervisory’’ and 

adding the words ‘‘Progression lending’’ 

in its place; and 

■ c. By revising paragraph (e). 

The revision reads as follows: 

§ 761.103 Farm assessment. 

* * * * * 

(e) The Agency reviews the 

assessment to determine a borrower’s 

progress at least annually, combining 

any required classification and 

graduation reviews as part of the review. 

For streamlined CLs, the borrower must 

provide a current balance sheet and 

income tax records. Any negative trends 

noted between the previous years’ and 

the current years’ information must be 

evaluated and addressed in the 

assessment of the streamlined CL 

borrower. 

* * * * * 

■ 8. Amend § 761.104 by revising 

paragraph (c)(4)(i) to read as follows: 

§ 761.104 Developing the farm operating 

plan. 

* * * * * 

(c) * * * 

(4) * * * 

(i) Use county average yields, or state 

average yields if county average yields 

are not available, in place of the disaster 

year yields when the county or state 

average yields are realistic and 

reasonable compared to the applicant’s 

actual non-disaster year yields, as 

determined by the agency approval 

official; or 

* * * * * 

■ 9. Amend § 761.105 by revising 

paragraphs (a)(1) and (4) to read as 

follows: 

§ 761.105 Year-end analysis. 

(a) * * * 

(1) Is being considered for a new 

direct loan or subordination; 

* * * * * 

(4) Is receiving a limited resource 

interest rate on any loan, in which case 

the review will be completed at least 

every 2 years. 

* * * * * 

Subpart D—Allocation of Farm Loan 

Programs Funds to State Offices 

§ 761.211 [Amended] 

■ 10. Amend § 761.211 in paragraph (a) 

by removing the word ‘‘Downpayment’’ 

and adding the words ‘‘Down payment’’ 

in its place. 

Subpart F—Farm Loan Programs Debt 

Settlement 

§ 761.405 [Amended] 

■ 11. Amend § 761.405 in paragraph 

(a)(6) by removing the words ‘‘greater 

than $1,000’’ and adding the words 

‘‘exceeding an amount determined by 

the Agency’’ in their place. 

PART 762—GUARANTEED FARM 

LOANS 

■ 12. The authority citation for part 762 

continues to read as follows: 

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

§ 762.110 [Amended] 

■ 13. Amend § 762.110 in paragraph 

(d)(2) by removing ‘‘over $1,000’’ and 

adding ‘‘exceeding an amount 

determined by the Agency’’ in its place. 

§ 762.120 [Amended] 

■ 14. Amend § 762.120: 

■ a. In paragraph (i)(2)(iii), by removing 

the words ‘‘a majority interest must’’ 

and adding ‘‘at least 50 percent interest 

must’’ in their place; and 

■ b. In paragraph (j)(2)(iii), by removing 

the words ‘‘a majority interest must 

operate the family farm and the entity 

members holding a majority interest’’ 

and adding ‘‘at least 50 percent interest 

must operate the family farm and the 

entity members holding at least 50 

percent’’ in their place. 

§ 762.121 [Amended] 

■ 15. Amend § 762.121: 

■ a. In paragraph (a)(1)(ix), by adding 

the words ‘‘or non-compliance’’ after the 

word ‘‘compliance’’ in the second 

sentence; and 

■ b. In paragraph (b)(1), by removing the 

word ‘‘downpayment’’ and adding the 

words ‘‘down payment’’ in its place. 

§ 762.123 [Amended] 

■ 16. Amend § 762.123 in paragraph 

(a)(2)(i) by removing ‘‘part 402’’ and 

adding ‘‘§ 400.651’’ in its place. 

§ 762.127 [Amended] 

■ 17. Amend § 762.127 in paragraphs 

(c)(2) introductory text and (c)(3) by 

removing the number ‘‘12’’ and adding 

the number ‘‘18’’ in its place each time 

it appears. 

§ 762.129 [Amended] 

■ 18. Amend § 762.129 in paragraph 

(b)(1)(ii) by removing the word 

‘‘downpayment’’ and adding ‘‘down 

payment’’ in its place. 

§ 762.130 [Amended] 

■ 19. Amend § 762.130 in paragraph 

(d)(4)(iii)(C) by removing the word 

‘‘Downpayment’’ and adding the words 

‘‘Down Payment’’ in its place. 

§ 762.145 [Amended] 

■ 20. Amend § 762.145 in paragraph 

(b)(2)(iv) by removing the words ‘‘of 

$1000 or more’’ and adding the words 

‘‘exceeding an amount determined by 

the Agency.’’ in their place. 

PART 764—DIRECT LOAN MAKING 

■ 21. The authority citation for part 764 

continues to read as follows: 

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

Subpart B—Loan Application Process 

§ 764.52 [Amended] 

■ 22. Amend § 764.52: 

■ a. In paragraph (a), by removing the 

number ‘‘10’’ and adding ‘‘7 calendar’’ 

in its place and by removing the number 

‘‘20’’ and adding the number ‘‘15’’ in its 

place; and 

■ b. In paragraph (b), by removing the 

number ‘‘10’’ and add the number ‘‘15’’ 

in its place. 

§ 764.54 [Amended] 

■ 23. Amend § 764.54 in paragraph 

(b)(2)(ii) by removing the word 

‘‘downpayment’’ and adding the words 

‘‘down payment’’ in its place. 

Subpart C—Requirements for All 

Direct Program Loans 

§ 764.101 [Amended] 

■ 24. Amend § 764.101 in paragraph 

(k)(2)(ii) by removing the words ‘‘a 

majority’’ and adding ‘‘at least 50 

percent’’ in their place. 

