Icp07-06

United States Department of Agriculture

Farm Service Agency

SUPPORTING STATEMENT

0MB Control No. 0560-0230

7 CFR Part 772, "Servicing Minor Program Loans”

The purpose of this document is to request extension of an information collection used in support of the Farm Service Agency (FSA) Minor Program Loans. Notice of this information collection package was published at 71 FR 19160, April 13, 2006.

Minor Program loans involve existing loans only since there is no longer funding for new loans in these programs. FSA Minor Programs consist of the following loan types: Grazing Association loans and Irrigation and Drainage Association loans previously administered by the U.S. Department of Agriculture’s Rural Development (RD) mission area, and Non-Farm enterprise and Recreation Loans made to individuals which have previously been administered by FSA. The forms previously approved in other packages will continue to be utilized by the program recipients.

1. Explain the circumstances that make the collection of information necessary. Identify any legal or administrative requirements that necessitate the collection. Attach a copy of the appropriate section of each statute and regulation mandating or authorizing the collection of information.

The FSA's FLP provides supervised credit in the form of loans to family farmers and ranchers to purchase land and finance agricultural production. Included are the association loans for irrigation and drainage and grazing associations. Regulations are promulgated to implement selected provisions of sections 331 and 335 of the Consolidated Farm and Rural Development Act. Section 331 authorizes the Secretary of Agriculture to grant releases from personal liability where security property is transferred to approved applicants who, under agreement, assume the outstanding secured indebtedness. That section also authorizes the Secretary of Agriculture to grant partial releases and subordinations of mortgages, subject to certain conditions, and to consent to leases of security and transfers of security property. Section 335 provides servicing authority for real estate security; operation or lease of realty, disposition of surplus property; conveyance of complete interest of the United States; easements; and condemnations. This regulation also delegates approval authorities, and clarifies authorities necessary to carry out the authorizing legislation.

2. Indicate how, by whom, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the Agency has made of the information received from the current collection.

The information is collected from FSA Minor Program borrowers who may be individual farmers or farming partnerships, associations, or corporations. The information is provided from the borrower on a case-by-case basis to FSA county office staff directly. This information is usually provided by the submission of an Agency form, but it could also include documents from commercial lenders or records which are in the borrower’s possession such as balance sheets, budgets, income and equity statements, and mortgages on land acquired with a subordination. The information relates to a program benefit recipient or loan borrower requesting action on security which they own, which was purchased with FSA loan funds, improved with FSA loan funds or has otherwise been mortgaged to the Agency to secure a government loan, or information required by the Agency to meet program requirements.

This information collection will be used solely by the Farm Loan Programs of the Farm Service Agency. It prescribes policies and procedures for servicing chattels, real estate, leaseholds, and certain note-only security for FSA grazing association loans, irrigation and drainage loans, non-farm enterprise loans and recreation loans to individuals. Real estate and chattel security is serviced in a manner intended to accomplish the loan objective and protect the Government’s financial interest. Servicing is carried out in accordance with the security instruments and related agreements, including any authorized modifications, provided the borrower has: (a) a reasonable prospect of accomplishing the loan objectives, (b) properly maintains and accounts for the security, and (c) otherwise meets the loan obligation. All applicable borrowers must be in compliance with civil rights laws and be serviced for graduation.

As of June 7, 2006, FSA has 215 Minor Program borrowers with 333 loans. Forms and information may be acquired and submitted by FAX, mail, or in person.

Specific items of burden imposed by this regulation are described as follows:

• Form RD 465-1 "Application for Partial Release, Subordination or Consent", Form RD

465-5 “ Transfer of Real Estate Security” and Form FSA 1965-13 “Assumption Agreement (Farmer Program Loans)”.

These forms are used by the Agency borrowers to obtain the consent of the Government for subordination of the Agency mortgage, for partial release of real estate security, for leasing of security property, for transfers of security, assumptions of loans, or for discontinuing the operation. The burden associated with Minor Program loans is included in this package. Other uses have been approved under OMB control number 0560-0158. It is estimated that 1 Form RD 465-1 would be submitted annually requiring 1 hour per submission for completion. Form RD 465-5 is estimated to be utilized one time per year and require 30 minutes for completion and Form FSA 1965-13 is signed by the borrower and is estimated to be used one time per year at a burden of 15 minutes.

