[Federal Register Volume 64, Number 44 (Monday, March 8, 1999)]
[Rules and Regulations]
[Pages 10929-10935]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5558]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1469
RIN 0560-AF63
Recourse Loan Regulations for Mohair
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In accordance with the Omnibus Consolidated and Emergency
Supplemental Appropriations Act, 1999, this final rule sets forth the
regulations for a recourse loan program for mohair. The program will be
conducted during the 1999 fiscal year and applies to mohair produced
during and before the 1999 fiscal year.
DATES: Effective March 3, 1999.
FOR FURTHER INFORMATION CONTACT: Margaret Wright, Program Specialist,
Farm Service Agency (FSA), USDA, STOP 0512, 1400 Independence Avenue,
SW, Washington, D.C. 20250-0512; telephone: (202) 720-8481.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule is in conformance with Executive Order 12866 and has been
determined to be significant and therefore has been reviewed by the
Office of Management and Budget.
Federal Assistance Program
The title and number of the Federal Assistance Program, as found in
the Catalog of Federal Domestic Assistance, to which this rule applies,
are Commodity Loans and Purchases--10.051.
Environmental Evaluation
It has been determined by an environmental evaluation that this
action will have no significant impact on the quality of the human
environment. Therefore, neither an environmental assessment nor an
environmental impact statement is needed.
Executive Order 12372
This activity is not subject to the provisions of Executive Order
12372, which requires intergovernmental consultation with State and
local officials. See the notice related to 7 CFR part 3014, subpart V,
published at 48 FR 29115 (June 24, 1983).
Executive Order 12988
This final rule has been reviewed in accordance with Executive
Order 12988. The provisions of this final rule are not retroactive and
preempt State laws to the extent that such laws are inconsistent with
the provisions of the final rule. Before any legal action is brought
regarding determinations made under provisions of 7 CFR part 723, the
administrative appeal provisions set forth at 7 CFR part 780 must be
exhausted.
Regulatory Flexibility Act
It has been determined that the Regulatory Flexibility Act is not
applicable to this final rule since the Commodity Credit Corporation
(CCC) is not required by 5 U.S.C. 553 or any other provision of law to
publish a notice of proposed rule making with respect to the subject
matter of this rule.
Unfunded Federal Mandates
This rule contains no Federal mandates under the regulatory
provisions of Title II of the Unfunded Mandate Reform Act of 1995
(UMRA) for State, local, and tribal governments or the private sector.
Thus, this rule is not subject to the requirements of sections 202 and
205 of the UMRA.
Paperwork Reduction Act and Notice and Comment
Section 1133 of the Omnibus Consolidated and Emergency Supplemental
Appropriations Act, 1999 (1999 Act) provides that this rule-making
shall be issued without regard to the public notice and comment
provisions of section 5 U.S.C. 553 or the Paperwork Reduction Act, and
provides that the provisions of 5 U.S.C. 808 which allows exemption
from layovers for Congressional review shall be applied. Accordingly
this rule and its information collection requirements are made
effective immediately in accordance with these provisions. Because of
the foregoing provisions and because this rule provides needed time-
sensitive relief, delay in completing this rule would be contrary to
the public interest.
Background
Section 1126 of the 1999 Act provides that the Secretary of
Agriculture (Secretary) shall make available recourse loans, as
determined by the Secretary, to producers of mohair produced during or
before that fiscal
[[Page 10930]]
year. This final rule contains the terms and conditions that the
Secretary has determined are necessary to implement Sec. 1126 of the
1999 Act. The terms and conditions focus on three critical issues: (1)
eligibility, (2) adequate loan collateralization, and (3) program
administration.
Eligibility
Section 1469.4 lists the eligibility requirements for both the
persons applying for a recourse loan (loan) and for the mohair being
tendered as loan collateral. The essence of the eligibility
requirements with respect to loan applicants is that they must be
``producers'' of mohair and not speculators who have purchased the
mohair. In general, a loan applicant must have a separate and
identifiable interest in both the goats and the mohair. This means, in
part, as defined in the regulations, that the loan applicant must have
been responsible for the financial risk of raising the animal(s) and of
producing the mohair, and must have owned, at time of shearing and for
the previous 180 calendar days (or less, if the kids are younger), in
the United States, the goats from which the mohair was shorn. The 180
calendar day requirement begins to run for imported goats after their
quarantine period ends. In any case, regardless of the period the goat
is held, loan applicants will be ineligible for a loan if the goats
that produced the mohair were imported to provide meat.