§ 764.103 [Amended] 

■ 25. Amend § 764.103 in paragraph (e) 

by removing ‘‘$5,000’’ and adding 

‘‘$15,000’’ in its place. 

Subpart D—Farm Ownership Loan 

Program 

§ 764.152 [Amended] 

■ 26. Amend § 764.152 in paragraph 

(c)(3)(ii) by removing the words ‘‘a 

majority’’ and adding ‘‘at least 50 

percent’’ in their place each time they 

appear. 


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Subpart E—Downpayment Loan 

Program 

■ 27. Amend § 764.201 by revising the 

section heading and removing the word 

‘‘Downpayment’’ and adding the words 

‘‘Down payment’’ in its place. 

The revision reads as follows: 

§ 764.201 Down payment loan uses. 

* * * * * 

§ 764.203 [Amended] 

■ 28. Amend § 764.203: 

■ a. In paragraph (a)(2), by removing the 

word ‘‘downpayment’’ and adding the 

words ‘‘down payment’’ in its place; 

and 

■ b. In paragraphs (b) introductory text 

and (c), by removing ‘‘Downpayment’’ 

and adding ‘‘Down payment’’ in its 

place. 

§ 764.204 [Amended] 

■ 29. Amend § 764.204 in paragraphs (a) 

and (b)(1) by removing the word 

‘‘Downpayment’’ and adding the words 

‘‘Down payment’’ in its place. 

§ 764.205 [Amended] 

■ 30. Amend § 764.205 in the 

introductory text by removing the word 

‘‘Downpayment’’ and adding the words 

‘‘Down payment’’ in its place. 

Subpart G—Operating Loan Program 

§ 764.251 [Amended] 

■ 31. Amend § 764.251 in paragraph 

(a)(2) by adding the words ‘‘or fixtures’’ 

after the word ‘‘equipment’’. 

§ 764.254 [Amended] 

■ 32. Amend § 764.254 in paragraphs 

(b)(1)(i) and (ii) by removing the number 

‘‘18’’ and adding ‘‘24’’ in its place. 

Subpart I—Emergency Loan Program 

§ 764.354 [Amended] 

■ 33. Amend § 764.354 in paragraph 

(b)(3) by removing the number ‘‘18’’ and 

adding ‘‘24’’ in its place. 

Subpart K—Borrower Training and 

Training Vendor Requirements 

■ 34. Amend § 764.453 by adding 

paragraph (d) to read as follows. 

§ 764.453 Agency waiver of training 

requirements. 

* * * * * 

(d) When considering subsequent loan 

actions, previous training requirements 

that have not yet been satisfied may be 

waived by the Agency should the 

borrower submit satisfactory evidence 

in accordance with paragraph (b) of this 

section. 

PART 765—DIRECT LOAN 

SERVICING—REGULAR 

■ 35. The authority citation for part 765 

continues to read as follows: 

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

Subpart B—Borrowers with Limited 

Resource Interest Rate Loans 

■ 36. Amend § 765.51 by revising the 

section heading and paragraph (a) to 

read as set forth below. 

§ 765.51 Required review. 

(a) At least every 2 years, a borrower 

with limited resource interest rate loans 

is required to provide the operation’s 

financial information to the Agency; for 

the Agency to determine if the borrower 

can afford to pay a higher interest rate 

on the loan. The Agency will review the 

information provided in accordance 

with § 761.105 of this chapter. 

* * * * * 

Subpart D—Borrower Payments 

■ 37. Add § 765.161 to read as follows: 

§ 765.161 Borrowers entering the Armed 

Forces. 

(a) Protections for borrowers on active 

duty. The Servicemembers Civil Relief 

Act (Pub. L. 108–189) and the Ronald 

W. Reagan National Defense 

Authorization Act for Fiscal Year (FY) 

2005 (Pub. L. 108–375) provide certain 

loan servicing protections for military 

borrowers. The Agency will apply those 

loan servicing protections to applicable 

Farm Loan borrowers. 

(1) The benefits and protections of the 

Servicemembers Civil Relief Act apply 

to borrowers on active duty at all times. 

(2) The requirements of the Ronald W. 

Reagan National Defense Authorization 

Act for Fiscal Year (FY) 2005 apply 

during a time of a war or national 

emergency as declared by the President 

or Congress. 

(b) Eligibility for National Guard 

members and military reservists. 

Borrowers who are National Guard 

members or military reservists will be 

eligible for the protections covered by 

this section, as specified in paragraphs 

(b)(1) and (2) of this section: 

(1) National Guard members must be 

on duty for at least 30 consecutive 

calendar days. 

(2) Military reservists are eligible from 

the date orders are received to report for 

active duty. 

(c) Entity eligibility. National Guard 

members and military reservists on 

active duty and any operating entity 

owned solely by the active duty 

borrower may be considered for 

protections specified in paragraph (a) of 

this section. 

Subpart F—Required Use and 

Operation of Agency Security 

■ 38. Amend § 765.252 by revising 

paragraph (a)(4) to read as follows: 

§ 765.252 Lease of security. 

(a) * * * 

(4) The lease does not hinder the 

future operation or success of the farm, 

or, if the borrower has ceased to operate 

the farm, the requirements specified in 

§ 765.253 are met. Leases for nonfarm 

enterprises, such as solar farms, which 

take significant acreage of the operation 

out of agriculture production are not 

authorized. Non-productive land may be 

considered for this type of lease; and. 

