03-27589. Technical Changes to Citizenship Requirements and Loan Eligibility Regulations

AGENCIES:

Farm Service Agency, Rural Housing Service, Rural Business-Cooperative Service, and Rural Utilities Service, USDA.

ACTION:

Final rule.

SUMMARY:

This rule amends the Farm Service Agency's (FSA) regulations for direct and guaranteed loan making requirements by revising loan eligibility requirements to conform with provisions of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). In addition, it amends the direct and guaranteed loan program regulations to implement statutory provisions of the Consolidated Farm and Rural Development Act (CONACT).

DATES:

This rule is effective November 3, 2003.

FOR FURTHER INFORMATION CONTACT:

Janet Downs, Senior Loan Officer, USDA, FSA, Farm Loan Programs, Loan Making Division, STOP 0522, 1400 Independence Avenue, SW., Washington, DC 20250-0522; Telephone: [phone], e-mail: [e-mail]. Persons with disabilities who require alternative means for communication (Braille, large print, audio tape, etc.) should contact the USDA Target Center at [phone] (voice and TDD).

SUPPLEMENTARY INFORMATION:

 

Notice and Comment

This rule is not being published for public notice or to solicit comment from interested parties as a proposed rule. It implements precise statutory requirements of both the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) (8 U.S.C. 1611, 1641) and the Consolidated Farm and Rural Development Act (CONACT) (7 U.S.C. 1921 et.seq.), where the Agency has little or no leeway in terms of policy interpretation. Thus, the Agency is not required by 5 U.S.C. 553 to publish a notice of proposed rulemaking for its interpretive policy. This rule is published as final and is effective immediately.

Executive Order 12866

This final rule has been determined to be not significant under Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget (OMB).

Regulatory Flexibility Act

In compliance with the Regulatory Flexibility Act, Public Law 96-534, (5 U.S.C. 601), FSA has determined that this rule will not have a significant economic impact on a substantial number of small entities. FLP applicants and borrowers are predominantly family-size farmers and ranchers and, as defined by the U.S. Small Business Administration, approximately 98 percent of all farmers are classified as small businesses. The provisions in this rule will not impact a substantial number of small entities to a greater extent than large entities. The intent of this rule is to implement legislation and makes non-substantive updates. Large entities are subject to these rules to the same extent as small entities. Therefore, a regulatory flexibility analysis was not performed.

Environmental Evaluation

The environmental impacts of this final rule have been considered in accordance with the provisions of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq., the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and the FSA regulations for compliance with NEPA, 7 CFR parts 799, and 1940, subpart G. FSA completed an environmental evaluation and concluded that the rule requires no further environmental review. No extraordinary circumstances or other unforeseeable factors exist which would require preparation of an environmental assessment or environmental impact statement. A copy of the environmental evaluation is available for inspection and review upon request.

Executive Order 12988

This final rule has been reviewed in accordance with Executive Order 12988. This rule preempts State laws to the extent any laws are inconsistent with it, and its provisions are not retroactive. Before legal action may be brought concerning this rule, administrative remedies under 7 CFR part 11 must be exhausted.

Executive Order 13132

The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Nor does this rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required.

Unfunded Mandates

The rule contains no Federal mandates, as defined by title II of the UMRA. Thus, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

Paperwork Reduction Act

The Agency's information collection requirements, currently approved under OMB control numbers 0560-0154, 0560-0155, 0560-0157, 0560-0159, 0560-0162, 0560-0167, and 0560-0178, are not affected by this final rule.

Federal Assistance Programs

The titles and numbers of the Federal assistance programs, as found in the Catalog of Federal Domestic Assistance, to which this final rule applies are:

10.404—Emergency

Loans

10.406—Farm Operating Loans

10.407—Farm Ownership Loans

Discussion of the Final Rule

Individual Citizenship Requirements

To be eligible for FSA Farm Loan Programs (FLP) loans, FSA regulations provide that an applicant must be a citizen of the United States or an alien lawfully admitted to the United States for permanent residence under the Immigration and Nationality Act; indefinite parolees are not eligible for loans. This rule changes FLP direct and guaranteed loan eligibility provisions to require an applicant be a United States citizen, a United States non-citizen national, or a qualified alien under applicable Federal immigration laws. This revision is necessary to reflect changes made by section 401 of the PRWORA (8 U.S.C. 1611) prohibiting aliens who are not qualified aliens from receiving Federal public benefits such as Federal loans.

