section_id,title_number,title_name,chapter,subchapter,part_number,part_name,subpart,subpart_name,section_number,section_heading,agency,authority,source_citation,amendment_citations,full_text 10:10:5.0.2.5.15.1.12.1,10,Energy,III,,765,PART 765—REIMBURSEMENT FOR COSTS OF REMEDIAL ACTION AT ACTIVE URANIUM AND THORIUM PROCESSING SITES,A,Subpart A—General,,§ 765.1 Purpose.,DOE,,,,"The provisions of this part establish regulatory requirements governing reimbursement for certain costs of remedial action at active uranium or thorium processing sites as specified by Subtitle A of Title X of the Energy Policy Act of 1992. These regulations are authorized by section 1002 of the Act (42 U.S.C. 2296a-1), which requires the Secretary to issue regulations governing the reimbursements." 10:10:5.0.2.5.15.1.12.2,10,Energy,III,,765,PART 765—REIMBURSEMENT FOR COSTS OF REMEDIAL ACTION AT ACTIVE URANIUM AND THORIUM PROCESSING SITES,A,Subpart A—General,,§ 765.2 Scope and applicability.,DOE,,,"[59 FR 26726, May 23, 1994, as amended at 68 FR 32957, June 3, 2003]","(a) This part establishes policies, criteria, and procedures governing reimbursement of certain costs of remedial action incurred by licensees at active uranium or thorium processing sites as a result of byproduct material generated as an incident of sales to the United States. (b) Costs of remedial action at active uranium or thorium processing sites are borne by persons licensed under section 62 or 81 of the Atomic Energy Act (42 U.S.C. 2092, 2111), either by NRC or an Agreement State pursuant to a counterpart to section 62 or 81 of the Atomic Energy Act, under State law, subject to the exceptions and limitations specified in this part. (c) The Department shall, subject to the provisions specified in this part, reimburse a licensee, of an active uranium or thorium processing site for the portion of the costs of remedial action as are determined by the Department to be attributable to byproduct material generated as an incident of sales to the United States and either incurred by the licensee not later than December 31, 2007, or incurred by the licensee in accordance with a plan for subsequent remedial action approved by the Department. (d) Costs of remedial action are reimbursable under Title X for decontamination, decommissioning, reclamation, and other remedial action, provided that claims for reimbursement are supported by reasonable documentation as specified in subpart C of this part. (e) Except as authorized by § 765.32, the total amount of reimbursement paid to any licensee of an active uranium processing site shall not exceed $6.25 multiplied by the number of Federal-related dry short tons of byproduct material. This total amount shall be adjusted for inflation pursuant to section 765.12. (f) The total amount of reimbursement paid to all active uranium processing site licensees shall not exceed $350 million. This total amount shall be adjusted for inflation by applying the CPI-U, as provided by § 765.12. (g) The total amount of reimbursement paid to the licensee of the active thorium processing site shall not exceed $365 million, as adjusted for inflation by applying the CPI-U as provided by § 765.12. (h) Reimbursement of licensees for costs of remedial action will only be made for costs that are supported by reasonable documentation as required by § 765.20 and claimed for reimbursement by a licensee in accordance with the procedures established by subpart C of this part. (i) The $715 million aggregate amount authorized to be appropriated under section 1003(a) of the Act (42 U.S.C. 2296a-2(a)) shall be adjusted for inflation by applying the CPI-U as provided by § 765.12, and shall be provided from the Fund." 10:10:5.0.2.5.15.1.12.3,10,Energy,III,,765,PART 765—REIMBURSEMENT FOR COSTS OF REMEDIAL ACTION AT ACTIVE URANIUM AND THORIUM PROCESSING SITES,A,Subpart A—General,,§ 765.3 Definitions.,DOE,,,"[59 FR 26726, May 23, 1994, as amended at 68 FR 32957, June 3, 2003]","For the purposes of this part, the following terms are defined as follows: Active uranium or thorium processing site or active processing site means: (1) Any uranium or thorium processing site, including the mill, containing byproduct material for which a license, issued either by NRC or by an Agreement State, for the production at a site of any uranium or thorium derived from ore— (i) Was in effect on January 1, 1978; (ii) Was issued or renewed after January 1, 1978; or (iii) For which an application for renewal or issuance was pending on, or after January 1, 1978; and (2) Any other real property or improvement on such real property that is determined by the Secretary or by an Agreement State to be: (i) In the vicinity of such site; and (ii) Contaminated with residual byproduct material. Agreement State means a State that is or has been a party to a discontinuance agreement with NRC under section 274 of the Atomic Energy Act (42 U.S.C. 2021) and thereafter issues licenses and establishes remedial action requirements pursuant to a counterpart to section 62 or 81 of the Atomic Energy Act under state law. Atomic Energy Act means the Atomic Energy Act of 1954, as amended, (42 U.S.C. 2011 et seq. ). Byproduct material means the tailings or wastes produced by the extraction or concentration of uranium or thorium from any ore processed primarily for its source material content. Claim for reimbursement means the submission of an application for reimbursement in accordance with the requirements established in subpart C of this part. Costs of remedial action means costs incurred by a licensee prior to or after enactment of UMTRCA to perform decontamination, decommissioning, reclamation, and other remedial action. These costs may include but are not necessarily limited to expenditures for work necessary to comply with applicable requirements to conduct groundwater remediation, treatment or containment of contaminated soil, disposal of process wastes, removal actions, air pollution abatement measures, mill and equipment decommissioning, site monitoring, administrative activities, expenditures required to meet necessary regulatory standards, or other requirements established by NRC, or an Agreement State. Costs of remedial action must be supported by reasonable documentation in accordance with the requirements of subpart C of this part. Decontamination, decommissioning, reclamation, and other remedial action means work performed which is necessary to comply with all applicable requirements of UMTRCA or, where appropriate, with applicable requirements established by an Agreement State. Department means the United States Department of Energy or its authorized agents. Dry short tons of byproduct material means the quantity of tailings generated from the extraction and processing of 2,000 pounds of uranium or thorium ore-bearing rock. Federal reimbursement ratio means the ratio of Federal-related dry short tons of byproduct material to total dry short tons of byproduct material present at an active uranium or thorium processing site on October 24, 1992. The ratio shall be established by comparing Federal-related dry short tons of byproduct material to total dry short tons of byproduct material present at the site on October 24, 1992, or by another means of attributing costs of remedial action to byproduct material generated as an incident of sales to the United States which the Department determines is more accurate than a ratio established using dry short tons of byproduct material. Federal-related dry short tons of byproduct material means dry short tons of byproduct material that was present at an active uranium or thorium processing site on October 24, 1992, and was generated as an incident of uranium or thorium sales to the United States. Generally accepted accounting principles means those principles established by the Financial Accounting Standards Board which encompass the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time. Inflation index means the consumer price index for all urban consumers (CPI-U) as published by the Department of Commerce's Bureau of Labor Statistics. Licensee means a site owner licensed under section 62 or 81 of the Atomic Energy Act (42 U.S.C. 2092, 2111) by NRC, or an Agreement State, for any activity at an active uranium or thorium processing site which results, or has resulted, in the production of byproduct material. Maximum reimbursement amount or maximum reimbursement ceiling means the smaller of the following two quantities: (1) The amount obtained by multiplying the total cost of remedial action at the site, as determined in the approved plan for subsequent remedial action, by the Federal reimbursement ratio established for the site; or (2) $6.25, as adjusted for inflation, multiplied by the number of Federal-related dry short tons of byproduct material. NRC means the United States Nuclear Regulatory Commission or its predecessor agency. Offsite disposal means the disposal, and activities that contribute to the disposal, of byproduct material in a location that is not contiguous to the West Chicago Thorium Mill Site located in West Chicago, Illinois, in accordance with a plan approved by, or other written authorization from, the State of Illinois or NRC provided the activities are consistent with the ultimate removal of byproduct material from the West Chicago Thorium Mill Site. Plan for subsequent remedial action means a plan approved by the Department which includes an estimated total cost and schedule for remedial action, and all applicable requirements of remedial action established by NRC or an Agreement State to be performed after December 31, 2007, at an active uranium or thorium processing site. Reclamation plan or site reclamation plan means a plan, which has been approved by NRC or an Agreement State, for remedial action at an active processing site that establishes the work necessary to comply with applicable requirements of UMTRCA, or where appropriate with requirements established by an Agreement State. Remedial action means decontamination, decommissioning, reclamation, and other remedial action at an active uranium or thorium processing site. Secretary means the Secretary of Energy or her designees. Site owner means a person that presently holds, or held in the past, any interest in land, including but not limited to a fee simple absolute, surface or subsurface ownership of mining claims, easements, and a right of access for the purposes of cleanup, or any other legal or equitable interest. Tailings means the remaining portion of a metal-bearing ore after some or all of the metal, such as uranium, has been extracted. The Fund means the Uranium Enrichment Decontamination and Decommissioning Fund established at the United States Department of Treasury pursuant to section 1801 of the Atomic Energy Act (42 U.S.C. 2297g). Title X or “the Act” means Subtitle A of Title X of the Energy Policy Act of 1992, Public Law 102-486, 106 Stat. 2776 (42 U.S.C. 2296a-1 et seq. ). UMTRCA means the Uranium Mill Tailings Radiation Control Act of 1978, as amended (42 U.S.C. 7901 et seq. ). United States means any executive department, commission, or agency, or other establishment in the executive branch of the Federal Government. Written Authorization means a written statement from either the NRC or an Agreement State that a licensee has performed in the past, or is authorized to perform in the future, a remedial action that is necessary to comply with the requirements of UMTRCA or, where appropriate, the requirements of an Agreement State." 