* * * * * 

Subpart H—Partial Release of Real 

Estate Security 

§ 765.351 [Amended] 

■ 39. Amend § 765.351 in the second 

sentence of paragraph (f)(6) by removing 

the words ‘‘and released’’. 

§ 765.353 [Amended] 

■ 40. Amend § 765.353 in paragraph 

(a)(2) by removing ‘‘$25,000’’ and 

adding ‘‘$50,000’’ in its place. 

PART 766—DIRECT LOAN 

SERVICING—SPECIAL 

■ 41. 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 

■ 42. In § 766.106 amend the 

introductory text by adding a second 

sentence to read as follows: 

§ 766.106 Agency notification of decision 

regarding a complete application. 

* * * Except that when a real estate 

appraisal is involved, the Agency will 

send the borrower notification of the 

Agency’s decision within 90 calendar 

days after receiving a complete 

application. 

* * * * * 

■ 43. Amend § 766.111 by: 

■ a. Revising the paragraph (a) subject 

heading; 

■ b. Adding introductory text to 

paragraph (b); and 

■ c. Revising paragraph (b)(1). 

The revisions and addition read as 

follows: 

§ 766.111 Writedown. 

(a) Borrower eligibility. * * * 

* * * * * 


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(b) Conditions. The conditions 

required for approval of writedown are: 

(1) Rescheduling, consolidation, 

reamortization, deferral or some 

combination of these options on all of 

the borrower’s loans would not result in 

a feasible plan with a 110 percent debt 

service margin. If a feasible plan is 

achieved with a debt service margin of 

101 percent or more, the Agency will 

permit a borrower to accept a nonwritedown servicing offer and waive the 

right to a writedown offer when the 

writedown offer will require additional 

time and appraisals to fully develop. If 

after obtaining an appraisal a feasible 

plan is achieved with and without a 

writedown and the borrower meets all 

the eligibility requirements, both 

options will be offered and the borrower 

may choose one option. 

* * * * * 

§ 766.202 [Amended] 

■ 44. Amend § 766.202 in paragraph (a) 

introductory text by removing the 

number ‘‘12’’ and adding the number 

‘‘18’’ in its place. 

PART 769—FARM LOAN PROGRAMS 

RELENDING PROGRAMS 

■ 45. The authority citation for part 769 

continues to read as follows: 

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

and 25 U.S.C. 488. 

■ 46. Revise the heading for part 769 to 

read as set forth above. 

§§ 769.101 through 769.125 [Redesignated 

as Subpart A] 

■ 47. Redesignate §§ 769.101 through 

769.125 as subpart A under the 

following heading: 

Subpart A—Highly Fractionated Indian 

Land Loan Program 

■ 48. Add subpart B, consisting of 

§§ 769.150 through 769.168, to read as 

follows: 

Subpart B—Heirs’ Property Relending 

Program 

Sec. 

769.150 Purpose. 

769.151 Abbreviations and definitions. 

769.152 Eligibility requirements of the 

intermediary. 

769.153 Eligibility requirements of the 

ultimate recipient. 

769.154 Authorized loan purposes. 

769.155 Loan limitations. 

769.156 Rates and terms. 

769.157 Intermediary’s relending plan. 

769.158 Intermediary’s loan application. 

769.159 Processing loan applications. 

769.160 Letter of conditions. 

769.161 Loan agreements. 

769.162 Security. 

769.163 Loan closing. 

769.164 Post award requirements. 

769.165 Loan servicing. 

769.166 Transfers and assumptions. 

769.167 Appeals. 

769.168 Exceptions. 

Subpart B—Heirs’ Property Relending 

Program 

§ 769.150 Purpose. 

(a) This subpart contains regulations 

for loans made by the Agency to eligible 

intermediaries that will make and 

service loans to ultimate recipients 

pursuant to requirements in this 

subpart. This subpart applies to 

intermediaries, ultimate recipients, and 

other parties involved in making such 

loans. 

(b) The purpose of HPRP is to assist 

heirs with undivided ownership 

interests resolve ownership and 

succession issues on a farm that is 

owned by multiple owners. This 

purpose is achieved by providing loan 

funds to eligible intermediaries who 

will re-lend to individuals and entities 

for the purpose of developing and 

implementing a succession plan and to 

resolve title issues. 

(c) Intermediaries receiving HPRP 

loans must comply with this subpart, 

the HPRP loan agreement, the 

intermediary’s relending plan approved 

by the Agency, the HPRP loan 

documents and security instruments 

and any other conditions that the 

Agency may impose in making a loan. 

§ 769.151 Abbreviations and definitions. 

Abbreviations and definitions used in 

this subpart are found in § 761.2 of this 

chapter. 

§ 769.152 Eligibility requirements of the 

intermediary. 

(a) Eligible entity types. Cooperatives, 

credit unions, and nonprofit 

organizations are eligible to participate 

as intermediaries. 

(b) Certification. The intermediary 

must be certified as a community 

development financial institution under 

12 CFR 1805.201 to operate as a lender. 

(c) Citizenship. The applicant and the 

members of the intermediary must be a 

U.S. citizen or qualified alien (see 8 

U.S.C. 1641). Each intermediary must 

certify to the citizenship requirement in 

the HPRP loan application. 

(d) Experience. The intermediary 

must have: 

(1) The requisite experience and 

capability in making and servicing 

agricultural and commercial loans that 

are similar in nature to HPRP. If 

consultants will be used in the making 

and servicing of HPRP loans, the 

Agency will assess the intermediary’s 

experience in choosing and supervising 

consultants based on information 

intermediaries include in their 

application describing the particular 

lending functions they typically rely on 

agents to fulfill and also describe their 

policies and procedures for monitoring 

these agents; 

(2) The legal authority necessary to 

carry out the proposed loan purposes 

and to obtain, provide security for, and 

repay the proposed loan; and 

(3) Demonstrated ability and 

willingness to repay the loan based on 

the intermediary’s financial condition, 

managerial capabilities, and other 

resources. 