The loan applicant must also hold a beneficial interest in the
mohair collateral until the loan is paid. Under the regulations, such
an interest will require that the producer maintains title and control
over the disposition of the mohair, as well as the risk of loss on the
mohair.
Persons handling the marketing of the mohair through a CCC-approved
cooperative marketing association (CMA) are also eligible to
participate in the loan program, provided the beneficial interest in
the mohair remains with the CMA member/loan applicant who shares in the
marketing proceeds realized by the CMA. Two or more applicants may be
eligible for a joint loan if, as individuals, they would fulfill the
eligibility requirements and the commingled mohair is not already under
a CCC loan.
With respect to the mohair itself, these regulations apply to
mohair produced before and during the 1999 fiscal year. However, mohair
that was used to qualify for an incentive payment under the previous
mohair payment program, which was terminated by Pub. L. 103-130, is
only eligible to be tendered as collateral for a loan under these
regulations if the incentive payment has been repaid to CCC. In
addition, the mohair pledged as loan collateral must be stored in a
warehouse carrying adequate insurance to cover the mohair and must be
contained in standard burlap mohair bags identified by signed and dated
receipts and other warehouse records provided by the warehouse.
Collateralization
Section 1126(3) of the 1999 Act provides that the loan rate for
mohair ``shall be equal to $2 per pound'' and requires that it be a
recourse loan. Because certain mohair may not generate sufficient
revenue to allow for full loan repayment, CCC shall retain (and the
producer must agree that CCC may retain) a first and superior security
interest on all of a loan recipient's existing and future production of
mohair, until the loan and all related charges are paid; the security
interest will not be restricted to the mohair actually used for
calculating the loan amount but shall cover all mohair of the producer.
Mohair used in calculating this amount is referred to as ``loan
mohair'' and all other mohair of the producer is referred to as ``non-
loan mohair'' although ``non-loan mohair'' may be subject to CCC's
security interests. CCC will determine when to apply proceeds of sales
of non-loan mohair which secures the loan against the loan amounts, but
it is expected that the proceeds from the sale of non-loan mohair will
not be required in advance of the maturity date of the loan and the
county office will be authorized to sign a waiver of CCC's security
interest for the sale of the non-loan mohair.
Also, producers will be required to make certain representations
concerning loan repayment as may be needed to provide adequate security
for the loans with the representations being enforceable by remedies
that apply to false or misleading statements made to obtain federal
benefits. While the loan is interest-free, as compelled by statute,
interest charges and costs will accrue on amounts outstanding after
maturity and may accrue from the date of loan disbursement if it is
determined that the producer was ineligible for the loan, committed a
loan violation, or obtained the loan on false or misleading pretenses.
In the event that the loan recipient's present production
capability is such that a security interest on production is not deemed
to be sufficient security, or if the loan is otherwise considered to be
insufficiently secured, the CCC, as determined appropriate by the
Executive Vice President, CCC, may require the loan recipient to agree
that 75 cents per pound, or such other amount as may otherwise be
deemed appropriate by the Executive Vice President (taking into
consideration the market value of the mohair and other factors) may be
deducted from the loan to provide additional security to CCC. Loan
recipients, in lieu of such reduction, may provide an acceptable letter
of credit, bond, or other form of security for the reduction amount, if
approved by CCC.
CCC may foreclose on the collateralized mohair and other mohair
subject to a security interest and sell it if the loan is not repaid.
The government may also pursue other options open to it, including
remedies against persons handling loan mohair in disregard of the
security interest.
Program Administration
In accordance with the 1999 Act, loans will be made only during the
1999 fiscal year and will mature 12 months after they are made. CCC has
determined that the final date to request a loan will be September 30,
1999. Anyone interested in applying for a loan and who has questions
concerning eligibility or any other matter covered under this
regulation will be able to obtain assistance from their local county
FSA office.
Any loan recipient seeking to sell any mohair loan collateral to
repay the loan will be required to obtain written authorization from
the county office before moving the mohair for sale. If the loan
recipient fails to obtain such authorization, or has also provided
incorrect certifications or made fraudulent representations, that
person will be in violation of the terms and conditions of the loan
note and security agreement and will be subject to liquidated damages
and other actions as provided in Sec. 1469.11 of the regulations. These
remedies are in addition to the obligation to repay the loan.