10:10:5.0.2.5.15.2.12.1,10,Energy,III,,765,PART 765—REIMBURSEMENT FOR COSTS OF REMEDIAL ACTION AT ACTIVE URANIUM AND THORIUM PROCESSING SITES,B,Subpart B—Reimbursement Criteria,,§ 765.10 Eligibility for reimbursement.,DOE,,,,"(a) Any licensee of an active uranium or thorium processing site that has incurred costs of remedial action for the site that are attributable to byproduct material generated as an incident of sales to the United States shall be eligible for reimbursement of these costs, subject to the procedures and limitations specified in this part. (b) Prior to reimbursement of costs of remedial action incurred by a licensee, the Department shall make a determination regarding the total quantity of dry short tons of byproduct material, and the quantity of Federal-related dry short tons of byproduct material present on October 24, 1992 at the licensee's active processing site. A claim for reimbursement from a site for which a determination is made will be evaluated individually. If a licensee does not concur with the Department's determination regarding the quantity of dry short tons of byproduct material present at the site, the licensee may appeal the Department's determination in accordance with § 765.22 of this part. The Department's determination shall be used to determine that portion of an approved claim for reimbursement submitted by the licensee which shall be reimbursed, unless or until the determination is overturned on appeal. If the outcome of an appeal requires a change in the Department's initial determination, the Department will adjust any payment previously made to the licensee to reflect the change." 10:10:5.0.2.5.15.2.12.2,10,Energy,III,,765,PART 765—REIMBURSEMENT FOR COSTS OF REMEDIAL ACTION AT ACTIVE URANIUM AND THORIUM PROCESSING SITES,B,Subpart B—Reimbursement Criteria,,§ 765.11 Reimbursable costs.,DOE,,,"[59 FR 26726, May 23, 1994, as amended at 68 FR 32957, June 3, 2003]","(a) Costs for which a licensee may be reimbursed must be for remedial action that a licensee demonstrates is attributable to byproduct material generated as an incident of sales to the United States, as determined by the Department. These costs are equal to the total costs of remedial action at a site multiplied by the Federal reimbursement ratio established for the site. These costs must be incurred in the performance of activities, prior to or after enactment of UMTRCA, and required by a plan, portion thereof, or other written authorization, approved by NRC or by an Agreement State. Costs of remedial action shall be reimbursable only if approved by the Department in accordance with the provisions of this part. (b) In addition, costs of remedial action incurred by a licensee after December 31, 2007 must be in accordance with a plan for subsequent remedial action approved by the Department as specified in § 765.30. (c) Total reimbursement of costs of remedial action incurred at an active processing site that are otherwise reimbursable pursuant to the provisions of this part shall be limited as follows: (1) Reimbursement of costs of remedial action to active uranium processing site licensees shall not exceed $6.25, as adjusted for inflation, multiplied by the number of Federal-related dry short tons of byproduct material. (2) Aggregate reimbursement of costs of remedial action incurred at all active uranium processing sites shall not exceed $350 million. This aggregate amount shall be adjusted for inflation pursuant to § 765.12; and (3) Reimbursement of costs of remedial action at the active thorium processing site shall be limited to costs incurred for offsite disposal and shall not exceed $365 million. This amount shall be adjusted for inflation pursuant to § 765.12. (d) Notwithstanding the Title X requirement that byproduct material must be located at an active processing site on October 24, 1992, byproduct material moved from the Edgemont Mill in Edgemont, South Dakota, to a disposal site as a result of remedial action, shall be eligible for reimbursement in accordance with all applicable requirements of this part." 10:10:5.0.2.5.15.2.12.3,10,Energy,III,,765,PART 765—REIMBURSEMENT FOR COSTS OF REMEDIAL ACTION AT ACTIVE URANIUM AND THORIUM PROCESSING SITES,B,Subpart B—Reimbursement Criteria,,§ 765.12 Inflation index adjustment procedures.,DOE,,,"[59 FR 26726, May 23, 1994, as amended at 68 FR 32957, June 3, 2003]","(a) The amounts of $6.25 (as specified in § 765.2(e) of this rule) $350 million (as specified in § 765.2(f) of this rule), $365 million (as specified in § 765.2(g) of this rule) and $715 million (as specified in § 765.2(i) of this rule) shall be adjusted for inflation as provided by this section. (b) To make adjustments for inflation to the amounts specified in paragraph (a) of this section, the Department shall apply the CPI-U to these amounts annually, beginning in 1994, using the CPI-U as published by the Bureau of Labor Statistics within the Department of Commerce for the preceding calendar year. (c) The Department shall adjust annually, using the CPI-U as defined in this part, amounts paid to an active uranium processing site licensee for purposes of comparison with the $6.25 per dry short ton limit on reimbursement as adjusted for inflation." 10:10:5.0.2.5.15.3.12.1,10,Energy,III,,765,PART 765—REIMBURSEMENT FOR COSTS OF REMEDIAL ACTION AT ACTIVE URANIUM AND THORIUM PROCESSING SITES,C,Subpart C—Procedures for Submitting and Processing Reimbursement Claims,,§ 765.20 Procedures for submitting reimbursement claims.,DOE,,,,"(a) All costs of remedial action for which reimbursement is claimed must be supported by reasonable documentation as specified in this subpart. The Department reserves the right to deny any claim for reimbursement, in whole or in part, that is not submitted in accordance with the requirements of this subpart. (b) The licensee shall provide a copy of the approved site reclamation plan or other written authorization from NRC or an Agreement State upon which claims for reimbursement are based, with the initial claim submitted. Any revision or modification made to the plan or other written authorization, which is approved by NRC or an Agreement State, shall be included by the licensee in the next claim submitted to the Department following that revision or modification. This reclamation plan or other written authorization, as modified or revised, shall serve as the basis for the Department's evaluation of all claims for reimbursement submitted by a licensee. (c) Each submitted claim shall provide a summary of all costs of remedial action for which reimbursement is claimed. This summary shall identify the costs of remedial action associated with each major activity or requirement established by the site's reclamation plan or other written authorization. In addition, each claim shall provide a summary of the documentation relied upon by the licensee in support of each cost category for which reimbursement is claimed. (d) Documentation used to support a reimbursement claim must demonstrate that the costs of remedial action for which reimbursement is claimed were incurred specifically for activities specified in the site's reclamation plan, or otherwise authorized by NRC or an Agreement State. Summary documentation used in support of a claim must be cross-referenced to the relevant page and activity of the licensee's reclamation plan, or other written authorization approved by NRC or an Agreement State. (1) Documentation prepared contemporaneous to the time the cost was incurred should be used when available. The documentation should identify the date or time period for which the cost was incurred, the activity for which the cost was incurred, and the reclamation plan provision or other written authorization to which the cost relates. Where available, each claim should be supported by receipts, invoices, pay records, or other documents that substantiate that each specific cost for which reimbursement is claimed was incurred for work that was necessary to comply with UMTRCA or applicable Agreement State requirements. (2) Documentation not prepared contemporaneous to the time the cost was incurred, or not directly related to activities specified in the reclamation plan or other written authorization, may be used in support of a claim for reimbursement provided that the licensee determines the documentation is the only means available to document costs for which reimbursement is sought. (e) The Department may audit, or require the licensee to audit, any documentation used to support a claim on a case-by-case basis and may approve, approve in part, or deny reimbursement of any claim in accordance with the requirements of this part. Documentation relied upon by a licensee in support of a claim for reimbursement shall be made available to the Department and retained by the licensee until 4 years after final payment of a claim is made by the Department. (f) Each licensee should utilize generally accepted accounting principles consistently throughout the claim. These accounting principles, underlying assumptions, and any other information necessary for the Department to evaluate the claim shall be set forth in each claim. (g) Following each annual appropriation by Congress, the Department will issue a Federal Register Notice announcing: (1) A claim submission deadline for that fiscal year; (2) Availability of funds for reimbursement of costs of remedial action; (3) Whether the Department anticipates that approved claims for that fiscal year may be subject to prorated payment; (4) Any changes in the Federal reimbursement ratio or maximum reimbursement ceiling for any active uranium or thorium processing site; (5) Any revision in the per dry short ton limit on reimbursement for all active uranium processing sites; and (6) Any other relevant information. (h) A licensee shall certify, with respect to any claim submitted by it for reimbursement, that the work was completed as described in an approved reclamation plan or other authorization. In addition, the licensee shall certify that all costs for which reimbursement is claimed, all documentation relied upon in support of its costs, and all statements or representations made in the claim are complete, accurate, and true. The certification shall be signed by an officer or other official of the licensee with knowledge of the contents of the claim and authority to represent the licensee in making the certification. Any knowingly false or frivolous statements or representations may subject the individual to penalties under