If a mortgage is required on land acquired with a subordination which is estimated to occur 1 time per year, it is estimated that 30 minutes would be required. In addition, Lien and Title information must be requested and reviewed by the borrower and it is estimated that the burden for this activity will require 30 minutes.

The 3 forms listed above are not currently available for completion on the eforms site of the FSA, therefore, must be acquired from the local FSA County Office, District Office, or State Office. However, the FSA 1965-13 is available on the eforms site for information only. The forms are then submitted to the appropriate FSA office.

• Compliance Reviews.

All Minor Program borrowers must be in compliance with all applicable Federal laws and regulations regarding equal opportunity in hiring, procurement, and related matters and meet the requirements of Title VI of the Civil Rights Act of 1964. Borrowers are reviewed every third year for compliance. The borrower is not required to complete any Agency forms, however, the borrower must keep records that monitor compliance. It is estimated that 70 borrowers will require 1 hour each year to assemble the required information. Information required by the borrower consists of users, members, and customers tracked by race and gender; and evidence of outreach efforts to the community served to assure that no evidence of discrimination exists based on Title VI of the Civil Rights Act of 1964.

• Graduation.

FSA requires all Minor Program borrowers to be serviced for graduation to commercial credit. Grazing association borrowers and irrigation and drainage borrowers are reviewed every 2 years for graduation and are required to provide a financial statement, balance sheet and other supporting documentation to allow the Agency official to make a decision on the probability of the borrower graduating to other credit. It is estimated that 95 borrowers will be reviewed annually. Since this is information the borrower would already possess, the only time involved would be to make copies of the information to provide to the Agency for review, or 15 minutes per response. Ten borrowers will be requested to provide graduation financial information. Those borrowers will be required to provide statements of Budget, Income and a Balance Sheet, information already in the possession of the borrower. Since these are associations who employ professional accountants or other trained individuals to prepare this information for income tax purposes on an annual basis, they would only be required to copy and submit this information to the Agency. An Agency form is not required as it would create redundancy and an undue burden on the borrower. It is estimated that it will require 15 minutes per response for the budget document and 15 minutes per response for the Balance Sheet.

• Transfer and Assumption of Minor Program Loans

Section 772.9 provides the requirements for a borrower transferring all or a portion of the security to another party with an assumption of the Agency debt. The party assuming the loan must provide current financial information and would likely take 15 minutes each to copy and submit financial information including a Budget and a Balance Sheet. This information is submitted in their own format and does not require an Agency form. Information is submitted to the local FSA servicing office to be reviewed by FSA. It is estimated that 1 request for a transfer and assumption would be processed annually. The borrower and party assuming the loan would likely be required a total of 30 minutes for a Transfer and Assumption.

• Leasing Security

Section 772.7 requires the borrower to provide FSA with a copy of the lease when they lease real estate security. FSA regulations require borrowers to operate their security and allow real estate security to be leased only when several criteria are met. Consequently, few FSA borrowers lease their security and the Agency estimates that this collection would be required 1 time annually and require 30 minutes per response.

3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g. permitting electronic submission of responses, and the basis for the decision for adopting this means of collection. Also describe any consideration of using information technology to reduce burden.

USDA has implemented digital signatures initiatives. Encrypting a message with the sender's private key, then encrypting the message with the intended recipient's public key creates digital signatures. This process provides the necessary evidence that a particular party processed an item on a specified date. Full compliance is not possible for these association-type borrowers as multiple parties must sign each form.

Forms RD 465-1, 465-5 and FSA 1965-13 are not available on-line for completion and must be provided to the borrower by the Agency. However, FSA 1965-13 is available on the eforms site for informational purposes only.

4. Describe efforts to identify duplication. Show specifically why any similar information already available cannot be used or modified for use for the purposes described in Item 2 above.

FSA Farm Loan Programs officials have reviewed any duplication of our information collection with other Agencies and other sources. As a result, there is no duplication of information collection between Federal Agencies and other sources.

