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Federal Register / Vol. 86, No. 150 / Monday, August 9, 2021 / Rules and Regulations
it is clear the borrower will not benefit from an approved vendors 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Progression Lending FSA is revising outdated provisions in the regulations.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.

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Assessment Regulations at 761.103 provide FSA, in collaboration with the loan applicant, will assess the farming operation to determine the applicants 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 761.103e, FSA reviews the assesment annually to determine the borrowers 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 761.103e 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.

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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 borrowers 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 FSAs 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
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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 353c4 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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