Entity Citizenship Requirements

PRWORA requirements similarly are adopted for entity citizenship requirements for direct and guaranteed FLP loans. These regulations are amended to consistently require the majority interest of the entity to be held by members who are United States citizens, United States non-citizen nationals, or qualified aliens under applicable Federal immigration laws. These changes implement CONACT program requirements that for an entity applicant to be eligible for a farm programs loan, individuals holding a majority interest of such entity must be citizens of the United States. See 7 U.S.C. 1922, 1941, and 1961.

In addition, FSA regulations require that aliens must provide the appropriate forms from the Bureau of Citizenship and Immigration Services of the Department of Homeland Security (BCIS) to document their permanent residency. This rule updates these provisions to require that United States non-citizen nationals and qualified aliens must provide the appropriate documentation as to their immigration status, as required by the BCIS. This revision further implements section 401 of the PRWORA.

Prohibition to Finance Non-Farm Enterprises

This rule amends FSA regulations to clarify that direct farm operating and farm ownership loan funds cannot be used to finance non-farm enterprises. This rule adds limitations in 7 CFR 1941.17 and 1943.17 and removes 7 CFR 1941.23(b)(3) accordingly.

Clarify Definition of Socially Disadvantaged

Section 355 of the CONACT defines a “socially disadvantaged group” as a “group whose members have been subjected to racial, ethnic, or gender prejudice because of their identity as members of a group without regard to their individual qualities.” This rule amends FSA regulations 7 CFR 1943.4 and 1955.103 to clarify that the term “socially disadvantaged applicant” refers to an applicant who is a member of a socially disadvantaged group.

Borrower Eligibility

Section 373(b) of the CONACT, in part, allows FSA to make annual operating loans to borrowers who have had debt forgiveness and who are current on payments under a confirmed reorganization plan under chapters 11, 12, or 13 of Title 11 of the United States Code. Section 373(a) also prohibits direct operating loans to any borrower who is delinquent on any loan made or guaranteed under the CONACT. This prohibition partially overlaps with the Debt Collection Improvement Act (DCIA) provision, 31 U.S.C. 3720B, making persons owing a delinquent non-tax debt to the Federal Government ineligible for Federal financial assistance in the form of a loan (other than a disaster loan) or loan insurance or guarantee. The DCIA provision is implemented by regulations at 31 CFR part 285. This rule amends FSA farm operating loan eligibility regulation, 7 CFR 1941.12, to reflect these statutory requirements. Reference to annual production loans to delinquent borrowers in 7 CFR 1941.33 also is removed for consistency.

Miscellaneous

This rule amends an incorrect reference in FSA regulation, 7 CFR 1941.18, to allow equal, unequal, or balloon installment schedules on loans made for other than annual operating purposes. This rule also removes from 7 CFR part 1924, subpart B, the definition of “Financially viable operation”, as it is unnecessary. References to required borrower training for guaranteed loan borrowers are also removed as section 805 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999 (Pub. L. 105-277, October 21, 1998) removed the borrower training requirement for guaranteed farm loans. This rule removes references to an obsolete form (FmHA 440-35) from 7 CFR part 1943, subpart A. This rule corrects a duplicate reference to § 1910.4(i) by revising the second (i) reference to read ( j).

List of Subjects

7 CFR Part 762

• Agriculture
• Loan programs—agriculture

7 CFR Part 764

• Agriculture
• Disaster assistance
• Loan programs—agriculture

7 CFR Part 1910

• Agriculture
• Loan programs—agriculture

7 CFR Part 1924

• Agriculture
• Loan programs—agriculture

7 CFR Part 1941

• Crops
• Livestock
• Loan programs—agriculture
• Rural areas
• Youth

7 CFR Part 1943

• Crops
• Loan programs—agriculture
• Recreation
• Water resources

7 CFR Part 1955

• Agriculture
• Loan programs—agriculture
• Property management
• Government property

Accordingly, 7 CFR Chapters VII and XVIII are amended as follows:

PART 762—GUARANTEED FARM LOANS

1. The authority citation for part 762 continues to read as follows:

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

2. Revise § 762.120(d) to read as follows:

§ 762.120

Loan applicant eligibility.