List of Subjects in 7 CFR Part 1469
Mohair, Loan programs/agriculture, Reporting and record keeping
requirements, Warehouses.
Accordingly, 7 CFR part 1469 is added to chapter XIV, subchapter B,
to read as follows:
PART 1469--RECOURSE LOAN REGULATIONS FOR MOHAIR
Sec.
1469.1 Applicability.
1469.2 Administration.
1469.3 Definitions.
1469.4 Eligibility.
[[Page 10931]]
1469.5 Application, availability, disbursement, and maturity.
1469.6 Security interests.
1469.7 Fees.
1469.8 Determination of quantity.
1469.9 Transfer of producer's interest prohibited.
1469.10 Loss or damage.
1469.11 Personal liability of the producer.
1469.12 Release of the mohair pledged as collateral for a loan.
1469.13 Liquidation of loans.
1469.14 Foreclosure.
1469.15 Handling payments and collections not exceeding $9.99.
1469.16 Death, incompetency, or disappearance; other regulations,
additional loan provisions.
Authority: Section 1126, Pub. L. 105-277, 112 Stat. 2681.
Sec. 1469.1 Applicability.
The regulations of this part provide the terms and conditions under
which the Commodity Credit Corporation (CCC) may issue recourse loans
for mohair which was both produced during or before fiscal year 1999,
and has remained continuously within the beneficial interest of the
producer. Additional terms and conditions that must be followed to
obtain a loan will be set forth in the applicable note and security
agreements. All forms needed to obtain a loan will be available from
State and county Farm Service Agency (State and county) offices.
Sec. 1469.2 Administration.
(a) The regulations of this part shall be administered under the
general supervision of the Executive Vice President, CCC, and shall be
carried out in the field by State and county committees.
(b) State and county committees, and representatives and employees
thereof, do not have the authority to modify or waive any of the
provisions of the regulations of this part.
(c) The State committee shall take any action required by these
regulations that has not been taken by the county committee. The State
committee shall also:
(1) Correct, or require a county committee to correct, any action
taken by such county committee that is not in accordance with the
regulations of this part; or
(2) Require a county committee to withhold taking any action that
is not in accordance with the regulations of this part.
(d) No provision or delegation herein to a State or county
committee shall preclude the Executive Vice President, CCC, or a
designee, from determining any question arising under the program or
from reversing or modifying any determination made by a State or county
committee.
(e) The Deputy Administrator for Farm Programs, Farm Service
Agency, may authorize State and county committees to waive or modify
deadlines and other program requirements in cases where timeliness or
failure to meet such other requirements does not adversely affect the
operation of the program.
(f) An approving official may execute loans and related documents
only under the terms and conditions determined and announced by CCC.
Any such document that is not executed in accordance with such terms
and conditions, including any purported execution before the date
authorized by CCC, shall be null and void unless affirmed by the
Executive Vice President, CCC.
Sec. 1469.3 Definitions.
The definitions set forth in this section shall be applicable for
all purposes of program administration. The terms defined in part 718
of this title shall also be applicable except where those definitions
conflict with the definitions set forth in this section or in program
instruments created under this part.
Administrator is the FSA Administrator.
Approving official is a representative of CCC who is authorized by
the Executive Vice President, CCC, to approve loan documents prepared
under this part.
CMA is a cooperative marketing association engaged in marketing
mohair.
County office is the local FSA office.
FSA is the Farm Service Agency, United States Department of
Agriculture.
Goat is an adult Angora goat or the kid of an Angora goat.
Loan is a recourse loan on mohair.
Loan quantity is the quantity on which the loan was disbursed, as
shown on the note and security agreement.
Loan mohair is the quantity of mohair tendered by an eligible
producer that is used in calculating the amount the loan.
Mohair is the hair sheared from a live goat before applying any
process that removes the natural oils or fats or produces a mohair
product. Mohair does not include pelts or hides or grease mohair shorn
from pelts or hides, scoured, carbonized, or dyed mohair or yarn,
skeins or other mohair which is identified for marketing by terms which
identify the mohair as being other than in its natural greasy state.
Non-loan mohair is mohair securing a loan made under this part that
was not used in calculating the amount of a loan made under this part.
Ownership is control, title, risk of loss, and the right to make
all decisions regarding the tender of mohair to CCC for a loan or for
marketing.
Person is the individual, partnership, association, corporation,
estate or trust, or other business enterprise or other legal entity
and, whenever applicable a State, political subdivision of a State, or
any agency thereof.