Additionally, due to our technology limitations, FSA could not share data electronically with other Agencies. However, the ongoing improvements of automation through the purchase of new technology and a common computing environment will allow for data sharing capabilities. Currently, FSA is working toward sharing data between its program areas. This will be the first step toward single data entry.

5. Methods to minimize burden on small business or other small entities (Item 5 of OMB Form 83-I), describe any methods to minimize burden.

This information collection places no burden on small businesses or other small entities beyond that performed in the course of normal business. The information collection can be made easier by updating previous financial information already in FSA’s file.

6. Describe the consequences to Federal program or policy activities if the collection is not conducted or conducted less frequently as well as any technical or legal obstacles to reducing burden.

The collection of information is required as a result of specific requests from program participants and obtained on an as needed basis and used to document the recipient's eligibility for the requested benefit. There is no regular reporting schedule related to the information collection requirements of this part. Failure to obtain this information at the time of the request for servicing will result in rejection of the borrower's request.

7. Explain any special circumstances that would cause an information collection to be conducted in a manner:

a. Requiring respondents to report information more than quarterly. There are no information collection requirements that require reporting on more than a quarterly basis.

b. Requiring written responses in less than 30 days. The information to be collected is a result of the respondent's program participation and receipt of a benefit. In order to ensure that all applicants are treated equally, some application deadlines are applied by regulation and or statute.

c. Requiring more than an original and two copies. The information collection requires only an original document or copy.

d. Requiring respondents to retain records for more than 3 years. There are no such requirements.

e. Not utilizing statistical sampling. There are no such requirements.

f. Require statistical sampling which has not been reviewed and approved by OMB. There are no such requirements.

g. Requiring a pledge of confidentiality. There are no such requirements.

h. Requiring submission of proprietary trade secrets. There are no such requirements.

8. Describe efforts to consult with persons outside the Agency to obtain their view on the availability of data, frequency of collection, the clarity of instructions and record keeping disclosure, or reporting format (if any), and on data elements to be recorded, disclosed, or reported.

The Agency published a Notice and Request for Comments on April 13, 2006 [ 71 FR 19160]. One response was received from an employee organization which addressed four items.

1. They believe the information required is essential to allow loan officials to quickly respond to borrower’s issues. The Agency concurs.

2. They state that it is difficult to assess the accuracy of the Agency’s estimated time burden to complete the required forms but do not disagree with the Agency’s estimate. Since the majority of information required from borrowers is acceptable on their own forms, generally prepared by their accountant or bookkeeper, there is little additional time burden required. The Agency’s estimate has not changed.

3. They state that the Farm Business Plan balance sheet used today is still not understood by many customers and that it would make sense to have several levels of financial information. The Farm Business Plan is not required for Minor Program loans covered under this burden package. Association Minor Program loans are required to use their own financial documents, not Agency forms. Individual loans covered under the Minor Programs are serviced according to 7 CFR part 1951-S for which a burden package has been approved.

4. They state that it would be a help for customers to be able to provide information via email. We agree, however, at this time the Agency can only accept information from customers with level 2 e-auth credentials and cannot accept regular email from an individual borrower to a specific employee or office.

Also, the Agency consults with its borrowers, representatives of private lending institutions, Agency and other USDA employees, and representatives of the Farm Credit Administration on a frequent basis as part of ongoing program administration, national oversight and national internal reviews.

The following individuals were consulted regarding this information collection and thought the process was clear, and, had no suggestions for modification of the forms or information required.

Douglas Rosenkrance

Houston Grazing Association

Rt. 1 Box 24

Mackay, ID 83252

(208) 588-2551

Dean Shelman, General Manager

Bell-A Grazing Association

69749 Hwy 205

Burns, OR 97720

(541) 573-2201

Vern Spaur, President

Allen Canyon Sprinkler Association

68830 Allen Canyon Rd.

Wallowa, OR 97885

(541) 569-2352

9. Explain any decision to provide any payment or gift to respondents, other than renumeration of contractors or grantees.

There is no payment or gift to respondents.

10. Describe any assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulation, or Agency policy.

No assurance of confidentiality is provided. Requests for information received by the Agency will be handled in accordance with the provisions of the Freedom of Information Act and the Privacy Act.

