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Federal Register / Vol. 86, No. 150 / Monday, August 9, 2021 / Rules and Regulations themselves if they only own 50 percent of the operating entity.
This rule amends 7 CFR 762.120i2
and j2, 764.101k, and 764.152c to ensure the rules consistently state that members owning at least 50 percent of the entity must own the farm.

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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
764.251a8, 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 762.121a1ix to match the regulation covering direct operating loan use of funds in 7 CFR
764.251a8. Specifically, this rule adds the term or non-compliance to 7
CFR 764.121a1ix 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.

To improve customer service and reduce application processing times, this rule amends 7 CFR 764.52a 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.

Reference to Crop Insurance This rule amends 7 CFR 762.1232i to correct a cross reference to crop insurance requirements. The correct reference is 7 CFR 400.651.

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 764.103e 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.

Timeframes for Direct Loan Application Processing Per 7 CFR 764.52a, 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 764.52a. Should outstanding items still remain at the end of that 20-day period, 7 CFR 764.52b 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.

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
764.251a2 to memorialize the current practice in the regulation by matching the rule covering guaranteed operating loan use of funds in 7 CFR 762.121a.
Specifically, this rule adds the term or
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fixtures to 7 CFR 764.251a2 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 764.254b1
and 764.354b3 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 applicants 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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