§ 769.153 Eligibility requirements of the 

ultimate recipient. 

(a) The eligibility requirements for the 

ultimate recipient are: 

(1) Ultimate recipients must be 

individuals or legal entities, with 

authority to incur the debt and to 

resolve ownership and succession of a 

farm owned by multiple owners; 

(2) Individual ultimate recipients or 

members of entity ultimate recipients 

must be a family member or heir-at-law 

related by blood or marriage to the 

previous owner of the real property; and 

(3) The ultimate recipient must agree 

to complete a succession plan. 

(b) The intermediary will determine 

the eligibility of the applicant to become 

the ultimate recipient in accordance 

with the rules provided in this subpart 

and in accordance with the 

intermediary’s relending plan as 

approved by the Agency in the HPRP 

loan agreement. 

§ 769.154 Authorized loan purposes. 

(a) Loans to the intermediary. HPRP 

loan funds must be used by the 

intermediary to provide direct loans to 

eligible ultimate recipients according to 

the rules provided in this subpart and 

pursuant to the HPRP loan agreement 

approved by the Agency. 

(b) Loans to the ultimate recipients. 

HPRP loan funds: 

(1) Must be used to assist heirs with 

undivided ownership interests to 

resolve ownership and succession of a 

farm owned by multiple owners; 

(2) Must be sufficient to cover costs 

and fees associated with development 

and implementation of the succession 

plan, including closing costs (such as 

costs for preparing documents, 

appraisals, surveys, and title reports) 

and other associated legal services (such 

as fees incurred for mediation); and 

(3) May be used to purchase and 

consolidate fractional interests held by 

other heirs in jointly-owned property, 

and to purchase rights-of-way, water 

rights, easements, and other 


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appurtenances that would normally 

pass with the property and are 

necessary for the proposed operation of 

the farm. 

§ 769.155 Loan limitations. 

(a) For each application period: 

(1) Loans to intermediaries will not 

exceed $5,000,000 to any intermediary; 

(2) Loans to ultimate recipients will 

not exceed the loan limit for a Direct 

Farm Ownership loan as specified in 

§ 761.8(a)(1)(i) of this chapter to any 

ultimate recipient. 

(b) Loans to the ultimate recipient 

may not be used: 

(1) For any land improvement, 

development purpose, acquisition or 

repair of buildings, acquisition of 

personal property, payment of operating 

costs, payment of finders’ fees, or 

similar costs; 

(2) For any purpose that will 

contribute to excessive erosion of highly 

erodible land or for the conversion of 

wetlands to produce an agricultural 

commodity as specified in 7 CFR part 

12; or 

(3) To resolve heirs’ property issues 

on property that will not be used, or has 

traditionally not been used, for 

production agricultural purposes. 

(c) The HPRP loan amount may not 

exceed the current market value of the 

land determined by an appraisal that 

meets the requirements specified in 

§ 761.7(b)(1) of this chapter; and 

(d) Intermediaries who receive HPRP 

funding are not permitted to charge the 

ultimate recipients for mediation 

services provided through grants 

received under the Agency’s State 

Agriculture Mediation Program (part 

785 of this chapter). 

§ 769.156 Rates and terms. 

(a) For loans to intermediaries: 

(1) The rate of interest for an HPRP 

loan will bear a fixed rate over the term 

of the loan of 1 percent or less as 

determined by the Administrator; 

(2) The repayment term for an HPRP 

loan will not exceed 30 years; and 

(3) Annual payments will be 

established. Interest will be due 

annually; however, principal payments 

may be deferred by the Agency. 

(b) Loans to the ultimate recipient 

from the HPRP revolving loan fund are 

required to have rates and terms clearly 

and publicly disclosed to qualified 

ultimate recipients. 

(1) The interest rate for loans to 

ultimate recipients will be set by the 

intermediary within the limits 

established by the intermediary’s 

relending plan approved by the Agency. 

The rate should normally be the lowest 

rate sufficient to cover the loan’s 

proportional share of the HPRP 

revolving loan fund’s debt service costs, 

reserve for bad debts, and 

administrative costs. 

(2) Loans made by an intermediary to 

an ultimate recipient will be scheduled 

for repayment over a term negotiated by 

the intermediary and ultimate recipient; 

but in no case will the loan term exceed 

30 years, unless otherwise specified by 

the Agency. 

§ 769.157 Intermediary’s relending plan. 

(a) The intermediary must submit a 

proposed relending plan which, once 

approved by the Agency, will be 

incorporated by reference as an 

attachment to the HPRP loan agreement. 

The relending plan will explain in 

sufficient detail the mechanics of how 

the funds will be distributed from the 

intermediary to the ultimate recipient. 