the False Claims Act, sections 3729 through 3731 of title 31 United States Code, or any other applicable statutory authority; and criminal penalties under sections 286, 287, 1001 and 1002 of title 18, United States Code, or any other applicable statutory authority. (i) All claims for reimbursement submitted to the Department shall be sent by registered or certified mail, return receipt requested. The Department reserves all rights under applicable law to recover any funds paid to licensees which an audit finds to not meet the requirements of this part." 10:10:5.0.2.5.15.3.12.2,10,Energy,III,,765,PART 765—REIMBURSEMENT FOR COSTS OF REMEDIAL ACTION AT ACTIVE URANIUM AND THORIUM PROCESSING SITES,C,Subpart C—Procedures for Submitting and Processing Reimbursement Claims,,§ 765.21 Procedures for processing reimbursement claims.,DOE,,,"[59 FR 26726, May 23, 1994, as amended at 68 FR 32957, June 3, 2003]","(a) The Department will conduct a preliminary review of each claim within 60 days after the claim submission deadline announced in the Federal Register Notice specified in § 765.20(g) to determine the completeness of each claim. Payments from the Fund to active uranium or thorium processing site licensees for approved costs of remedial action will be made simultaneously by the Department within 1 year of the claim submission deadline. (b) After completing the preliminary review specified in paragraph (a) of this section, the Department may audit, or require the licensee to audit, any documentation used in support of such claim, request the licensee to provide additional information, or request the licensee to provide other clarification determined by the Department to be necessary to complete its evaluation of the claim. In addition, the Department reserves the right to conduct an inspection of the site to verify any information provided by the licensee in a claim for reimbursement, or in support thereof. Any information requested by the Department, if provided, must be submitted by the claimant within 60 days of receipt of the request unless the Department specifies in writing that additional time is provided. (c) At any time during the review of a claim, the Department may request an informal conference with a licensee to obtain further information or clarification on any unresolved issue pertaining to the claim. While the licensee is not required to provide additional clarification requested by the Department, a failure to do so may result in the denial of that portion of the claim for which information is requested. (d) Based upon the claim submitted and any additional information received by the Department, including any audit or site inspection if conducted, the Department shall complete a final review of all relevant information prior to making a reimbursement decision. When the Department determines it is not clear that an activity for which reimbursement is claimed was necessary to comply with UMTRCA or where appropriate, with applicable Agreement State requirements, the Department may consult with the appropriate regulatory authorities. (e) A written decision regarding the Department's determination to approve, approve in part, or deny a claim will be provided to the licensee within 10 days of completion of the claim review. Within 45 days after the Department's issuance of a written decision to deny the claim due to inadequate documentation, the licensee may request the Department to reconsider its decision if the licensee provides reasonable documentation in accordance with § 765.20. If a licensee chooses not to submit the documentation, the licensee has the right to file a formal appeal to a claim denial in accordance with § 765.22. If a licensee chooses to submit the documentation, the Department will consider whether the documentation results in the Department's reversal of the initial decision to deny the claim and will inform the licensee of the Department's subsequent decision. The licensee may appeal that decision in accordance with § 765.22. (f) If the Department determines that insufficient funds are available at any time to provide for complete payment of all outstanding approved claims, reimbursements of approved claims will be made on a prorated basis. A prorated payment of all outstanding approved claims for reimbursement, or any unpaid portion thereof, shall be made on the basis of the total amount of all outstanding approved claims, regardless of when the claims were submitted or approved. (g) Notwithstanding the provisions of paragraph (f) of this section, or any other provisions of this part, any requirement for the payment or obligation of funds by the Department established by this part shall be subject to the availability of appropriated funds, and no provision herein shall be interpreted to require obligation or payment of funds in violation of the Anti-Deficiency Act (31 U.S.C. 1341)." 10:10:5.0.2.5.15.3.12.3,10,Energy,III,,765,PART 765—REIMBURSEMENT FOR COSTS OF REMEDIAL ACTION AT ACTIVE URANIUM AND THORIUM PROCESSING SITES,C,Subpart C—Procedures for Submitting and Processing Reimbursement Claims,,§ 765.22 Appeals procedures.,DOE,,,"[59 FR 26726, May 23, 1994, as amended at 60 FR 15017, Mar. 21, 1995]","(a) Any appeal by a licensee of any Department determination subject to the requirements of this part, shall invoke the appeals process specified in paragraph (b) of this section. (b) A licensee shall file an appeal of any Department determination subject to the requirements of this part with the Office of Hearings and Appeals, U.S. Department of Energy, 1000 Independence Avenue, SW., Washington, DC 20585. Any appeal must be filed within 45 days from the date the licensee received notice, actual or constructive (i.e., publication in the Federal Register ), of the Department's determination. Appeals must comply with the procedures set forth in 10 CFR part 1003, subpart C. The decision of the Office of Hearings and Appeals shall be the final decision of the Department. A licensee must file an appeal in order to exhaust its administrative remedies, and the receipt of an appellate decision is a prerequisite to seeking judicial review of any determination made under this part." 10:10:5.0.2.5.15.3.12.4,10,Energy,III,,765,PART 765—REIMBURSEMENT FOR COSTS OF REMEDIAL ACTION AT ACTIVE URANIUM AND THORIUM PROCESSING SITES,C,Subpart C—Procedures for Submitting and Processing Reimbursement Claims,,§ 765.23 Annual report.,DOE,,,"[59 FR 26726, May 23, 1994, as amended at 68 FR 32957, June 3, 2003]","The Department shall prepare annually a report summarizing pertinent information concerning claims submitted in the previous calendar year, the status of the Department's review of the claims, determinations made regarding the claims, amounts paid for claims approved, and other relevant information concerning this reimbursement program. The report will be available to all interested parties upon written request to the Department's National Nuclear Security Administration Service Center, Office of Technical Services, Environmental Programs Department, P.O. Box 5400, Albuquerque, NM 87185-5400 and will also be available in the Department's Freedom of Information Reading room, 1000 Independence Avenue SW., Washington, DC." 10:10:5.0.2.5.15.4.12.1,10,Energy,III,,765,PART 765—REIMBURSEMENT FOR COSTS OF REMEDIAL ACTION AT ACTIVE URANIUM AND THORIUM PROCESSING SITES,D,Subpart D—Additional Reimbursement Procedures,,§ 765.30 Reimbursement of costs incurred in accordance with a plan for subsequent remedial action.,DOE,,,"[59 FR 26726, May 23, 1994, as amended at 68 FR 32957, June 3, 2003]","(a) This section establishes procedures governing reimbursements of costs of remedial action incurred in accordance with a plan for subsequent remedial action approved by the Department as provided in this section. Costs otherwise eligible for reimbursement in accordance with the terms of this part and incurred in accordance with the plan shall be reimbursed in accordance with the provisions of subpart D and subpart C. In the event there is an inconsistency between the requirements of subpart D and subpart C, the provisions of subpart D shall govern reimbursement of such costs of remedial action. (b) A licensee who anticipates incurring costs of remedial action after December 31, 2007 may submit a plan for subsequent remedial action. This plan may be submitted at any time after January 1, 2005, but no later than December 31, 2006. Reimbursement of costs of remedial action incurred after December 31, 2007 shall be subject to the approval of this plan by the Department. This plan shall describe: (1) All applicable requirements established by NRC pursuant to UMTRCA, or where appropriate, by the requirements of an Agreement State, included in a reclamation plan approved by NRC or an Agreement State which have not yet been satisfied in full by the licensee, and (2) The total cost of remedial action required at the site, together with all necessary supporting documentation, segregated into actual costs incurred to date, costs incurred or expected to be incurred prior to December 31, 2007 but not yet approved for reimbursement, and anticipated future costs. (c) The Department shall review the plan for subsequent remedial action to verify conformance with the NRC- or Agreement State-approved reclamation plan or other written authorization, and to determine the reasonableness of anticipated future costs, and shall approve, approve with suggested modifications, or reject the plan. During its review, the Department may request additional information from the licensee to clarify or provide support for any provision or estimate contained in the plan. The Department may also consult with NRC or an Agreement State concerning any provision or estimate contained in the plan. Upon approval, approval with modifications, or rejection of a plan, the Department shall inform and explain to the licensee its decision. (d) If the Department rejects a plan for subsequent remedial action submitted by a licensee, the licensee may appeal the Department's rejection or prepare and submit a revised plan. The licensee may continue to submit revised plans for subsequent remedial action until the Department approves a plan, or September 30, 2007, whichever occurs first. A failure by a licensee to receive approval from the Department of a plan prior to December 31, 2007 will preclude that licensee from receiving any reimbursement for costs of remedial action incurred after that date. (e) The Department shall determine, in approving a plan for subsequent remedial action, the maximum reimbursement amount for which the licensee may be eligible. This maximum reimbursement amount shall be the smaller of the following two quantities: (1) The amount obtained by multiplying the total cost of remedial action at the site, as determined in the approved plan for subsequent remedial action, by the Federal reimbursement ratio established for such site; or (2) For the uranium site licensees only, $6.25, as adjusted for inflation, multiplied by