* * * * *

(d) Citizenship. (1) The applicant must be a citizen of the United States, a United States non-citizen national, or a qualified alien under applicable Federal immigration laws. For an entity applicant, the majority interest of the entity must be held by members who are United States citizens, United States non-citizen nationals, or qualified aliens under applicable Federal immigration laws.

(2) United States non-citizen nationals and qualified aliens must provide the appropriate documentation as to their immigration status as required by the United States Department of Homeland Security, Bureau of Citizenship and Immigration Services.

* * * * *

PART 764—EMERGENCY FARM LOANS

3. The authority citation for part 764 continues to read as follows:

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

4. Revise § 764.4(a)(2) to read as follows:

§ 764.4

Eligibility requirements.

(a) * * *

(2) Citizenship. (i) The applicant must be a citizen of the United States, a United States non-citizen national, or a qualified alien under applicable Federal immigration laws. For an entity applicant, the majority interest of the entity must be held by members who are United States citizens, United States non-citizen nationals, or qualified aliens under applicable Federal immigration laws.

(ii) United States non-citizen nationals and qualified aliens must provide the appropriate documentation as to their immigration status as required by the United States Department of Homeland Security, Bureau of Citizenship and Immigration Services.

* * * * *

PART 1910—GENERAL

5. The authority citation for part 1910 continues to read as follows:

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

Subpart A—Receiving and Processing Applications

§ 1910.4

[Amended]

6. Amend § 1910.4 by redesignating the second paragraph (i) as paragraph (j).

PART 1924—CONSTRUCTION AND REPAIR

7. The authority citation for part 1924 continues to read as follows:

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

Subpart B—Management Advice to Individual Borrowers and Applicants

§ 1924.54

[Amended]

8. In § 1924.54 remove the definition of “Financially viable operation”.

9. In § 1924.74 revise the second sentence of paragraph (a)(2) to read as follows:

§ 1924.74

Borrower training program.

(a) * * *

(2) * * * Unless waived, this training requirement will be an eligibility requirement for all Agency direct loans. * * *

* * * * *

PART 1941—OPERATING LOANS

10. The authority citation for part 1941 continues to read as follows:

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

Subpart A—Operating Loan Policies, Procedures, and Authorizations

11. Revise paragraphs (a)(1), (b)(5)(i), the last sentence of paragraphs (a)(8) and (b)(11), and the first sentence of paragraphs (a)(9) and (b)(12) of § 1941.12, to read as follows:

§ 1941.12

Eligibility requirements.

(a) * * *

(1) Be a citizen of the United States, a United States non-citizen national, or a qualified alien under applicable Federal immigration laws. United States non-citizen nationals and qualified aliens must provide the appropriate documentation as to their immigration status as required by the United States Department of Homeland Security, Bureau of Citizenship and Immigration Services.

* * * * *

(8) * * * However, an applicant who received a write-down under section 353 of the CONACT, or who is current on payments under a confirmed reorganization plan under chapters 11, 12, or 13 of Title 11 of the United States Code, may receive direct and guaranteed OL loans to pay annual farm and ranch operating expenses, including family subsistence, if the applicant meets all other eligibility requirements.

(9) Not be delinquent on any non-tax Federal debt or FSA guaranteed debt. * * *

* * * * *

(b) * * *

(5) * * *

(i) The majority interest of the entity must be held by members who are citizens of the United States, United States non-citizen nationals, or qualified aliens under applicable Federal immigration laws. United States non-citizen nationals and qualified aliens must provide the appropriate documentation as to their immigration status as required by the United States Department of Homeland Security, Bureau of Citizenship and Immigration Services.

* * * * *

(11) * * * However, an applicant who received a write down under section 353 of the CONACT, or who is current on payments under a confirmed reorganization plan under chapters 11, 12, or 13 of Title 11 of the United States Code, may receive direct and guaranteed OL loans to pay annual farm and ranch operating expenses, including family subsistence, if the applicant meets all other eligibility requirements.

(12) Not be delinquent on any non-tax Federal debt or FSA guaranteed debt. * * *

* * * * *

12. Amend § 1941.17 by adding paragraph (e) to read as follows:

§ 1941.17

Loan limitations.

* * * * *

(e) If the purpose of the loan is to finance a nonfarm enterprise.