(b) The intermediary’s relending plan 

must include copies of the 

intermediary’s proposed application 

forms, loan documents and security 

instruments, and should include 

information regarding: 

(1) The service area; 

(2) The proposed fees and other 

charges the intermediary will assess the 

ultimate recipients; 

(3) Eligibility criteria for the ultimate 

recipient; 

(4) Authorized loan purposes; 

(5) Loan limitations; 

(6) Loan underwriting methods and 

criteria; 

(7) Loan rates and terms; 

(8) Security requirements; 

(9) The method of disbursement of the 

funds to the ultimate recipient; 

(10) The process for addressing 

environmental issues on property to be 

purchased; 

(11) The proposed process for 

reviewing loan requests from ultimate 

recipients and making eligibility 

determinations; 

(12) A description of the established 

internal credit review process; 

(13) The monitoring and servicing of 

loans distributed to the ultimate 

recipients; 

(14) The amount that will be set aside 

to maintain a reserve for bad debts; and 

(15) A description of the requirements 

for maintaining adequate hazard 

insurance, life insurance (for principals 

and key employees of the ultimate 

recipient), workmen’s compensation 

insurance on ultimate recipients, flood 

insurance, and fidelity bond coverage. 

§ 769.158 Intermediary’s loan application. 

(a) The intermediary’s loan 

application will consist of: 

(1) An application form provided by 

the Agency; 

(2) A relending plan addressing the 

items in § 769.157; 

(3) A copy of the intermediary’s 

certification as a community 

development financial institution; 

(4) A signed form, to be provided by 

the Agency, assuring the intermediary’s 

compliance and continued compliance 

with Title IX of the Education 

Amendments of 1972 (20 U.S.C. 1681– 

1688) and Title VI of the Civil Rights 

Act of 1964 (42 U.S.C. 2000d–1– 

2000d–7); 

(5) Other evidence the Agency 

requires to determine that the 

intermediary satisfies the eligibility 

requirements in § 769.152, and that the 

intermediary’s proposed relending plan 

is feasible and meets the objectives of 

HPRP; 

(6) Documentation of the 

intermediary’s ability to administer the 

HPRP loan funds in accordance with 

this subpart; and 

(7) The name(s) of attorneys or any 

third parties involved with the 

application process. 

(b) Prior to loan approval and 

advancing funds, the intermediary must 

certify that: 

(1) The intermediary and its officers, 

or agents are not delinquent on any 

Federal debt, including, but not limited 

to, federal income tax obligations, 

federal loan or loan guarantee, or 

obligation from another Federal agency. 

If delinquent, the intermediary must 

provide in writing the reasons for the 

delinquency, and the Agency will take 

this into consideration in deciding 

whether to approve the loan or advance 

of funds; 

(2) The intermediary and its officers 

have not been convicted of a felony 

criminal violation under Federal law in 

the 24 months preceding the date of the 

loan application; 

(3) The intermediary is in compliance 

with the restrictions and requirements 

in 31 U.S.C. 1352, limitation on use of 

appropriated funds to influence certain 

Federal contracting and financial 

transactions; 

(4) The intermediary has been 

informed of the options by the Federal 

Government to collect delinquent debt; 

and 

(5) The intermediary, its officers, or 

agents are not debarred or suspended 

from participation in Government 

contracts or programs. 

(c) An intermediary that has received 

one or more HPRP loans may apply for 

and be considered for subsequent HPRP 

loans provided: 

(1) The intermediary is relending all 

collections from loans made from its 

revolving fund in excess of what is 

needed for the required debt service 


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reserve and approved administrative 

costs; 

(2) The outstanding loans of the 

intermediary’s HPRP revolving loan 

fund are performing; and 

(3) The intermediary is following all 

regulatory requirements and is 

complying with the terms and 

conditions of its HPRP loan 

agreement(s) and the intermediary’s 

relending plan(s) approved by the 

Agency. 

(d) The Agency may require the 

intermediary to provide information 

relating to applications from ultimate 

recipients the intermediary has in 

process. 

§ 769.159 Processing loan applications. 

(a) Application dates. The opening 

and closing dates for the HPRP 

applications submission will be 

announced in Federal Register. 

(b) Intermediary loan application 

review. After the closing date, the 

Agency will review applications from 

intermediaries for compliance with the 

provisions of this subpart. 

(c) Loan approval. Loan approval is 

subject to the availability of funds. The 

loan will be considered approved for the 

intermediary on the date the Agency 

signs the obligation of funds 

confirmation. 

(d) Preferences for loan funding. The 

Agency will fund eligible applications 

from intermediaries: 

(1) First, to those with not less than 

10 years’ experience serving socially 

disadvantaged farmers and ranchers that 

are located in states that have adopted 

a statute consisting of an enactment or 

adoption of the Uniform Partition of 

Heirs Property Act, as approved and 

recommended for enactment in all 

States by the National Conference of 

Commissioners on Uniform State Laws 

in 2010, that relend to owners of heirs 

property (as defined by the Uniform 

Partition of Heirs Property Act); 

(2) Second, to those that have 

applications from ultimate recipients 

already in process, or that have a history 

of successfully relending previous HPRP 

funds; and 

(3) Multiple applications in the same 

priority tier, will be processed based by 

date of application received; and 

(4) Any remaining applications, after 

priority tiers 1 and 2 have be funded, 

will be funded in order of the date the 

application was received. 

(e) Current information required. 

Information supplied by the 

intermediary in the loan application 

must be updated by the intermediary if 

the information is more than 90 days 

old at the time of loan closing. 

§ 769.160 Letter of conditions. 

(a) If the Agency approves a loan 

application, the Agency will provide the 

intermediary with a letter of conditions 

listing all requirements for the loan. 

(b) Immediately after reviewing the 

conditions and requirements in the 

letter of conditions, the intermediary 

should complete, sign, and return the 

form provided by the Agency indicating 

the intermediary’s intent to meet the 

conditions. 

(1) If certain conditions cannot be 

met, the intermediary may propose 

alternative conditions to the Agency. 

(2) The Agency loan approval official 

must concur with any changes made to 

the initially issued or proposed letter of 

conditions prior to loan approval. 