Program is the administration and issuance of a loan in accordance
with the terms and conditions of this part and of any note and security
agreement which must be executed by a loan recipient under this part.
Representative is a receiver, executor, administrator, guardian, or
trustee representing the interests of a person or an estate.
State committee is the FSA committee so designated for the
applicable state.
Sec. 1469.4 Eligibility.
(a) To be eligible to receive an individual or joint loan under
this part, a person must:
(1) Own, other than through a security interest, mortgage, or lien,
the goats that produced the mohair which is the basis for the loan
sought under this part, which goats must be of domestic origin or
imported for purposes other than for slaughter and which in all cases
were located in the United States for a period of not less than 180
calendar days (excluding days in quarantine if imported) prior to
shearing, except that kids younger than 180 calendar days must be
located in the United States from birth to shearing;
(2) Share in the risk of raising and shearing the goats;
(3) Comply with subsection (h) of this section;
(4) Store the mohair pledged as loan collateral in a warehouse:
(i) In standard burlap wool and mohair bags identified by signed
and dated receipts provided by the warehouse and other warehouse
records, in which the warehouse certifies to CCC the name of the person
requesting the loan, lot number, number of bags in storage, and net
weight; and
(ii) Which has certified to CCC that it carries insurance to cover
the stored mohair or can provide some other type of financial
assurance;
(5) Adequately protect the interests of CCC by providing security
for a loan in accordance with the requirements in Secs. 1469.5 and
1469.6 which is superior to all other security interests and by
maintaining in good condition the mohair pledged as security for a
loan;
(6) Be accurate and truthful and not make any misrepresentations
with
[[Page 10932]]
respect to any information provided to CCC concerning any activity
covered by this part;
(7) Not have been convicted of a crime as provided in part 718 of
this title; and
(8) Not have received an incentive payment under the previous
mohair payment program for a quantity of mohair pledged as loan
collateral covered by this part, unless the incentive payment is repaid
to CCC.
(b) Loan mohair must be mohair of merchantable quality deemed by
CCC to be suitable for a loan and must have been shorn in the United
States and not shorn while the producing goat was in quarantine.
(c) Two or more applicants may be eligible for a joint loan if:
(1) The conditions in paragraphs (a) and (b) of this section are
met with respect to the commingled mohair they are tendering for a
loan; and
(2) The commingled mohair is not used as collateral for an
individual loan that has not been repaid.
(d) Heirs who succeed to a beneficial interest in the mohair are
eligible for a loan if they:
(1) Assume the decedent's obligation under a loan if such loan has
already been obtained; and
(2) Assure continued safe storage of the loan mohair if such mohair
has been pledged as collateral for a loan.
(e) A representative may be eligible to receive a loan on behalf of
a person or estate who or which meets the requirements in paragraphs
(a), (b), (c), and (d) of this section, and the mohair tendered as
collateral by the representative, in his capacity as a representative,
shall be considered as tendered by the person or estate being
represented.
(f) A minor who otherwise meets the requirements of this part for a
loan shall be eligible to receive a loan only if the minor meets one of
the following requirements:
(1) A court or statute has conferred the right of majority on the
minor;
(2) A guardian has been appointed to manage the minor's property,
and the applicable loan documents are signed by the guardian;
(3) Any note signed by the minor is cosigned by a person determined
by the county committee to be financially responsible; or
(4) A surety, by furnishing a bond, guarantees to protect CCC from
any loss incurred for which the minor would be liable had the minor
been an adult.
(g) A CMA which the Executive Vice President, CCC, determines meets
the requirements for CMA's in part 1425 of this title may be eligible
to obtain a loan on behalf of those members who themselves are eligible
to obtain a loan provided that:
(1) The beneficial interest in the mohair must always, until loan
repayment or forfeiture, remain in the member who delivered the mohair
to the eligible CMA or its member CMA's, except as otherwise provided
in this part; and
(2) The mohair delivered to an eligible CMA shall establish
eligibility for a loan if the member who delivered the mohair does not
retain the right to share in the proceeds from the marketing of the
mohair as provided in part 1425 of this title.
(h)(1) To be eligible to receive loans under this part a producer
must have the beneficial interest in the mohair that is tendered to CCC
for a loan. The producer must always have had the beneficial interest
in the mohair unless, before the mohair was sheared, the producer and a
former producer whom the producer tendering the mohair to CCC has
succeeded had such an interest in the mohair. Mohair obtained by gift
or purchase shall not be eligible to be tendered to CCC for loans.