the number of Federal-related dry short tons of byproduct material. For all licensees, the Department shall subtract from the maximum reimbursement amount any reimbursement already approved to be paid to the licensee. The resulting sum shall be the potential additional reimbursement to which the licensee may be entitled. This resulting sum will be adjusted after the approval of claims for work performed through December 31, 2007, to reflect the actual approved costs of work performed through that date." 10:10:5.0.2.5.15.4.12.2,10,Energy,III,,765,PART 765—REIMBURSEMENT FOR COSTS OF REMEDIAL ACTION AT ACTIVE URANIUM AND THORIUM PROCESSING SITES,D,Subpart D—Additional Reimbursement Procedures,,§ 765.31 Designation of funds available for subsequent remedial action.,DOE,,,"[59 FR 26726, May 23, 1994, as amended at 68 FR 32958, June 3, 2003]","(a) The Department shall authorize reimbursement of costs of remedial action, incurred in accordance with an approved plan for subsequent remedial action and approved by the Department as specified in subpart C to this part, to be made from the Fund. These costs are reimbursable until: (1) This remedial action has been completed, or (2) The licensee has been reimbursed its maximum reimbursement amount as determined by the Department pursuant to paragraph (e) of § 765.30. (b) A licensee shall submit any claim for reimbursement of costs of remedial action incurred pursuant to an approved plan for subsequent remedial action in accordance with the requirements of subpart C of this part. The Department shall approve, approve in part, or deny any claims in accordance with the procedures specified in subpart C of this part. The Department shall authorize the disbursement of funds upon approval of a claim for reimbursement. (c) After all remedial actions have been completed by affected Agreement State or NRC licensees, the Department will issue a Federal Register notice announcing a termination date beyond which claims for reimbursement will no longer be accepted." 10:10:5.0.2.5.15.4.12.3,10,Energy,III,,765,PART 765—REIMBURSEMENT FOR COSTS OF REMEDIAL ACTION AT ACTIVE URANIUM AND THORIUM PROCESSING SITES,D,Subpart D—Additional Reimbursement Procedures,,§ 765.32 Reimbursement of excess funds.,DOE,,,"[59 FR 26726, May 23, 1994, as amended at 68 FR 32957, June 3, 2003]","(a) No later than December 31, 2008, the Department shall determine if the aggregate amount authorized for appropriation pursuant to section 1003 of the Act (42 U.S.C. 2296a-2), as adjusted for inflation pursuant to § 765.12, exceed as of that date the combined total of all reimbursements which have been paid to licensees under this part, any amounts approved for reimbursement and owed to any licensee, and any anticipated additional reimbursements to be made in accordance with approved plans for subsequent remedial action. (b) If the Department determines that the amount authorized pursuant to section 1003 of the Act (42 U.S.C. 2296a-2), as adjusted for inflation, exceed the combined total of all reimbursements (as indicated in paragraph (a) of this section), the Department may establish procedures for providing additional reimbursement to uranium licensees for costs of remedial action, subject to the availability of appropriated funds. If the amount of available excess funds is insufficient to provide reimbursement of all eligible costs of remedial action, then reimbursement shall be paid on a prorated basis. (c) Each eligible uranium licensee's prorated share will be determined by dividing the total excess funds available by the total number of Federal-related dry short tons of byproduct material present at the site where costs of remedial action exceed $6.25 per dry short ton, as adjusted for inflation pursuant to § 765.12. The resulting number will be the maximum cost per dry short ton, over $6.25, that may be reimbursed. Total reimbursement for each licensee that has incurred approved costs of remedial action in excess of $6.25 per dry short ton will be the product of the excess cost per dry short ton multiplied by the number of Federal-related dry short tons of byproduct material at the site or the actual costs incurred and approved by the Department, whichever is less. (d) Any costs of remedial action for which reimbursement is sought from excess funds determined by the Department to be available is subject to all requirements of this part except the per dry short ton limit on reimbursement established by paragraph (d) of § 765.11." 7:7:7.1.1.4.16.1.9.1,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,A,Subpart A—Overview,,§ 765.1 Introduction.,FSA,,,,"(a) Purpose. This part describes the policies for servicing direct FLP loans, except for borrowers who are delinquent, financially distressed, or otherwise in default on their loan. (b) Servicing actions. Servicing actions described in this part include: (1) Limited resource reviews; (2) Graduation to commercial credit; (3) Application of payments; (4) Maintaining and disposing of security; (5) Transfer of security and assumption of debt; and (6) Servicing accounts of deceased borrowers. (c) Loans covered. The Agency services direct FLP loans under the policies contained in this part. This part is not applicable to Non-program loans, except where noted." 7:7:7.1.1.4.16.1.9.2,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,A,Subpart A—Overview,,§ 765.2 Abbreviations and definitions.,FSA,,,,Abbreviations and definitions for terms used in this part are provided in § 761.2 of this chapter. 7:7:7.1.1.4.16.1.9.3,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,A,Subpart A—Overview,,§§ 765.3-765.50 [Reserved],FSA,,,, 7:7:7.1.1.4.16.10.9.1,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,J,Subpart J—Deceased Borrowers,,§ 765.451 Continuation of FLP debt and transfer of security.,FSA,,,,"(a) Individuals who are liable. Following the death of a borrower, the Agency will continue the loan with any individual who is liable for the indebtedness provided that the individual complies with the obligations of the loan and security instruments. (b) Individuals who are not liable. The Agency will continue the loan with a person who is not liable for the indebtedness in accordance with subpart I of this part." 7:7:7.1.1.4.16.10.9.2,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,J,Subpart J—Deceased Borrowers,,§ 765.452 Borrowers with Non-program loans.,FSA,,,,"(a) Loan continuation. (1) The Agency will continue the loan with a jointly liable borrower if the remaining borrower continues to pay the deceased borrower's loan in accordance with the loan and security instruments. (2) The Agency may continue the loan with an individual who inherits title to the property and is not liable for the indebtedness provided the individual makes payments as scheduled and fulfills all other responsibilities of the borrower according to the loan and security instruments. (b) Loan assumption. A deceased borrower's loan may be assumed by an individual not liable for the indebtedness in accordance with subpart I of this part. (c) Loan discontinuation. (1) The Agency will not continue a loan for any subsequent transfer of title by the heirs, or sale of interests between heirs to consolidate title; and (2) The Agency treats any subsequent transfer of title as a sale subject to requirements listed in subpart I of this part." 7:7:7.1.1.4.16.10.9.3,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,J,Subpart J—Deceased Borrowers,,§§ 765.453-765.500 [Reserved],FSA,,,, 7:7:7.1.1.4.16.11.9.1,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,K,Subpart K—Exception Authority,,§ 765.501 Agency exception authority.,FSA,,,,"On an individual case basis, the Agency may consider granting an exception to any regulatory requirement or policy of this part if: (a) The exception is not inconsistent with the authorizing statute or other applicable law; and (b) The Agency's financial interest would be adversely affected by acting in accordance with published regulations or policies and granting the exception would resolve or eliminate the adverse effect upon the Agency's financial interest." 7:7:7.1.1.4.16.2.9.1,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,B,Subpart B—Borrowers With Limited Resource Interest Rate Loans,,§ 765.51 Required review.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 86 FR 43392, Aug. 9, 2021]","(a) At least every 2 years, a borrower with limited resource interest rate loans is required to provide the operation's financial information to the Agency; for the Agency to determine if the borrower can afford to pay a higher interest rate on the loan. The Agency will review the information provided in accordance with § 761.105 of this chapter. (b) If the borrower's farm operating plan shows that the debt service margin exceeds 110 percent, the Agency will increase the interest rate on the loans with a limited resource interest rate until: (1) A further increase in the interest rate results in a debt service margin of less than 110 percent; or (2) The interest rate is equal to the interest rate currently in effect for the type of loan. (c) Except as provided in paragraph (d) of this section, the Agency will increase the limited resource interest rate to the current interest rate for the type of loan, if the borrower: (1) Purchases items not planned during the term of the loan; (2) Refuses to submit information the Agency requests for use in reviewing the borrower's financial condition; (3) Ceases farming, as described in § 765.253; or (4) Is ineligible due to disqualification resulting from Federal crop insurance violation according to 7 CFR part 718. (d) If the borrower has limited resource interest rate loans that are deferred, the Agency will not change the interest rate during the deferral period." 7:7:7.1.1.4.16.2.9.2,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,B,Subpart B—Borrowers With Limited Resource Interest Rate Loans,,§§ 765.52-765.100 [Reserved],FSA,,,, 7:7:7.1.1.4.16.3.9.1,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,C,Subpart C—Borrower Graduation,,§ 765.101 Borrower graduation requirements.