(c) The loan request will be 

considered withdrawn if the 

intermediary does not respond within 

15 calendar days from the date the letter 

of conditions was sent. 

§ 769.161 Loan agreements. 

(a) The HPRP loan agreement will 

specify the terms of each loan, such as: 

(1) The amount of the loan; 

(2) The interest rate; 

(3) The term and repayment schedule; 

(4) Any provisions for late charges; 

(5) The disbursement procedure; 

(6) Provisions regarding default; and 

(7) Fidelity insurance. 

(b) As a condition of receiving HPRP 

loan funds, the intermediary will agree: 

(1) To obtain written approval from 

the Agency prior to making any changes 

in the intermediary’s articles of 

incorporation, charter, or by-laws; 

(2) To maintain a separate ledger and 

segregated account for the HPRP 

revolving loan fund; 

(3) To comply with the Agency’s 

annual reporting requirements in 

§ 769.164(g); 

(4) To obtain prior written approval 

from the Agency regarding all forms to 

be used for relending purposes, as well 

as the intermediary’s policy with regard 

to the amount and security to be 

required; 

(5) To obtain written approval from 

the Agency prior to making any 

significant changes in the proposed 

forms, security policy, or the 

intermediary’s relending plan; 

(6) To maintain the collateral pledged 

as security for the HPRP loan; and 

(7) To request demographics data 

from ultimate recipients on race, 

ethnicity, and gender. The response to 

the data request will be voluntary. The 

intermediary will maintain the 

information when voluntarily submitted 

by the ultimate recipient. The 

intermediary agrees to make this 

information available when requested 

by FSA. 

§ 769.162 Security. 

(a) Loans to intermediaries. Security 

pledged to the Agency by intermediaries 

must be sufficient to reasonably assure 

repayment of the loan, while taking into 

consideration the intermediary’s 

financial condition, the intermediary’s 

relending plan, and the intermediary’s 

management ability. The Agency will 

require adequate security, as determined 

by the Agency, to fully secure the loan: 

(1) Primary security for HPRP loan 

will be in the form of a first lien upon 

the intermediary’s revolving loan fund 

and such accounts must be fully 

covered by Federal deposit insurance or 

fully collateralized with other securities 

in accordance with normal banking 

practices and all applicable State laws. 

The form of the control agreement with 

the depository bank that will be used to 

perfect the Agency’s security interest in 

the depository accounts used by the 

intermediary to maintain HPRP funds 

must be approved by the Agency. The 

control agreement will not require the 

Agency’s signature for withdrawals. 

Among other things, the intermediary 

must use a depository bank that agrees 

to waive its offset and recoupment 

rights against the depository account 

and subordinate any liens it may have 

against the HPRP depository account in 

favor of the Agency; 

(2) Additional security as needed, 

which includes, but is not limited to: 

(i) Assignments of assessments, taxes, 

levies, or other sources of revenue as 

authorized by law; 

(ii) Financial assets of the 

intermediary and its members; and 

(ii) Capital assets or other property of 

the intermediary and its members. 

(b) Loans to the ultimate recipient. 

The intermediary is responsible for 

obtaining adequate security for all loans 

made to ultimate recipients from the 

HPRP revolving loan funds as specified 

in the HPRP loan agreement and 

intermediary’s relending plan. The 

Agency will only require concurrence 

with the intermediary’s proposed 

security for a loan to an ultimate 

recipient from the HPRP revolving loan 

fund if the proposed security will also 

serve as security for an unrelated 

Agency loan. 

§ 769.163 Loan closing. 

(a) HPRP loan documents and 

security instruments. At loan closing, 

the intermediary will execute the HPRP 

loan agreement or supplemental loan 

agreement, HPRP promissory note, the 

HPRP security agreement, the control 

agreement, and any other security 

instruments required by the Agency. 


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(b) Intermediary certification. At loan 

closing, the intermediary must certify 

that: 

(1) No changes have been made in the 

intermediary’s relending plan except 

those approved in the interim by the 

Agency; 

(2) All requirements in the letter of 

conditions have been met; and 

(3) There has been no material change 

in the intermediary or its financial 

condition since the issuance of the letter 

of conditions. If there have been 

changes, the intermediary must explain 

the changes to the Agency. The Agency 

will review the changes and respond in 

writing prior to loan closing. 

§ 769.164 Post award requirements. 

(a) Applicability. Whenever this 

subpart imposes a requirement on loan 

funds from the HPRP revolving loan 

fund, the requirement will apply to all 

loans made by an intermediary to an 

ultimate recipient from the 

intermediary’s HPRP revolving loan 

fund for as long as any portion of the 

intermediary’s HPRP loan remains 

unpaid. 

(b) Applicability for HPRP loan funds. 

Whenever this subpart imposes a 

requirement on loans made by 

intermediaries from HPRP loan funds, 

without specific reference to the HPRP 

revolving loan fund, such requirement 

only applies to loans made by an 

intermediary using HPRP loan funds, 

and will not apply to loans made from 

revolved funds. 

(c) File maintenance. In addition to 

information normally maintained by 

lenders in each loan file associated with 

a relending loan to an ultimate 

recipient, the intermediary must include 

a certification and supporting 

documentation in its file demonstrating 

that: 

(1) The ultimate recipient is eligible 

for the loan; 

(2) The loan is for eligible purposes; 

and 

(3) The loan complies with all 

applicable laws, regulations, and the 

intermediary’s HPRP loan agreement. 