* * * * *

§ 1941.18

[Amended]

13. Amend the first sentence of § 1941.18(b)(4) by changing the reference to paragraph “(b)(2)” to read paragraph “(b)(3)”.

§ 1941.23

[Amended]

14. Amend § 1941.23 by removing paragraph (b)(3) and redesignating paragraph (b)(4) as (b)(3).

15. Amend § 1941.33 by removing the second sentence of paragraph (c)(2) and by revising paragraph (b)(1)(iii) to read as follows:

§ 1941.33

Loan approval or disapproval.

* * * * *

(b) * * *

(1) * * *

(iii) The proposed loan is based on a feasible farm operating plan.

* * * * *

PART 1943—FARM OWNERSHIP, SOIL AND WATER AND RECREATION LOANS

16. The authority citation for part 1943 continues to read as follows:

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

Subpart A—Direct Farm Ownership Loan Policies, Procedures, and Authorizations

17. Amend paragraph § 1943.4 by revising the definition of “Socially disadvantaged applicant” to read as follows:

§ 1943.4

Definitions.

* * * * *

Socially disadvantaged applicant (SDA). An applicant who is a member of a socially disadvantaged group whose members have been subjected to racial, ethnic, or gender prejudice because of their identity as a member of a group, without regard to their individual qualities. For entity SDA applicants, the majority interest in the entity must be held by socially disadvantaged individuals. The Agency has identified socially disadvantaged groups as Women, Blacks, American Indians, Alaskan Natives, Hispanics, Asians, and Pacific Islanders.

* * * * *

18. Amend § 1943.12 by revising paragraphs (a)(1), (b)(4)(i), and the first sentence of paragraphs (a)(9) and (b)(11) to read as follows:

§ 1943.12

Farm ownership loan eligibility requirements.

* * * * *

(a) * * *

(1) Be a citizen of the United States, a United States non-citizen national, or a qualified alien under applicable Federal immigration laws. United States non-citizen nationals and qualified aliens must provide the appropriate documentation as to their immigration status as required by the United States Department of Homeland Security, Bureau of Citizenship and Immigration Services.

* * * * *

(9) Not be delinquent on any non-tax Federal debt or FSA guaranteed debt.* * *

(b) * * *

(4) * * *

(i) For an entity applicant, the majority interest of the entity must be held by members who are United States citizens, United States non-citizen nationals, or qualified aliens under applicable Federal immigration laws. United States non-citizen nationals and qualified aliens must provide the appropriate documentation as to their permanent immigration status as required by the United States Department of Homeland Security, Bureau of Citizenship and Immigration Services.

* * * * *

(11) Not be delinquent on any non-tax Federal debt or FSA guaranteed debt.* * *

* * * * *

19. Amend § 1943.17 paragraph (a)(2) by removing the words “and nonfarm enterprise” and by adding paragraph (c) to read as follows:

§ 1943.17

Loan limitations.

* * * * *

(c) The purpose of the loan is to finance a nonfarm enterprise.

20. Amend § 1943.34 by revising the section title, removing paragraph (c), and revising paragraphs (a) and (b) to read as follows:

§ 1943.34

Requesting title service.

(a) Title clearance will be obtained as provided in subpart B of part 1927 of this chapter, when required by the Agency.

(b) When the loan is approved, the applicant will arrange with the seller to take possession of the land that is being acquired.

PART 1955—PROPERTY MANAGEMENT

21. The authority citation for part 1955 continues to read as follows:

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

Subpart C—Disposal of Inventory Property

22. Amend § 1955.103 by revising the definition of “Socially disadvantaged applicant” to read as follows:

§ 1955.103

Definitions.

* * * * *

Socially disadvantaged applicant (SDA). An applicant who is a member of a socially disadvantaged group whose members have been subjected to racial, ethnic, or gender prejudice because of their identity as a member of a group, without regard to their individual qualities. For entity SDA applicants, the majority interest in the entity must be held by socially disadvantaged individuals. The Agency has identified socially disadvantaged groups as Women, Blacks, American Indians, Alaskan Natives, Hispanics, Asians, and Pacific Islanders.

* * * * *

Dated: October 27, 2003.

J.B. Penn,

Under Secretary for Farm and Foreign Agricultural Services.

Dated: October 28, 2003.

Thomas C. Dorr,

Under Secretary for Rural Development.