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010; 89 FR 65042, Aug. 8, 2024]","(a) In accordance with the promissory note and security instruments, the borrower must graduate to another source of credit if the Agency determines that: (1) The borrower has the ability to obtain credit from other sources; and (2) Adequate credit is available from other sources at reasonable rates and terms. (b) The Agency may require partial or full graduation. (1) In a partial graduation, all FLP loans of one type ( i.e. all chattel loans or all real estate loans) must be paid in full by refinancing with other credit with or without an Agency guarantee. (2) In a full graduation, all FLP loans are paid in full by refinancing with other credit with or without an Agency guarantee. (3) A loan made for chattel and real estate purposes will be categorized according to how the majority of the loan's funds are expended. (c) The borrower must submit all information that the Agency requests in conjunction with the review of the borrower's financial condition, including Federal income tax returns. (d) The Agency may provide a borrower's prospectus to lenders in an attempt to identify sources of non-Agency credit and assess the lenders' interest in refinancing the borrower's loan. The Agency will notify the borrower when the borrower's prospectus is provided to one or more lenders. (e) If a lender expresses an interest in refinancing the borrower's FLP loan, the borrower must: (1) Apply for a loan from the interested lender within 30 days of notice; or (2) Seek guaranteed loan assistance under the market placement program in accordance with § 762.110(g) of this chapter. (f) The borrower will be responsible for any application fees or purchase of stock in conjunction with graduation. (g) CLs are not subject to graduation requirements under this part." 7:7:7.1.1.4.16.3.9.2,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,C,Subpart C—Borrower Graduation,,§ 765.102 Borrower non-compliance with graduation requirements.,FSA,,,"[89 FR 65042, Aug. 8, 2024]","(a) Borrower failure to fulfill all graduation requirements, including failure to submit information as specified in § 765.101(c) of this chapter, within the time-period specified by the Agency constitutes default on the loan. Except as provided in paragraph (b) of this section, the Agency will accelerate the borrower's loan without offering servicing options provided in 7 CFR part 766 if any outstanding direct loan was closed prior to September 25, 2024. (b) If all outstanding direct loans were closed after September 25, 2024, or when the borrower makes a written request in response to the Agency's notification of intent to accelerate within provided timeframes, the Agency will convert the debt to a non-program loan under the following conditions: (1) It is in the interest of the Agency; (2) The debt will be subject to the interest rate for non-program loans in effect at the time of default; (3) The debt will be serviced as a non-program loan; and (4) The term of the non-program loan will be: (i) For FOs, the Agency will schedule repayment in equal installments over the lesser of the remaining number of years on the loan, the useful life of security, or 25 years. (ii) For OLs, the Agency will schedule repayment in equal installments over the lesser of the remaining number of years on the loan, the useful life of security or 5 years." 7:7:7.1.1.4.16.3.9.3,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,C,Subpart C—Borrower Graduation,,§ 765.103 Transfer and assignment of Agency liens.,FSA,,,,The Agency may assign its lien to the new lender when the borrower is graduating and all FLP debt will be paid in full. 7:7:7.1.1.4.16.3.9.4,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,C,Subpart C—Borrower Graduation,,§§ 765.104-765.150 [Reserved],FSA,,,, 7:7:7.1.1.4.16.4.9.1,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,D,Subpart D—Borrower Payments,,§ 765.151 Handling payments.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 87 FR 13124, Mar. 9, 2022]","(a) Borrower payments. Borrowers must submit their loan payments in a form acceptable to the Agency, such as checks and money orders. Forms of payment not acceptable to the Agency include, but are not limited to, cash, foreign currency, foreign checks, and sight drafts. (b) Crediting account. The Agency credits the borrower's account as of the date the Agency receives payment." 7:7:7.1.1.4.16.4.9.2,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,D,Subpart D—Borrower Payments,,§ 765.152 Types of payments.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010; 87 FR 13124, Mar. 9, 2022]","(a) Regular payments. Regular payments are derived from, but are not limited to: (1) The sale of normal income security; (2) The sale of farm products; (3) Lease income, including mineral lease signing bonus; (4) Program or disaster-related disbursements from USDA or crop insurance entities; and (5) Non-farm income. (b) Extra payments. Extra payments are derived from any of the following: (1) Sale of chattel security other than normal income security; (2) Sale of real estate security; (3) Refinancing of FLP debt; (4) Proceeds of insurance claims received on Agency security, if not being used to repair or replace the security; (5) Any transaction that results in a loss in the value of any Agency basic security; (6) Refunds of duplicate program benefits or assistance to be applied on CL or EM loans; or (7) Refunds of unused loan funds. (c) Payments from sale of real estate. Notwithstanding any other provision of this section, payments derived from the sale of real estate security will be treated as regular payments at the Agency's discretion, if the FLP loans will be adequately secured after the transaction." 7:7:7.1.1.4.16.4.9.3,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,D,Subpart D—Borrower Payments,,§ 765.153 Application of payments.,FSA,,,,"(a) Regular payments. A regular payment is credited to a scheduled installment on program and non-program loans. Regular payments are applied to loans in the following order: (1) Annual operating loan; (2) Delinquent FLP installments, paying least secured loans first; (3) Non-delinquent FLP installments due in the current production cycle in order of security priority, paying least secured loans first; (4) Any future installments due. (b) Extra payments. An extra payment is not credited to a scheduled installment and does not relieve the borrower's responsibility to make scheduled loan installments, but will reduce the borrower's FLP indebtedness. Extra payments are applied to FLP loans in order of lien priority except for refunds of unused loan funds, which shall be applied to the loan for which the funds were advanced." 7:7:7.1.1.4.16.4.9.4,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,D,Subpart D—Borrower Payments,,§ 765.154 Distribution of payments.,FSA,,,,"The Agency applies both regular and extra payments to each loan in the following order, as applicable: (a) Recoverable costs and protective advances plus interest; (b) Deferred non-capitalized interest; (c) Accrued deferred interest; (d) Interest accrued to date of payment; and (e) Loan principal." 7:7:7.1.1.4.16.4.9.5,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,D,Subpart D—Borrower Payments,,§ 765.155 Final loan payments.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 85 FR 36693, June 17, 2020; 87 FR 13124, Mar. 9, 2022]","(a) General. (1) Unless the Agency has reservations regarding the validity of the payment, the Agency may release the borrower's security instruments at the time payment is made, if the borrower makes a final payment by one of the following methods: (i) U.S. Treasury check; (ii) Cashier's check; or (iii) Certified check. (2) Security instruments will only be released when all loans secured by the instruments have been paid in full or otherwise satisfied. (3) The Agency will return the paid note and satisfied security instruments to the borrower after the Agency processes the final payment and determines that the total indebtedness is paid in full. (b) Borrower refunds. If the borrower refunds the entire loan after the loan is closed, the borrower must pay interest from the date of the note to the date the Agency received the funds. (c) Overpayments. If an Agency miscalculation of a final payment results in an overpayment by the borrower of less than $10, the borrower must request a refund from the Agency in writing. Overpayments of $10 or more automatically will be refunded by the Agency. (d) Underpayments. If an Agency miscalculation of a final payment amount results in an underpayment, the Agency may collect all account balances resulting from its error. If the Agency cannot collect an underpayment from the borrower, the Agency will service the debt in accordance with part 761, subpart F of this chapter." 7:7:7.1.1.4.16.4.9.6,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,D,Subpart D—Borrower Payments,,§§ 765.156-765.160 [Reserved],FSA,,,, 7:7:7.1.1.4.16.4.9.7,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,D,Subpart D—Borrower Payments,,§ 765.161 Borrowers entering the Armed Forces.,FSA,,,"[86 FR 43392, Aug. 9, 2021 ]","(a) Protections for borrowers on active duty. The Servicemembers Civil Relief Act (Pub. L. 108-189) and the Ronald W. Reagan National Defense Authorization Act for Fiscal Year (FY) 2005 (Pub. L. 108-375) provide certain loan servicing protections for military borrowers. The Agency will apply those loan servicing protections to applicable Farm Loan borrowers. (1) The benefits and protections of the Servicemembers Civil Relief Act apply to borrowers on active duty at all times. (2) The requirements of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year (FY) 2005 apply during a time of a war or national emergency as declared by the President or Congress. (b) Eligibility for National Guard members and military reservists. Borrowers who are National Guard members or military reservists will be eligible for the protections covered by this section, as specified in paragraphs (b)(1) and (2) of this section: (1) National Guard members must be on duty for at least 30 consecutive calendar days. (2) Military reservists are eligible from the date orders are received to report for active duty. (c) Entity eligibility. National Guard members and military reservists on active duty and any operating entity owned solely by the active duty borrower may be considered for protections specified in paragraph (a) of this section." 7:7:7.1.1.4.16.4.9.8,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,D,Subpart D—Borrower Payments,,§§ 765.162-765.200 [Reserved],FSA,,,, 7:7:7.1.1.4.16.5.9.1,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,E,Subpart E—Protecting the Agency's Security Interest,,§ 765.201 General policy.,FSA,,,,All Agency servicing actions regarding preservation and protection of Agency security will be consistent with the covenants and agreements contained in all loan agreements and security instruments. 7:7:7.1.1.4.16.5.9.2,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,E,Subpart E—Protecting the Agency's Security Interest,,§ 765.202 Borrower responsibilities.,FSA,,,,"The borrower must: (a) Comply with all provisions of the loan agreements; (1) Non-compliance with the provisions of loan agreements and documents, other than failure to meet scheduled loan repayment installments contained in the promissory note, constitutes non-monetary default on FLP loans by the borrower; (2) Borrower non-compliance will be considered by the Agency when making eligibility determinations for future requests for assistance and may adversely impact such requests; (b) Maintain, protect, and account for all security; (c) Pay the following, unless State law requires the Agency to pay: (1) Fees for executing, filing or recording financing statements, continuation statements or other security instruments; and (2) The cost of lien search reports; (d) Pay taxes on property securing FLP loans when they become due; (e) Maintain insurance coverage in an amount specified by the Agency; (f) Protect the interests of the Agency when a third party brings suit or takes other action that could affect Agency security." 