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| USDA/FSA | RIN: 0560-AH60 | Publication ID: Fall 2008 |
| Title: Farm Storage Facility Loan (FSFL) and Sugar Storage Facility Loan (SSFL) Programs | |
| Abstract: We are amending the regulations to implement provisions of the 2008 Farm Bill concerning storage facility loans. The Commodity Credit Corporation (CCC) Charter Act authorizes CCC to provide financing for producers to build or upgrade farm storage and handling facilities. The 2008 Farm Bill requires changes to the storage facility loan program, including increasing the loan limit, increasing the term limit, and adding hay and renewable biomass as eligible stored commodities. The 2008 Farm Bill changes have been added into this rule, which will amend the regulations to clarify procedures for the storage of ineligible commodities in financed structures. An amendment to provisions of the Sugar Storage Facility Loan (SSFL) Program will eliminate penalty for prepayment specifically for SSFL. Hay and renewable biomass as eligible FSFL commodities. Detailed definitions of hay and renewable biomass are also included. The maximum loan term will increase to 12 years. The regulation will authorize loan terms of 7, 10, or 12 years with the term dependent on the loan principal. The regulations will also be amended to increase the useful life of FSFL structures from 10 to 15 years. The FSFL maximum principal amount will increase to $500,000 from the current limit of $100,000 per eligible borrower signing the note and security agreement. One partial disbursement of loan principal and one final disbursement of loan principal, as determined appropriate and subject to acceptable documentation, will be allowed. The purpose of the partial disbursement is to facilitate the purchase and construction of an eligible facility. For loans where the principal is equal to or under $50,000, the actual storage structure constitutes the sole security for the collateral, although severance agreements must be obtained from any prior lien holders on the real estate parcel on which the storage facility is located. The borrower will be allowed to forgo obtaining severance agreements if the down payment is increased by an amount determined appropriate by the Secretary, or other acceptable security is provided. For all loans with the principal over $50,000 or where the borrowerÂ’s aggregate outstanding loan balance will exceed $50,000, additional security is required in the form of a mortgage on the real estate parcel on which the structure is located or another form of security acceptable to the Secretary such as a deed of trust or irrevocable letter of credit. The borrower will be allowed to define another sub parcel of real estate as security if a mortgage on the real estate where the facility is located is not possible. This sub parcel, with the approval of the Secretary, must be of adequate size and value to adequately secure the loan and not be subject to any other liens or mortgages that are superior to the lien interest of CCC. In addition to the changes to the FSFL and SSFL programs mandated by the 2008 Farm Bill, the following changes to the regulations will also be made to clarify certain procedures for FSFL loans. - When a loan is approved, the eligible borrower or entity must be the same as for other FSA or CCC programs. If the farming operation changes after the loan is disbursed, the loan must be repaid or assumed by an eligible entity. - FSA State Committees will have the authority to extend the loan approval period an additional 4 months, for a total of 12 months. Extensions can be granted in situations where the lack of completion is for reasons beyond the producerÂ’s control. The Deputy Administrator, Farm Programs will only become involved if the approval period must be extended for more than 1 year. - An FSFL application fee of $45 is currently required for each loan application. The FSFL application fee will be increased to $100 per loan entity to cover the increase cost of the fees CCC pays for necessary loan application documents. CCC pays the following fees: Lien searches, UC-1 filing, and credit report. - Commercial storage facilities with FSFLs are to use those facilities to store only their own eligible FSFL commodities for the entire loan term. | |
| Agency: Department of Agriculture(USDA) | Priority: Economically Significant |
| RIN Status: Previously published in the Unified Agenda | Agenda Stage of Rulemaking: Final Rule Stage |
| Major: Yes | Unfunded Mandates: No |
| CFR Citation: 7 CFR 1436 | |
| Legal Authority: 15 USC 714 PL 110-246 | |
Legal Deadline:
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Timetable:
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| Regulatory Flexibility Analysis Required: No | Government Levels Affected: None |
| Small Entities Affected: No | Federalism: No |
| Included in the Regulatory Plan: No | |
| RIN Data Printed in the FR: No | |
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Agency Contact: Deirdre Holder Branch Chief, Regulatory Analysis and PRA Requirements Branch Department of Agriculture Farm Production and Conservation Business Center, 1400 Independence Avenue SW, Washington, DC 20250-0572 Phone:202 205-5851 Email: deirdre.holder@usda.gov |
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