Heirs who succeed to the beneficial interest of a deceased producer or
who assume the decedent's obligations under an existing loan shall be
eligible to receive loans whether succession to the mohair occurs
before or after shearing so long as the heir otherwise complies with
the provisions of this part.
(2) A producer shall not be considered to have divested the
beneficial interest in the mohair if the producer retains control,
title, and risk of loss in the mohair including the right to make all
decisions regarding the tender of such mohair to CCC for a loan, and
the producer takes one of the following actions:
(i) Executes an option to purchase, whether or not a payment is
made by the potential buyer for such option to purchase, with respect
to such mohair if all other eligibility requirements are met and the
option to purchase contains the following provision:
Not withstanding any other provision of this option to purchase,
title, risk of loss, and beneficial interest in the mohair, as
specified in 7 CFR part 1469, shall remain with the producer until
the buyer exercises this option to purchase the mohair. This option
to purchase shall expire, notwithstanding any action or inaction by
either the producer or the buyer, at the earlier of: (1) the
maturity of any CCC loan which is secured by such mohair; (2) the
date the CCC claims title to such mohair; or (3) such other date as
provided in this option.
(ii) Enters into a contract to sell the mohair if the producer
retains title, risk of loss, and beneficial interest in the mohair and
the purchaser does not pay to the producer any advance payment amount
or any incentive payment amount to enter into such contract except as
provided in part 1425 of this chapter.
(3) If loans are made available to producers through an approved
CMA in accordance with part 1425 of this chapter, the beneficial
interest in the mohair must always have been in the producer-member who
delivered the mohair to the CMA or its member CMA's, except as
otherwise provided in this section. Mohair delivered to such a CMA
shall not be eligible for loans if the producer-member who delivered
the mohair does not retain the right to share in the proceeds from the
marketing of the mohair as provided in part 1425 of this chapter.
(i) A producer may, before the final date for obtaining a loan for
mohair, re-offer as loan mohair any mohair that has been previously
pledged as loan mohair except that the loan on such re-offered mohair
shall have the same maturity date as the original loan.
Sec. 1469.5 Application, availability, disbursement, and maturity.
(a) The deadline for requesting a loan offered under this part is
September 30, 1999.
(b) Loans mature on demand but not later than the last day of the
twelfth calendar month following the month in which the note and
security agreement was approved. When the final maturity date falls on
a non-workday for county offices, CCC shall extend the final date to
the next workday.
(c) A producer must request loans on mohair at the county office
serving the county where the headquarters of the producer's farm,
ranch, or feed lot is located. If the producer has more than one farm,
ranch, or feed lot, with headquarters in more than one county, separate
non-duplicative applications for loans may be filed with the county
office serving each such headquarters covering only the mohair at each
such location. A CMA must request loans at the county office for the
county in which the principal office of the CMA is located unless the
State committee designates another county office. If the CMA has
operations in two or more States, the CMA must file its loan
applications at the county office for the county in which its principal
office for each State is located.
(d) Loans will be made on the mohair (i.e., adult, yearling, spring
kid, fall kid) as declared and certified by the producer on Form CCC-
633 (Mohair), (Mohair Loan Certification and
[[Page 10933]]
Worksheet) at the time the mohair is pledged as collateral for a loan.
(e) CCC shall not approve a loan application until the producer
provides adequate assurance that the loan and all related charges will
be paid to CCC in accordance with paragraph (f) of this section. The
disbursement of loans will be made by county offices on behalf of CCC.
(f) The loan rate under this part shall be $2 per pound for all
mohair eligible to be pledged as collateral under this part. Until the
loan and all related charges have been paid, CCC shall retain (and the
producer shall agree that CCC shall retain) a first and superior
security interest on all of the producer's current and future
production of mohair, the security interest shall not be restricted to
the mohair used in calculating the amount of the loan but shall cover
all mohair (current and future) owned by the producer. Proceeds from
the sale of loan mohair will be applied to the loan. Proceeds from the
sale of non-loan mohair in which CCC holds a security interest will be
applied to the loan only if the proceeds from the sale of the loan
mohair are inadequate to pay the loan in full. The security interest
shall also apply to the current and future mohair production of
affiliated producers as defined in this part. CCC may require such
additional security as it deems needed to assure repayment of the loan.