(d) Maintenance of HPRP revolving 

loan fund. For as long as any part of an 

HPRP loan remains unpaid, the 

intermediary must maintain the HPRP 

revolving loan fund in accordance with 

the requirements in paragraphs (d)(1) 

through (11) of this section: 

(1) All HPRP loan funds received by 

an intermediary must be deposited into 

the HPRP revolving loan fund. The 

intermediary may transfer additional 

assets into the HPRP revolving loan 

fund; 

(2) All cash of the HPRP revolving 

loan fund must be deposited in a 

separate bank account or accounts; 

(3) The HPRP revolving loan fund 

must be segregated from other financial 

assets of the intermediary, and no other 

funds of the intermediary will be 

commingled with the HPRP revolving 

loan fund; 

(4) All moneys deposited in the HPRP 

revolving loan fund account or accounts 

will be money from the HPRP revolving 

loan fund; 

(5) Loans to ultimate recipients are 

advanced from the HPRP revolving loan 

fund; 

(6) The receivables created by making 

loans to ultimate recipients, the 

intermediary’s security interest in 

collateral pledged by ultimate 

recipients, collections on the 

receivables, interest, fees, and any other 

income or assets derived from the 

operation of the HPRP revolving loan 

fund are a part of the HPRP revolving 

loan fund; 

(7) The portion of the HPRP revolving 

loan fund consisting of HPRP loan funds 

may only be used for making loans in 

accordance with § 769.154. The portion 

of the HPRP revolving loan fund that 

consists of revolved funds may be used 

for debt service reserve, approved 

administrative costs, or for making 

additional loans; 

(8) A reasonable amount of revolved 

funds must be maintained as a reserve 

for bad debts. The total amount should 

not exceed maximum expected losses, 

considering the credit quality of the 

intermediary’s portfolio of loans. The 

amount of reserved funds proposed by 

the intermediary requires written 

concurrence from the Agency. Unless 

the intermediary provides loss and 

delinquency records that, in the opinion 

of the Agency, justifies different 

amounts, a reserve for bad debts of 6 

percent of outstanding loans must be 

accumulated over 5 years and then 

maintained; and 

(9) Any funds in the HPRP revolving 

loan fund from any source that is not 

needed for debt service reserve, 

approved administrative costs, or 

reasonable reserves must be available 

for additional loans to ultimate 

recipients. 

(i) Funds may not be used for any 

investments in securities or certificates 

of deposit of over 30-day duration 

without the Agency’s concurrence. 

(ii) The intermediary must make one 

or more loans to ultimate recipients 

within 6 months of any disbursement it 

receives from the Agency. If funds have 

been unused to make loans to ultimate 

recipients for 6 months or more, those 

funds will be returned to the agency 

unless the Agency provides a written 

exception based on evidence 

satisfactory to the Agency that every 

effort is being made by the intermediary 

to utilize the HPRP funding in 

conformance with HPRP objectives; 

(10) All reserves and other cash in the 

HPRP revolving loan fund that are not 

immediately needed for loans to 

ultimate recipients or other authorized 

uses must be deposited in accounts in 

banks or other financial institutions. 

Such accounts must be fully covered by 

Federal deposit insurance or fully 

collateralized with other securities in 

accordance with normal banking 

practices and all applicable State laws. 

Any interest earned on the account 

remains a part of the HPRP revolving 

loan fund; and 

(11) If an intermediary receives more 

than one HPRP loan, it does not need to 

establish and maintain a separate HPRP 

revolving loan fund for each loan; it 

may combine them and maintain only 

one HPRP revolving loan fund. 

(e) Budgets and administrative costs. 

The intermediary must submit an 

annual budget of proposed 

administrative costs for Agency 

approval. The annual budget should 

itemize cash income and cash out-flow. 

Projected cash income should consist of, 

but is not limited to, collection of 

principal repayment, interest 

repayment, interest earnings on 

deposits, fees, and other income. 

Projected cash out-flow should consist 

of, but is not limited to, principal and 

interest payments, reserve for bad debt, 

and an itemization of administrative 

costs to operate the HPRP revolving loan 

fund. 

(1) Proceeds received from the 

collection of principal repayment 

cannot be used for administrative 

expenses. 

(2) The amount removed from the 

HPRP revolving loan fund for 

administrative costs in any year must be 

reasonable, must not exceed the actual 

cost of operating the HPRP revolving 

loan fund, including loan servicing and 

providing technical assistance, and 

must not exceed the amount approved 

by the Agency in the intermediary’s 

annual budget. 

(f) Loan monitoring reviews. The 

Agency may conduct loan monitoring 

reviews, including annual and periodic 

reviews, and performance monitoring. 

(1) At least annually, the intermediary 

must provide the Agency documents for 

reviewing the financial status of the 

intermediary, assessing the progress of 

using loan funds, and identifying any 

potential problems or concerns. Nonregulated intermediaries must furnish 


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Federal Register / Vol. 86, No. 150 / Monday, August 9, 2021 / Rules and Regulations 43397 

audited financial statements at least 

annually. 

(2) The intermediary must allow the 

Agency or its representative to review 

the operations and financial condition 

of the intermediary upon the Agency’s 

request. The intermediary and its agents 

must provide access to all pertinent 

information to allow the Agency, or any 

party authorized by the Agency, to 

conduct such reviews. The intermediary 

must submit financial or other 

information within 14 calendar days 

upon receipt of the Agency’s request, 

unless the data requested is not 

available within that time frame. Failure 

to supply the requested information to 

the satisfaction of the Agency will 

constitute non-monetary default. The 

Agency may conduct reviews, including 

on-site reviews, of the intermediary’s 

operations and the operations of any 

agent of the intermediary, for the 

purpose of verifying compliance with 

Agency regulations and guidelines. 

