[Federal Register Volume 79, Number 195 (Wednesday, October 8, 2014)]
[Notices]
[Pages 60805-60807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-24050]


-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Farm Service Agency


Farm Loan Pilot Projects

AGENCY: Farm Service Agency, USDA.

ACTION: Notice and request for comment.

-----------------------------------------------------------------------

SUMMARY: The Farm Service Agency (FSA) will conduct pilot projects of 
limited scope and duration to evaluate processes and techniques that 
may improve the efficiency and effectiveness of the Farm Loan Programs 
(FLP) real estate loans (also referred to as ``farm ownership loans''), 
operating loans, emergency loans, and administrative provisions, as 
required by the Agricultural Act of 2014 (the 2014 Farm Bill). This 
notice provides an opportunity for the public to provide comments for 
FSA to consider for pilot projects. FSA expects to conduct at least two 
to three pilot projects.

DATES: We will consider comments that we receive by November 7, 2014.

ADDRESSES: We invite you to submit comments on this notice. In your 
comment, include volume, date, and page number of this issue of the 
Federal Register. You may submit comments by any of the following 
methods:
    <bullet> Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
    <bullet> Mail: Carrie L. Novak, Senior Loan Officer, LMD DAFLP FSA, 
US Department of Agriculture, 1400 Independence Avenue SW., Stop 0522, 
Washington, DC 20250-0522.
    Comments will be available for viewing online at http://www.regulations.gov. In addition, comments will be available for public 
inspection at the above address during business hours from 8 a.m. to 5 
p.m., Monday through Friday, except holidays.

FOR FURTHER INFORMATION CONTACT: Carrie Novak; phone: (202) 720-1643. 
Persons with disabilities who require alternative means for 
communication of information for this notice (Braille, large print, 
audiotape, etc.) should contact USDA's TARGET Center at (202) 720-2600 
(voice).

SUPPLEMENTARY INFORMATION: 

Background

    FSA makes and services a variety of direct and guaranteed loans to 
farmers who are temporarily unable to obtain private commercial credit. 
FSA also provides direct loan customers with credit counseling and 
supervision to enhance their opportunity for success. FSA loan 
applicants are often beginning

[[Page 60806]]

farmers and socially disadvantaged farmers who do not qualify for 
conventional loans because of insufficient net worth or established 
farmers who have suffered financial setbacks due to natural disasters 
or economic downturns. FSA loans are tailored to a customer's needs and 
may be used to buy farmland and to finance agricultural production.
    FSA makes direct and guaranteed operating and farm ownership loans 
to eligible farmers and ranchers. Under its direct operating loan 
program, FSA also makes loans to youths to establish and operate 
income-producing projects of modest size in connection with their 
participation in 4-H clubs, Future Farmers of America, and similar 
organizations. Guaranteed loans are made through private lenders with a 
guarantee of up to 95 percent of the loss of principal and interest. 
Direct and guaranteed operating loans can be used to purchase 
livestock, equipment, feed, seed, and other material essential to a 
farm or ranch operation.
    Direct and guaranteed farm ownership loan funds may be used to 
purchase land, construct buildings, or make farm improvements. 
Guaranteed operating and farm ownership loans may also be used to 
refinance debt. FSA also provides assistance to beginning and socially 
disadvantaged farmers and ranchers under its Direct Farm Ownership Down 
Payment Loan Program, and provides retiring farmers the opportunity to 
transfer their land to future generations of farmers and ranchers.
    FSA also targets a portion of its direct and guaranteed operating 
loan and farm ownership loan funds to beginning farmers and ranchers 
and socially disadvantaged applicants.
    Emergency loans are available to established farmers and ranchers 
who have suffered losses as a result of a natural disaster or 
quarantine.