In the event that the producer's present capability for producing
mohair is such that a security interest on the producer's current and
future production of mohair is not deemed to be sufficient, or if the
loan is otherwise considered to be insufficiently secured, the CCC, as
determined by the Executive Vice President, CCC, may require that 75
cents per pound, or such other amount as may be deemed appropriate by
the Executive Vice President (taking into consideration the market
value of the mohair) be deducted from the loan to provide additional
security. Producers, in lieu of such reduction, may provide a letter of
credit, bond, or other form of security for the reduction amount, as
approved by CCC. The Executive Vice President, CCC, may allow for
releases from the security interest provided for in this section as
needed to accomplish the goals of the program, and require the
necessary assurances to determine the future production capability of a
producer seeking a loan under this part.
(g) If, after a loan is made, CCC determines that the producer or
the mohair collateral is not in compliance with any of the provisions
of this part, the producer shall refund the total amount disbursed
under loan together with interest and other charges as may apply,
including late payment interest as provided in part 1403 of this title.
Sec. 1469.6 Security interests.
(a) CCC's security interest in the mohair pledged as collateral is
first and superior to all other security interests.
(b) The county office may file or record, as required by State law,
all financing statements needed to perfect a security interest in
mohair pledged as collateral for loans. The cost of filing and
recording shall be for the account of CCC.
(c) If there are any security interests or encumbrances on the
mohair, waivers that fully protect the interest of CCC must be
obtained. For non-loan mohair which is subject to the security interest
provided for in this part, CCC may require waivers of pre-existing
security interests.
Sec. 1469.7 Fees.
A producer shall pay a non-refundable loan service fee to CCC at a
rate determined by CCC. The amount of such fees will be available in
State and county offices.
Sec. 1469.8 Determination of quantity.
The amount of a loan on the quantity of eligible loan mohair shall
be based on 100 percent of the net weight in pounds of such quantity
certified by the producer and verified by the warehouse for mohair
which is pledged as security for the loan and covered by the note and
security agreement.
Sec. 1469.9 Transfer of producer's interest prohibited.
Absent written approval from CCC, the producer shall not transfer
either the remaining interest in, or right to redeem, the mohair
pledged as collateral for a loan nor shall anyone acquire such interest
or right. Subject to the provisions of Sec. 1469.12, a producer who
wishes to liquidate all or part of a loan by contracting for the sale
of the loan mohair must obtain written approval of the county office on
a form prescribed by CCC to remove a specified quantity of the mohair
from storage. Any such approval shall be subject to the terms and
conditions set forth in the applicable form, copies of which may be
obtained by producers at the county office.
Sec. 1469.10 Loss or damage.
The producer is responsible for any loss in quantity or quality of
the mohair pledged as collateral for a loan. CCC shall not assume any
loss in quantity or quality of the loan collateral.
Sec. 1469.11 Personal liability of the producer.
(a) When applying for an individual or joint loan, each producer
agrees:
(1) When signing any document, including Form CCC-633 (Mohair),
(Mohair Loan Certification and Worksheet) and Form CCC-677 (Farm
Storage Note and Security Agreement), that the producer will:
(i) Provide correct, accurate, and truthful certifications and
representations of the loan quantity and all other matters of fact and
interest; and
(ii) Not remove or dispose of any amount of the loan quantity
without prior written approval from CCC in accordance with this
section; and
(2) That violation of the terms and conditions of this part and
Form CCC-677 will cause harm or damage to CCC in that funds may be
disbursed to the producer for a loan quantity which is not actually in
existence or for an amount of mohair for which the producer is not
eligible.
(b) For purposes of this section, a ``violation'' shall refer to
any violation of the loan agreement and this part which shall include,
but not be limited to, any incorrect certification made with respect to
obtaining a loan, any misrepresentation with respect to a loan, or any
mis-disposition of loan collateral.
(c) The producer and CCC agree that it will be difficult, if not
impossible, to prove the amount of damages to CCC for conduct which is
in violation of this part or the loan agreement. Accordingly, if the
county committee determines that the producer has engaged in any such
violation, liquidated damages shall be assessed and shall be due in
addition to any loan refund that may be due plus interest and charges.