7:7:7.1.1.4.16.5.9.3,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,E,Subpart E—Protecting the Agency's Security Interest,,§ 765.203 Protective advances.,FSA,,,,"When necessary to protect the Agency's security interest, costs incurred for the following actions will be charged to the borrower's account: (a) Maintain abandoned security property; (b) Preserve inadequately maintained security; (c) Pay real estate taxes and assessments; (d) Pay property, hazard, or flood insurance; (e) Pay harvesting costs; (f) Maintain Agency security instruments; (g) Pay ground rents; (h) Pay expenses for emergency measures to protect the Agency's collateral; and (i) Protect the Agency from actions by third parties." 7:7:7.1.1.4.16.5.9.4,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,E,Subpart E—Protecting the Agency's Security Interest,,§ 765.204 Notifying potential purchasers.,FSA,,,,"(a) States with Central Filing System (CFS). The Agency participates and complies with central filing systems in States where CFS has been organized. In a State with a CFS, the Agency is not required to additionally notify potential purchasers that the Agency has a lien on a borrower's chattel security, unless specifically required by State law. (b) States without CFS. In a State without CFS, the Agency follows the filing requirements specified for perfecting a lien on a borrower's chattel security under State law. The Agency will distribute the list of chattel and crop borrowers to sale barns, warehouses, and other businesses that buy or sell chattels or crops. In addition, the Agency may provide the list of borrowers to potential purchasers upon request." 7:7:7.1.1.4.16.5.9.5,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,E,Subpart E—Protecting the Agency's Security Interest,,§ 765.205 Subordination of liens.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010; 78 FR 65530, Nov. 1, 2013; 81 FR 51284, Aug. 3, 2016; 89 FR 65042, Aug. 8, 2024]","(a) Borrower application requirements. The borrower must submit the following, unless it already exists in the Agency's file and is still current as determined by the Agency: (1) Completed Agency application for subordination form; (2) A current financial statement, including, in the case of an entity, financial statements from all entity members; (3) Documentation of compliance with the Agency's environmental regulations contained in part 799 of this chapter; (4) Verification of all non-farm income; (5) The farm's operating plan, including a projected cash flow budget reflecting production, income, expenses, and debt repayment plan; and (6) Verification of all debts. (b) Incomplete applications. Incomplete applications will be processed in accordance with 7 CFR 764.52. (c) Subordination of real estate security. For loans secured by real estate, the Agency will approve a request for subordination subject to the following conditions: (1) If a lender requires that the Agency subordinate its lien position on the borrower's existing property in order for the borrower to acquire new property and the request meets the requirements in paragraph (b)(3) of this section, the request may be approved. The Agency will obtain a valid mortgage and the required lien position on the new property. The Agency will require title clearance and loan closing for the property in accordance with § 764.402 of this chapter. (2) If the borrower is an entity and the Agency has taken real estate as additional security on property owned by a member, a subordination for any authorized loan purpose may be approved when it meets the requirements in paragraph (b)(3) of this section and it is needed for the entity member to finance a separate farming operation. The subordination must not cause the unpaid principal and interest on the FLP loan to exceed the value of loan security or otherwise adversely affect the security. (3) The Agency will approve a request for subordination of real estate to a creditor if: (i) The loan will be used for an authorized loan purpose or is to refinance a loan made for an authorized loan purpose by the Agency or another creditor; (ii) The credit is essential to the farming operation, and the borrower cannot obtain the credit without a subordination; (iii) The FLP loan is still adequately secured after the subordination, or the value of the loan security will be increased by an amount at least equal to the advance to be made under the subordination; (iv) Except as authorized by paragraph (c)(2) of this section, there is no other subordination outstanding with another lender in connection with the same security; (v) The subordination is limited to a specific amount; (vi) The loan made in conjunction with the subordination will be closed within a reasonable time and has a definite maturity date; (vii) If the loan is made in conjunction with a guaranteed loan, the guaranteed loan meets the requirements of § 762.142(c) of this chapter; (viii) The borrower is not in default or will not be in default on FLP loans by the time the subordination closing is complete; (ix) The borrower can demonstrate, through a current farm operating plan, the ability to repay all debt payments scheduled, and to be scheduled, during the production cycle; (x) Except for CL, the borrower is unable to partially or fully graduate; (xi) The borrower must not be ineligible as a result of a conviction for controlled substances according to part 718 of this chapter; (xii) The borrower must not be ineligible due to disqualification resulting from Federal crop insurance violation according to part 718 of this chapter; (xiii) The borrower will not use loan funds in a way that will contribute to erosion of highly erodible land or conversion of wetlands as described in part 799 of this chapter; (xiv) Any planned development of real estate security will be performed as directed by the lessor or creditor, as approved by the Agency, and will comply with the terms and conditions of § 761.10 of this chapter; (xv) If a borrower with an SAA mortgage is refinancing a loan held by a lender, subordination of the SAA mortgage may only be approved when the refinanced loan does not increase the amount of debt; and (xvi) In the case of a subordination of non-program loan security, the non-program loan security also secures a program loan with the same borrower. (4) The Agency will approve a request for subordination of real estate to a lessee if the conditions in paragraphs (b)(3)(viii) through (xvi) of this section are met. (d) Chattel security. The requirements for chattel subordinations are as follows: (1) For loans secured by chattel, the subordination must meet the conditions contained in paragraphs (b)(3)(i) through (xiii) of this section. (2) The Agency will approve a request for a second subordination to enable a borrower to obtain crop insurance, if the following conditions are met: (i) The creditor to whom the first subordination was given did not provide for payment of the current year's crop insurance premium, and consents in writing to the provisions of the second subordination to pay insurance premiums from the crop or insurance proceeds; (ii) The borrower assigns the insurance proceeds to the Agency or names the Agency in the loss payable clause of the policy; and (iii) The subordination meets the conditions under paragraphs (b)(1) through (12) of this section. (e) Appraisals. An appraisal of the property that secures the FLP loan will be required when the Agency determines it necessary to protect its interest. Appraisals will be obtained in accordance with § 761.7 of this chapter." 7:7:7.1.1.4.16.5.9.6,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,E,Subpart E—Protecting the Agency's Security Interest,,§ 765.206 Junior liens.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010]","(a) General policy. The borrower will not give a lien on Agency security without the consent of the Agency. Failure to obtain Agency consent will be considered by the Agency when making eligibility determinations for future requests for assistance and may adversely impact such requests. (b) Conditions for consent. The Agency will consent to the terms of a junior lien if all of the following conditions are met: (1) The borrower's ability to make scheduled loan payments is not jeopardized; (2) The borrower provides the Agency a copy of the farm operating plan submitted to the junior lienholder, and the plan is consistent with the Agency operating plan; (3) The total debt against the security does not exceed the security's market value; (4) The junior lienholder agrees in writing not to foreclose the security instrument unless written notice is provided to the Agency; (5) The borrower is unable to graduate on any program except for CL; and (6) The junior lien will not otherwise adversely impact the Agency's financial interests." 7:7:7.1.1.4.16.5.9.7,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,E,Subpart E—Protecting the Agency's Security Interest,,§ 765.207 Conditions for severance agreements.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010]","For loans secured by real estate, a borrower may request Agency consent to a severance agreement or similar instrument so that future chattel acquired by the borrower will not become part of the real estate securing the FLP debt. The Agency will consent to severance agreements if all of the following conditions are met: (a) The financing arrangements are in the financial interest of the Agency and the borrower; (b) The transaction will not adversely affect the Agency's security position; (c) The borrower is unable to graduate on any program except for CL; (d) The transaction will not jeopardize the borrower's ability to pay all outstanding debts to the Agency and other creditors; and (e) The property acquired is consistent with authorized loan purposes." 7:7:7.1.1.4.16.5.9.8,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,E,Subpart E—Protecting the Agency's Security Interest,,§§ 765.208-765.250 [Reserved],FSA,,,, 7:7:7.1.1.4.16.6.9.1,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,F,Subpart F—Required Use and Operation of Agency Security,,§ 765.251 General.,FSA,,,,"(a) A borrower is required to be the operator of Agency security in accordance with loan purposes, loan agreements, and security instruments. (b) A borrower who fails to operate the security without Agency consent is in violation of loan agreements and security instruments. (c) The Agency will consider a borrower's request to lease or cease to operate the security as provided in §§ 765.252 and 765.253." 7:7:7.1.1.4.16.6.9.2,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,F,Subpart F—Required Use and Operation of Agency Security,,§ 765.252 Lease of security.