These reviews may include, but are not 

limited to, audits of case files; 

interviews with owners, managers, and 

staff; audits of collateral; and 

inspections of the intermediary’s and its 

agents underwriting, servicing, and 

liquidation guidelines. 

(g) Annual monitoring reports. Each 

intermediary will be monitored by the 

Agency through annual monitoring 

reports submitted by the intermediary. 

Annual monitoring reports must include 

a description of the use of loan funds, 

information regarding the acreage, the 

number of heirs both before and after 

loan was made, audit findings, 

disbursement transactions, and any 

other information required by the 

Agency, as necessary. 

(h) Unused loan funds. If any part of 

the HPRP loan has not been used in 

accordance with the intermediary’s 

relending plan within 3 years from the 

date of the HPRP loan agreement, the 

Agency may cancel the approval of any 

funds not delivered to the intermediary. 

The Agency may also direct the 

intermediary to return any funds 

delivered to the intermediary that have 

not been used by that intermediary in 

accordance with the intermediary’s 

relending plan. The Agency may, at its 

sole discretion, allow the intermediary 

additional time to use the HPRP loan 

funds. 

§ 769.165 Loan servicing. 

(a) Payments. The intermediary will 

make payments to the Agency as 

specified in the HPRP loan documents. 

All payments will be applied to interest 

first, any additional amount will be 

applied to principal. 

(b) Restructuring. The Agency may 

restructure the intermediary’s loan debt, 

if: 

(1) The loan objectives cannot be met 

unless the HPRP loan is restructured; 

(2) The Agency’s interest will be 

protected; and 

(3) The restructuring will be within 

the Agency’s budget authority. 

(c) Default. The Agency will work 

with the intermediary to correct any 

default, subject to the requirements of 

paragraph (b) of this section. In the 

event of monetary or non-monetary 

default, the Agency will take all 

appropriate actions to protect its 

interest, including, but not limited to, 

declaring the debt fully due and payable 

and may proceed to enforce its rights 

under the HPRP loan agreement, and 

any other loan instruments relating to 

the loan under applicable law and 

regulations, and commencement of legal 

action to protect the Agency’s interest. 

Violation of any agreement with the 

Agency or failure to comply with 

reporting or other HPRP requirements 

will be considered non-monetary 

default. 

§ 769.166 Transfers and assumptions. 

(a) All transfers and assumptions 

must be approved in advance by the 

Agency. The assuming entity must meet 

all eligibility criteria for HPRP. 

(b) Available transfer and assumption 

options to eligible intermediaries 

include: 

(1) The total indebtedness may be 

transferred to another eligible 

intermediary on the same rates and 

terms; or 

(2) The total indebtedness may be 

transferred to another eligible 

intermediary on different terms not to 

exceed the term for which an initial 

loan can be made. 

(c) The transferor must prepare the 

transfer document for the Agency’s 

review prior to the transfer and 

assumption. 

(d) The transferee must provide the 

Agency with information required in the 

application as specified in § 769.158. 

(e) The Agency’s approved form of the 

assumption agreement will formally 

authorize the transfer and assumption 

and will contain the Agency case 

number of the transferor and transferee. 

(f) When the transferee makes a cash 

down-payment in connection with the 

transfer and assumption, any proceeds 

received by the transferor will be 

credited on the transferor’s loan debt in 

order of maturity date. 

§ 769.167 Appeals. 

Any appealable adverse decision 

made by the Agency may be appealed 

upon written request of the 

intermediary as specified in 7 CFR part 

11. 

§ 769.168 Exceptions. 

The Agency may grant an exception to 

any of the requirements of this subpart 

if the proposed change is in the best 

financial interest of the Government and 

not inconsistent with the authorizing 

law or any other applicable law. 

Zach Ducheneaux, 

Administrator, Farm Service Agency. 

[FR Doc. 2021–16459 Filed 8–5–21; 8:45 am] 

BILLING CODE 3410–05–P 

NUCLEAR REGULATORY 

COMMISSION 

10 CFR Chapter I 

[NRC–2021–0113] 

RIN 3150–AK65 

Miscellaneous Corrections 

AGENCY: Nuclear Regulatory 

Commission. 

ACTION: Final rule. 

SUMMARY: The U.S. Nuclear Regulatory 

Commission (NRC) is amending its 

regulations to make miscellaneous 

corrections. These changes include 

correcting mailing addresses, 

typographical errors, grammatical 

errors, references, spelling, agency 

names, and office titles; removing 

outdated reporting requirements; 

clarifying language; adding metric units; 

and inserting missing language. This 

document is necessary to inform the 

public of these non-substantive 

amendments to the NRC’s regulations. 

DATES: This final rule is effective on 

September 8, 2021. 

ADDRESSES: Please refer to Docket ID 

NRC–2021–0113 when contacting the 

NRC about the availability of 

information for this action. You may 

obtain publicly-available information 

related to this action by any of the 

following methods: 

• Federal Rulemaking Website: Go to 

https://www.regulations.gov and search 

for Docket ID NRC–2021–0113. Address 

questions about NRC dockets to Dawn 

Forder; telephone: 301–415–3407; 

email: Dawn.Forder@nrc.gov. For 

technical questions, contact the 

individual listed in the FOR FURTHER

INFORMATION CONTACT section of this 

document. 

• NRC’s Agencywide Documents 

Access and Management System 

(ADAMS): You may obtain publiclyavailable documents online in the 


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