The amount of such liquidated damages shall be computed using the
quantity of mohair that is involved in the violation and the formula
set out below. If CCC determines the producer:
(1) Acted in good faith when the violation occurred, liquidated
damages will be assessed by multiplying the quantity of mohair involved
in the violation by:
(i) 10 percent of the loan rate applicable to the loan note for the
first offense; or
(ii) 25 percent of the loan rate applicable to the loan note for
the second offense; or
(2) Did not act in good faith with regard to the violation, or for
cases other than the first or second offense, liquidated damages will
be assessed by multiplying the quantity involved in the violation by 25
percent of the loan rate applicable to the loan note.
[[Page 10934]]
(d) For liquidated damages assessed in accordance with paragraph
(c)(1) of this section, the county committee shall:
(1) Require repayment of the loan principal applicable to the loan
quantity which was the subject of the violation plus charges, plus
interest applicable to the amount repaid; and
(2) If the producer fails to pay such amount within 30 calendar
days from the date of notification, call the applicable loan in its
entirety, plus charges, plus interest assessed from the date of the
loan disbursement.
(e) For liquidated damages assessed in accordance with paragraph
(c)(2) of this section, the county committee shall call the entirety of
the loan, plus charges, plus interest assessed from the date of the
loan disbursement.
(f) The county committee:
(1) May waive the administrative actions taken in accordance with
paragraphs (c)(1) and (d) of this section if the county committee
determines that the violation occurred inadvertently, accidentally, or
unintentionally.
(2) Shall furnish a copy of its determination to the State
committee, and the Administrator. If the determination of the county
committee is not disapproved by either the State committee or the
Administrator, or a designee, within 60 calendar days from the date the
determination is received, such determination may be considered to have
been approved unless the Administrator issues procedures that allow for
more time, or decides in an individual case that more time is needed.
(g) If, there is any violation of the loan agreement or this part,
the loan may be terminated in which case there must be a full refund of
the loan plus interest, and costs.
(h) If the county committee determines that the producer has
violated this part or the loan agreement, the county committee shall
notify the producer in writing that:
(1) The producer has 30 calendar days to provide evidence and
information regarding the circumstances which caused the violation, to
the county committee, and
(2) Administrative actions will be taken in accordance with
paragraph (d) or (e) of this section.
(i)(1) If a producer makes any fraudulent or misleading
representation in obtaining, maintaining, or settling a loan, the
producer shall be liable for:
(i) The amount of the loan;
(ii) Any additional amounts paid by CCC with respect to the loan;
(iii) All other costs which CCC would not have incurred but for the
fraudulent representation;
(iv) Interest from the date of the loan disbursement;
(v) Late payment interest as may be provided for in part 1403 of
this title; and
(vi) Liquidated damages assessed under paragraph (c) of this
section; and
(2) Notwithstanding any provisions of the note and security
agreement, if a producer has made any such fraudulent or misleading
representation to CCC, the value of the settlement for such collateral
removed by CCC shall be determined by CCC according to Sec. 1469.14.
(j) If the amount disbursed under a loan or in settlement thereof,
exceeds the amount authorized under this part, the producer shall be
personally liable for repayment of such excess, plus charges, plus
interest, and for any other sanction as may be allowed by law.
(k) If the amount collected from the producer in satisfaction of
the loan is less than the amount required in accordance with this part,
the producer shall be personally liable for repayment of the amount of
such deficiency plus charges, plus interest.
(l) In the case of joint loans, the personal liability for the
amounts specified in this section shall be joint and several on the
part of each producer signing or responsible under the loan note.
Further, each producer who is a party to a joint loan will be jointly
and severally liable for any violation of the terms and conditions of
the note, security agreement, and the regulations set forth in this
part. Each such producer shall also remain liable for repayment of the
entire loan amount until the loan is fully repaid without regard to
such producer's claimed share in the mohair, or loan proceeds, after
execution of the note and security agreement by CCC.
(m) Any or all of the liquidated damages assessed in accordance
with the provisions of paragraph (c) of this section may be waived by
CCC.
(n) Remedies set out here are in addition to remedies the CCC will
have through its security interest on non-loan mohair which secures the
repayment of the loan made on the loan mohair.
(o) All remedies provided for in this section or part are in
addition to any remedies as may otherwise be provided for in law.
Sec. 1469.12 Release of the mohair pledged as collateral for a loan.
(a)(1) A producer shall not move or dispose of any loan mohair
pledged as collateral for a loan until prior written approval for such
removal or disposition has been received from the county committee in
accordance with this section.
(2) A producer may at any time obtain a release of all or part of
the mohair remaining as loan collateral by paying to CCC the amount of
the loan and any charges which had been made by CCC to the producer
with respect to the quantity of the loan mohair released.