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 78 FR 65531, Nov. 1, 2013; 79 FR 78694, Dec. 31, 2014; 81 FR 51284, Aug. 3, 2016; 86 FR 43392, Aug. 9, 2021; 89 FR 65042, Aug. 8, 2024]","(a) Real estate surface leases. The borrower must request prior approval to lease the surface of real estate security. The Agency will approve requests provided the following conditions are met: (1) The lease will not adversely affect the Agency's security interest; (2) The term of consecutive leases for agricultural purposes does not exceed 3 years, or 5 years if the borrower and the lessee are related by blood or marriage. The term of surface leases for farm property no longer in use, such as old barns, or for nonfarm purposes, such as wind turbines, communication towers, or similar installations can be for any term; (3) The lease does not contain an option to purchase; (4) The lease does not hinder the future operation or success of the farm, or, if the borrower has ceased to operate the farm, the requirements specified in § 765.253 are met. Leases for nonfarm enterprises, such as solar farms, which take significant acreage of the Agency's security out of agriculture production are not authorized. Non-productive land may be considered for this type of lease; and (5) The lease and any contracts or agreements in connection with the lease must be reviewed and approved by the Agency. (b) Mineral leases. The borrower must request Agency consent to lease any mineral rights used as security for FLP loans. (1) For FO loans made from December 23, 1985, to February 7, 2014, and loans other than FO loans secured by real estate and made from December 23, 1985, to November 1, 2013, the value of the mineral rights must have been included in the original appraisal in order for the Agency to obtain a security interest in any oil, gas, and other mineral associated with the real estate security. (2) For all other loans not covered by paragraph (b)(1) of this section, the Agency will obtain a security interest in any oil, gas, and other mineral on or under the real estate pledged as collateral in accordance with the applicable security agreement, regardless of whether such minerals were included in the original appraisal. (3) The Agency may consent to a mineral lease if the proposed use of the leased rights will not adversely affect either: (i) The Agency's security interest; or (ii) Compliance with any applicable environmental requirements of part 799 of this chapter. (4) The term of the mineral lease is not limited. (c) Lease of chattel security. The borrower must request prior approval to lease chattel security. The Agency will approve requests provided the following conditions are met: (1) The term of lease does not exceed 12 months and does not automatically renew; (2) The lease does not contain an option to purchase; (3) The lease does not hinder the future operation or success of the farm, or, if the borrower has ceased to operate the farm, the requirements specified in § 765.253 are met; (4) The lease must be in the best interest of the Agency as determined by the authorized Agency official; (5) Leased security must be accessible and readily identifiable at all times. Leased livestock must be branded, tagged, or be otherwise specifically identifiable; and (6) The lease and any contracts or agreements in connection with the lease must be reviewed and approved by the Agency. (d) Lease proceeds. Lease proceeds are considered normal income security and may be used in accordance with § 765.303. (e) Lease of allotments. (1) The Agency will not approve any crop allotment lease that will adversely affect its security interest in the allotment. (2) The borrower must assign all rental proceeds from an allotment lease to the Agency." 7:7:7.1.1.4.16.6.9.3,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,F,Subpart F—Required Use and Operation of Agency Security,,§ 765.253 Ceasing to operate security.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010; 78 FR 65531, Nov. 1, 2013]","If the borrower requests Agency consent to cease operating the security or if the Agency discovers that the borrower is failing to operate the security, the Agency will give consent if: (a) Such action is in the Agency's best interests; (b) The borrower is unable to graduate on any program except for CL; (c) The borrower is not ineligible as a result of disqualification for Federal crop insurance violation according to 7 CFR part 718; (d) Any one of the following conditions is met: (1) The borrower is involved in the day-to-day operational activities, management decisions, costs and returns of the farming operation, and will continue to reside in the immediate farming community for reasonable management and operation involvement; (2) The borrower's failure to operate the security is due to age or poor health, and the borrower continues to reside in the immediate farming community for reasonable management and operation involvement; or (3) The borrower's failure to operate the security is beyond the borrower's control, and the borrower will resume the farming operation within 3 years." 7:7:7.1.1.4.16.6.9.4,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,F,Subpart F—Required Use and Operation of Agency Security,,§§ 765.254-765.300 [Reserved],FSA,,,, 7:7:7.1.1.4.16.7.9.1,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,G,Subpart G—Disposal of Chattel Security,,§ 765.301 General.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 78 FR 65531, Nov. 1, 2013]","(a) The borrower must account for all chattel security, and maintain records of dispositions of chattel security and the actual use of proceeds. The borrower must make these records available to the Agency upon request. (b) The borrower may not dispose of chattel security for an amount less than its market value. All proceeds, including any amount in excess of the market value, must be distributed to lienholders for application to the borrower's account in the order of lien priority. (1) The Agency considers the market value of normal income security to be the prevailing market price of the commodity in the area in which the farm is located. (2) The market value for basic security is determined by an appraisal obtained in accordance with § 761.7 of this chapter. (c) When the borrower sells chattel security, the property and proceeds remain subject to the Agency lien until the lien is released by the Agency. (d) The Agency and all other lienholders must provide written consent before a borrower may use proceeds for a purpose other than payment of lienholders in the order of lien priority. (e) The transaction must not interfere with the borrower's farming operation or jeopardize the borrower's ability to repay the FLP loan. (f) The disposition must enhance the program objectives of the FLP loan. (g) When the borrower exchanges security property for other property or purchases new property with sale proceeds, the acquisition must be essential to the farming operation as well as meet the program objectives, purposes, and limitations for the type of loan. (h) All checks, drafts, or money orders which the borrower receives from the sale of Agency security must be payable to the borrower and the Agency. If all FLP loan installments and any past due installments, for the period of the agreement for the use of proceeds have been paid, however, these payments from the sale of normal income security may be payable solely to the borrower." 7:7:7.1.1.4.16.7.9.2,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,G,Subpart G—Disposal of Chattel Security,,§ 765.302 Use and maintenance of the agreement for the use of proceeds.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 78 FR 65531, Nov. 1, 2013]","(a) The borrower and the Agency will execute an agreement for the use of proceeds. (b) The borrower must report any disposition of basic or normal income security to the Agency as specified in the agreement for the use of proceeds. (c) If a borrower wants to dispose of normal income security in a way different than provided by the agreement for the use of proceeds, the borrower must obtain the Agency's consent before the disposition unless all FLP payments planned on the agreement have been paid. (d) If the borrower sells normal income security to a purchaser not listed in the agreement for the use of proceeds, the borrower must immediately notify the Agency of what property has been sold and of the name and business address of the purchaser. (e) The borrower must provide the Agency with the necessary information to update the agreement for the use of proceeds. (f) Changes to the agreement on the use of proceeds will be recorded, dated and initialed by the borrower and the Agency." 7:7:7.1.1.4.16.7.9.3,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,G,Subpart G—Disposal of Chattel Security,,§ 765.303 Use of proceeds from chattel security.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 89 FR 65042, Aug. 8, 2024]","(a) General. (1) Proceeds from the sale of basic security and normal income security must be remitted to lienholders in order of lien priority. (2) Proceeds remitted to the Agency may be used as follows: (i) Applied to the FLP loan; (ii) Pay customary costs appropriate to the transaction. (3) With the concurrence of all lienholders, proceeds may be used to preserve the security because of a natural disaster or other severe catastrophe, when funds cannot be obtained by other means in time to prevent the borrower and the Agency from suffering a substantial loss. (4) Security may be consumed as follows: (i) Livestock may be used by the borrower's family for subsistence; (ii) If crops serve as security and usually would be marketed, the Agency may allow such crops to be fed to the borrower's livestock, if this is preferable to marketing, provided the Agency obtains a lien or assignment on the livestock, and livestock products, at least equal to the lien on the crops. (b) Proceeds from the sale of normal income security. In addition to the uses specified in paragraph (a) of this section, the agreement for the use of proceeds will allow for release of proceeds from the sale of normal income security to be used to pay essential family living and farm operating expenses. Such releases will be terminated when an account is accelerated. (c) Proceeds from the sale of basic security. In addition to the uses specified in paragraph (a) of this section: (1) Proceeds from the sale of basic security may not be used for any family living and farm operating expenses. (2) Security may be exchanged for chattel property better suited to the borrower's farming needs if the Agency will acquire a lien on the new property at least equal in value to the lien held on the property exchanged. (3) Proceeds may be used to purchase chattel property better suited to the borrower's farming needs if the Agency will acquire a lien on the purchased property. The value of the purchased property, together with any proceeds applied to the FLP loan, must at least equal the value of the Agency lien on the old security." 