11. Provide any additional justification for any question of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private.

The information collected is financial and production in nature. As a condition of the receipt of program assistance, respondents must provide total disclosure of income, financial data, and history of business dealings that may be considered sensitive.

12. Provide estimates of the hour burden of the collection of information.

As outlined on the attached Form FSA 85-1, collection of information is expected from 194 respondents annually. Although it is possible that one program recipient may request multiple servicing actions, that number would be difficult to estimate. Therefore, this analysis assumes each respondent will provide one annual response. The estimated hour burden of this regulation is 104 man-hours. The burden is calculated by adding the estimated time to complete each record times the number of responses for each record as listed on the FSA 85-1.

The estimated cost to the public is $4,182 based on average annual farm household income.

(104 x $40.22 average hourly rate = $4,182).

13. Provide an estimate of the total annual cost burden to the respondents or record keepers resulting from the collection of information.

The information collection places no burden cost on respondents for capital, start-up, total operation, maintenance, or the purchase of services.

14. Provide estimates of annualized cost to the Federal Government.

The estimated annual cost to the Federal Government is $ 2,745.53. This cost is salary expense for Government employee time associated with the information collection, such as assembling documentation, and reviewing paperwork submitted by respondents. There is no special equipment aside from that needed for day-to-day operations; therefore, there are no costs included for these items. Averaging the GS-9/5 through GS-12/5 salary, indicates employee income of $56,072. Standard adjustments recommended by FSA Budget Division of 33.3% are added for benefits and miscellaneous expenses. The total average cost for an FLP employee salary is $74,744. Divided by 2080 hours/year is $35.93 per hour. Therefore, the estimated costs to the Federal Government are:

Require a Mortgage on Land Acquired with a Subordination.

10 minutes per response for Agency analysis X $35.93 per hour X 1 Respondents = $5.98

Form RD 465-1. "Application for Partial Release, Subordination or Consent"

15 minutes per response for Agency analysis X $35.93 per hour X 1 Respondents = $8.98

Transfer of Real Estate Security - Repayment Ability

15 minutes per response for Agency analysis X $35.93 per hour X 1 Respondents = $8.98

Form RD 465‑5. "Transfer of Real Estate Security"

30 minutes per response for Agency analysis X $35.93 per hour X 1 Respondents = $17.96

Form FSA 1965-13. "Assumption Agreement (Farmer Program Loans)"

15 minutes per response for Agency analysis X $35.93 per hour X 1 Respondents = $8.98

Form FSA 2648. “Compliance Review”

1 hour per response for Agency completion and analysis X $35.93 per hour X 70 respondents = $2,515.10

Graduation Review.

30 minutes per response for Agency analysis X $35.93 per hour X 10 respondents = $179.65

15. Explain the reasons for any program changes or adjustments reported in items 13 or 14 of the OMB form 83-I.

The adjustment made to item 13 is due to a substantial decrease in the number of existing borrowers since the original ICP was prepared 3 years ago. There is no funding for any of the Minor Program loan programs and borrowers have liquidated their accounts by paying them off or refinancing through commercial financing. This has resulted in a net decrease in the number of burden hours for borrowers from 194 to 104, a difference of 90 hours and associated costs for the Government from $4,046.32 three years ago to $2,745.53 at this time.

16. For collection of information whose results will be published, outline plans for tabulation and publication.

There is no collection of information requirements in this regulation which will be published.

17. If seeking approval to not display the expiration date for the OMB approval of information collection, explain the reasons that display would be inappropriate.

The display of the OMB expiration date is inappropriate since it would cause the Agency to wastefully discard forms that have not been modified except for the OMB expiration date. There would also be a cost to the government for modifying automated forms in order to keep up with the OMB printed expiration date.

18. Explain each exception statement to the certification statement identified in items 19 and 20 on OMB 83-I.

There are no exceptions requested.

19. How is this information collected related to Customer Service Center and the one stop

shopping concept?

FSA Service Center employees collect required information. The information is collected from the borrower and is stored locally at the Service Center. This information is program specific and would not be part of one stop shopping except for basic information dissemination.