FLP Pilot Projects

    Section 5302 of the 2014 Farm Bill amends the Consolidated Farm and 
Rural Development Act (also known as the CONACT) to provide the 
Secretary authority to conduct pilot projects of limited scope and 
duration to evaluate processes and techniques that may improve the 
efficiency and effectiveness of real estate loans, operating loans, 
emergency loans, and administrative provisions (7 U.S.C. 1983d). 
Processes and techniques can be as specific as the manner in which 
applications for assistance are submitted (for example, through 
electronic submissions), or as broad as more effective methods of 
outreach on programs for existing and potential customers.
    FSA is constantly identifying ways to improve services and is 
interested in hearing what kinds of pilots our customers, stakeholders, 
and other members of the public want to see. FSA wants to hear how we 
can better serve our customers and understand their needs. The 
following are examples of initiatives that FSA has already taken to 
improve efficiency and effectiveness for FLP.
    One way that FSA has made improvements is by expanding credit 
opportunities for farmers and ranchers with the Microloan Program. A 
Microloan is a small direct farm operating loan with a shortened 
application process and reduced paperwork. In addition, modifications 
were made to the experience requirement to allow for mentors and 
apprenticeships. This has already helped farmers.
    FSA has recently released a recent package of technology 
enhancements that include Web access for handheld and smartphone users, 
as well as a more efficient and timely option for receiving news and 
critical program information. The technology improvements will allow 
users of FSA information to gain access to easy-to-read data, including 
key features such as loan deficiency payment rates, posted county 
prices, FSA news releases and AskFSA, the agency's online self-help 
knowledge base.
    A recently revised policy allows FSA to issue farm loan guarantees 
to nontraditional lenders. A nontraditional lender is one that does not 
typically hold deposit accounts and is not subject to oversight and 
supervision. The most common nontraditional lenders are those who are 
funded under the U.S. Department of Treasury's Community Development 
Financial Institutions Fund. Nontraditional lenders can originate, hold 
and service guaranteed loans. The goal is to improve and maintain the 
quality of rural communities. This goal is accomplished by assisting 
rural communities, individuals, groups, and support organizations with 
viable rural development enterprises. FSA has worked with traditional 
lenders in the past, but is now expanding to work with both traditional 
and nontraditional lenders.
    FSA is currently operating a pilot project in digital signatures. 
The Electronic Signatures in Global and National Commerce Act (Pub. L. 
106-229) ensures that a signature, contract, or other record relating 
to such transaction may not be denied legal effect, validity, or 
enforceability solely because it is in electronic form. It is an FSA 
policy decision whether a certain electronic format is practicable for 
a certain transaction.
    This digital signature pilot will allow FSA to evaluate the use of 
this available technology, potential cost and time savings, and 
determine whether it is practical for FLP and Farm Programs (FP) 
purposes. This will assist FSA to develop policy to not only allow the 
use of digital signatures by FSA officials, but by producers, FLP 
applicants, borrowers, and lenders as well. The pilot is to be 
conducted in Indiana and Texas; digital signatures are only authorized 
for certain FLP and FP documents.
    FSA is requesting comments that will be used to develop 
recommendations for pilot projects that will meet the intended goals to 
evaluate processes and techniques that may improve the efficiency and 
effectiveness of real estate loans, operating loans, emergency loans, 
and administrative provisions. The pilot projects may diverge from 
program regulations at 7 CFR parts 761 through 767, but the pilot 
projects must be consistent with the existing statutory provisions 
governing Real Estate Loans, Operating Loans, Emergency Loans, and 
Administrative Provisions (see 7 U.S.C. Chapter 50, subchapters I 
through IV for the details of these CONACT provisions). For example, a 
suggestion could be for projects that provide financial and management 
assistance to eligible family farmers for authorized loan purposes. 
Additional information on FLP policies and procedures is available in 
FSA handbooks 1-FLP through 6-FLP at http://www.fsa.usda.gov/FSA/webapp?area=home&subject=lare&topic=hbk.
    The following questions provide examples of loan making and 
servicing concerns that may be helpful to consider for your comment:
    <bullet> How can FSA better reach and serve veterans, especially 
returning veterans who plan to start or return to farming?
    <bullet> How can FSA encourage lending for urban agriculture?
    <bullet> What pricing models can be developed or expanded to assist 
loan officers in lending to producers who sell traditional and 
specialty agricultural products at non-traditional markets?
    <bullet> What types of borrower training systems can be explored to 
provide long term economic benefits to agricultural producers?
    <bullet> Should FSA explore the use of credit scores for small, 
streamlined loan applications?
    <bullet> Are there alternative lenders and financers (grocery 
chains, implement

[[Page 60807]]

and feed dealers, community development organizations) that could 
partner and improve service to joint customers as well as strengthen 
their own business needs?
    <bullet> What type of consulting service could be developed to 
assist existing borrowers to be more productive and successful?
    <bullet> How can the role of a mentor be expanded beyond 
microloans?
    <bullet> What are other methods that an applicant can successfully 
prove experience and managerial ability?
    In your comment it will be most helpful to:
    <bullet> Explain the proposed pilot project in as much detail as 
possible, including the issue or concern to be addressed and the 
intended benefit(s);
    <bullet> Provide specific examples to illustrate your points;
    <bullet> Describe whether the project is intended to benefit any 
particular region, type of agricultural producer (organic, direct 
market, wholesale, etc.), or end customer; and
    <bullet> Outline any potential costs or costs savings and the basis 
for the assumptions.
    At the conclusion of the comment period, FSA staff will review and 
consider all of the suggestions in the comments.
    As required by the 2014 Farm Bill, at least 60 days before 
initiating a pilot project, the Secretary will submit notice of the 
proposed pilot project to the Committee on Agriculture of the House of 
Representatives and the Committee on Agriculture, Nutrition, and 
Forestry of the Senate. FSA will also consider any feedback provided to 
the Secretary in response to that notice.
    FSA expects to select at least two to three pilot projects. FSA 
will announce the pilot projects through news release.
    FSA expects that one of the results of the pilot project will help 
expand service to underserved producers. For example, in remote areas, 
such as Indian Country, distance and travel time make it extremely 
difficult to establish the network of contacts essential for effective 
outreach and to provide technical assistance. FSA lacks the necessary 
knowledge and staff resources to overcome language and cultural 
barriers for some minority communities and provide effective outreach 
and technical assistance. In such situations, partnerships with local 
organizations could use existing networks and expertise to provide 
effective outreach and technical assistance and expand participation. 
This is one example of how FSA may carry out some pilot projects.
    In addition to this notice, general information about FSA's 
administration of FLP is also available on the FSA Web site at http://www.fsa.usda.gov/FSA/webapp?area=home&subject=fmlp&topic=landing.

    Signed on September 30, 2014.
Val Dolcini,
Administrator, Farm Service Agency.
[FR Doc. 2014-24050 Filed 10-7-14; 8:45 am]
BILLING CODE 3410-05-P