(3) When the proceeds of a sale of loan mohair are needed to repay
all or part of a loan, the producer must request and obtain prior
written approval of the county office on a form prescribed by CCC in
order to remove a specified quantity of the mohair from storage. Any
such approval shall be subject to the terms and conditions set forth in
the applicable form, copies of which may be obtained by producers at
the county office. Any such approval shall not constitute a release of
CCC's security interest in the commodity or release the producer from
liability for any amounts due and owing to CCC with respect to any loan
indebtedness. With respect to non-loan mohair securing the loan, CCC
may, in its discretion, release its security interest in the mohair if
there are no loan amounts overdue at the time of the release.
(b) The note and security agreement shall not be released until all
loan liability has been satisfied in full.
(c) After satisfaction of a loan, CCC shall release CCC's security
interest in the mohair at the producer's request. The producer shall be
responsible for payment of any fee for such release if such fee can be
determined.
Sec. 1469.13 Liquidation of loans.
(a) The producer is required to repay the loan on or before
maturity by payment of the amount of loan, plus any charges.
(b) If a producer fails to settle the loan in accordance with
paragraph (a) of this section within 30 calendar days from the maturity
date of such loan, or other reasonable time period as established by
CCC, a claim for the loan amount plus charges, plus interest shall be
established. Interest shall accrue from the next calendar day after the
maturity date. CCC shall inform the producer before the maturity date
of the loan of the date by which the loan must be settled or a claim
will be established in accordance with part 1403 of this title. A
failure to pay timely will start the accrual of interest, late payment
interest, and costs.
Sec. 1469.14 Foreclosure.
(a) Upon maturity and nonpayment of the loan, title to the
unredeemed loan mohair securing the loan shall vest in CCC.
[[Page 10935]]
(b) If the total amount due on a loan or the unpaid amount of the
note and charges is not satisfied upon maturity, CCC may remove the
loan mohair from storage and assign, transfer, and deliver the mohair
or documents evidencing title thereto at such time, in such manner, and
upon such terms as CCC may determine at a public or private sale. Any
such disposition may also be effected without removing the mohair from
storage. CCC may become the purchaser of the whole or any part of the
mohair at either a public or private sale.
(c) If the mohair is removed from storage by CCC and is sold, the
value of the settlement shall be the proceeds from the sale of the
mohair minus costs associated with the disposition of the mohair, and:
(1) If the value of the collateral computed at settlement is less
than the amount due, the producer shall pay to CCC the amount of such
deficiency plus charges, plus interest on such deficiency and CCC may
take any action against the producer to recover the deficiency; or
(2) If the proceeds received from the sale of the loan mohair so
computed are greater than the sum of the amount due, such excess shall
be paid to the producer or, if applicable, to any secured creditor of
the producer.
(d) In addition, CCC may take any action with respect to non-loan
mohair as may be needed to assure collection of all loans including, if
need be, possession of the mohair. Nothing in this section of this part
shall constitute a waiver of its lien on such mohair except when an
express waiver has been executed by CCC. Absent such a waiver, all
proceeds from such mohair shall be the property of CCC until the
producer's loans have been repaid in full.
Sec. 1469.15 Handling payments and collections not exceeding $9.99.
In order to avoid administrative costs of making small payments and
handling small accounts, amounts of $9.99 or less which are due the
producer will be paid only upon the producer's request. Deficiencies of
$9.99 or less may be disregarded by CCC unless demand for payment is
made by CCC.
Sec. 1469.16 Death, incompetency, or disappearance; other regulations,
additional loan provisions.
(a) In the case of death, incompetency, or disappearance of any
producer who is entitled to the payment of any sum in settlement of a
loan, payment shall, upon proper application to the county office which
made the loan, be made to the persons who would be entitled to such
producer's share under the regulations contained in part 707 of this
title. Applications for loans may be made upon application of a
representative of the producer as allowed under standard practice for
farm programs.
(b) Appeals of adverse decisions made under this part shall be
subject to the provisions of 7 CFR parts 11 and 780.
(c) The Executive Vice President, CCC, may impose such additional
loan conditions as are determined to be necessary or appropriate to
insure that the purposes and goals of the program provided for in this
part are met.
Signed at Washington, D.C., on March 2, 1999.
Keith Kelly,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 99-5558 Filed 3-3-99; 3:20 pm]
BILLING CODE 3410-05-P