7:7:7.1.1.4.16.7.9.4,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,G,Subpart G—Disposal of Chattel Security,,§ 765.304 Unapproved disposition.,FSA,,,,"(a) If a borrower disposes of chattel security without Agency approval, or misuses proceeds, the borrower must: (1) Make restitution to the Agency within 30 days of Agency notification; or (2) Provide disposition or use information to enable the Agency to consider post-approval within 30 days of Agency notification. (b) Failure to cure the first unauthorized disposition in accordance with paragraph (a) of this section, or a second unauthorized disposition, whether or not cured, constitutes a non-monetary default, will be considered by the Agency when making eligibility determinations for future requests for assistance, may adversely impact such requests, and may result in civil or criminal action." 7:7:7.1.1.4.16.7.9.5,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,G,Subpart G—Disposal of Chattel Security,,§ 765.305 Release of security interest.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 78 FR 65531, Nov. 1, 2013; 89 FR 65042, Aug. 8, 2024]","(a) When Agency security is sold, exchanged, or consumed in accordance with the agreement for the use of proceeds, the Agency will release its security interest to the extent of the value of the security disposed. (b) Security interests on wool and mohair may be released when the security is marketed by consignment, provided all of the following conditions are met: (1) The borrower assigns to the Agency the proceeds of any advances made, or to be made, on the wool or mohair by the broker, less shipping, handling, processing, and marketing costs; (2) The borrower assigns to the Agency the proceeds of the sale of the wool or mohair, less any remaining costs in shipping, handling, processing, and marketing, and less the amount of any advance (including any interest which may have accrued on the advance) made by the broker against the wool or mohair; and (3) The borrower and broker agree that the net proceeds of any advances on, or sale of, the wool or mohair will be paid by checks made payable jointly to the borrower and the Agency. (c) The Agency will release its lien on chattel security without compensation, after written request from the borrower, provided all the following criteria are satisfied: (1) The borrower is current on all loan accounts with FSA and has not received PLS, DBSA, or DSA on any loan within the last 36 months; (2) The borrower has paid in full scheduled direct term loan installments that include principal reduction in each of the last 3 calendar years; (3) After the release, the security margin on each Agency direct loan will be 125 percent (or more, if it is not practicable to separate the property, if necessary to ensure the loan is fully secured for the life of the loan, or if the borrower requests only a portion of Agency security to be released). The value of the retained and released security will normally be based on appraisals obtained as specified in § 761.7 of this chapter; however, well-documented recent sales of similar properties can be used if the Agency determines a supportable decision can be made without current appraisals; (4) Any asset requested for release must serve only as security for term loan(s) that have been outstanding for at least the prior 36 months and cannot serve as adequate security for another existing Agency direct loan; and (5) Except for CL, the borrower is unable to fully graduate as specified in § 765.101." 7:7:7.1.1.4.16.7.9.6,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,G,Subpart G—Disposal of Chattel Security,,§§ 765.306-765.350 [Reserved],FSA,,,, 7:7:7.1.1.4.16.8.9.1,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,H,Subpart H—Partial Release of Real Estate Security,,§ 765.351 Requirements to obtain Agency consent.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 75 FR 54016, Sept. 3, 2010; 78 FR 65531, Nov. 1, 2013; 81 FR 51284, Aug. 3, 2016; 86 FR 43392, Aug. 9, 2021; 89 FR 65043, Aug. 8, 2024]","The borrower must obtain prior consent from the Agency for any transactions affecting the real estate security, including, but not limited to, sale or exchange of security, a right-of-way across security, and a partial release. The Agency may consent to such transactions provided the conditions in this section are met. (a) General. The following conditions apply to all transactions affecting real estate: (1) The transaction will enhance the objectives for which the FLP loan or loans were made; (2) The transaction will not jeopardize the borrower's ability to repay the FLP loan, or is necessary to place the borrower's farming operation on a sound basis; (3) Except for releases in paragraph (f) of this section, the amount paid for the security being disposed of, or the rights being granted, is not less than the market value and will be remitted to the lienholders in the order of lien priority; (4) The transaction must not interfere with the borrower's farming operation; (5) The market value of the remaining security is adequate to secure the FLP loans, or if the market value of the security before the transaction was inadequate to fully secure the FLP loans, the Agency's equity in the security is not diminished; (6) The environmental requirements of part 799 of this chapter must be met; (7) The borrower cannot graduate to other credit on any program except for CL; (8) The borrower must not be ineligible due to disqualification resulting from Federal crop insurance violation according to 7 CFR part 718; and (9) The disposition of real estate security for an outstanding ST loan will only be authorized if the transaction will result in full repayment of the loan. (b) Sale of timber, gravel, oil, gas, coal, or other minerals. (1) Agency security instruments require that the borrower request and receive written consent from the Agency prior to certain transactions, including, but not limited to, cutting, removal, or lease of timber, gravel, oil, gas, coal, or other minerals, except small amounts used by the borrower for ordinary household purposes. (i) The sale of timber from real estate that secures an FLP loan will be considered a disposition of a portion of the security. (ii) When the Agency has a security interest in oil, gas, or other minerals as provided by § 765.252(b), the sale of such products will be considered a disposition of a portion of the security by the Agency. (2) Any compensation the borrower may receive for damages to the surface of the real estate security resulting from exploration for, or recovery of, minerals must be assigned to the Agency. Such proceeds will be used to repair the damage, and any remaining funds must be remitted to lienholders in the order of lien priority or, with all lienholders' consent, used for an authorized loan purpose. (c) Exchange of security property. (1) When an exchange of security results in a balance owing to the borrower, the proceeds must be used in accordance with § 765.352. (2) Property acquired by the borrower must meet program objectives, purposes and limitations relating to the type of loan involved as well as applicable requirements for appraisal, title clearance and security. (d) Sale under contract for deed. A borrower may sell a portion of the security for not less than its market value under a contract for deed subject to the following: (1) Not less than 10 percent of the purchase price will be paid as a down payment and remitted to lienholders in the order of lien priority; (2) Payments will not exceed 10 annual installments of principal plus interest or the remaining term of the FLP loan, whichever is less. The interest rate will be the current rate being charged on a regular FO loan plus 1 percent or the rate on the borrower's notes, whichever is greater. Payments may be in equal or unequal installments with a balloon final installment; (3) The Agency's security rights, including the right to foreclose on either the portion being sold or retained, will not be impaired; (4) Any subsequent payments must be assigned to the lienholders and remitted in order of lien priority, or with lienholder's approval, used in accordance with § 765.352; (5) The mortgage on the property sold will not be released prior to either full payment of the borrower's account or receipt of the full amount of sale proceeds; (6) The sale proceeds applied to the borrower's loan accounts will not relieve the borrower from obligations under the terms of the note or other agreements approved by the Agency; (7) All other requirements of this section are met. (e) Transfer of allotments. (1) The Agency will not approve any crop allotment lease that will adversely affect its security interest. (2) The sale of an allotment must comply with all conditions of this subpart. (3) The borrower may transfer crop allotments to another farm owned or controlled by the borrower. Such transfer will be treated as a lease under § 765.252. (f) Release without compensation. Real estate security may be released by FSA without compensation upon written request from the borrower when the requirements of paragraph (a) of this section, except paragraph (a)(3) of this section, are met, and all the following criteria are satisfied: (1) The borrower is current on all loan accounts with FSA and has not received PLS, DBSA, or DSA on any loan within the last 36 months; (2) The borrower has paid in full direct term loan installments that include principal reduction in each of the last 3 calendar years; (3) The property released will not interfere with access to or operation of the remaining farm; (4) Essential buildings and facilities will not be released if they reduce the utility or marketability of the remaining property; (5) Any issues arising due to legal descriptions, surveys, environmental concerns, utilities are the borrower's responsibility, and no costs or fees will be paid by FSA; (6) After the release, the security margin on each Agency direct loan will be 125 percent (or more, if it is not practicable to separate the property, if necessary to ensure the loan is fully secured for the life of the loan, or if the borrower requests only a portion of Agency security to be released). The value of the retained and released security will normally be based on appraisals obtained as specified in § 761.7 of this chapter; however, well-documented recent sales of similar properties can be used if the Agency determines a supportable decision can be made without current appraisals; (7) Any asset requested for release must serve only as security for term loan(s) that have been outstanding for at least the prior 36 months and cannot serve as adequate security for another existing Agency direct loan; and (8) Except for CL, the borrower is unable to fully graduate as specified in § 765.101." 7:7:7.1.1.4.16.8.9.2,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,H,Subpart H—Partial Release of Real Estate Security,,§ 765.352 Use of proceeds.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 89 FR 65043, Aug. 8, 2024]","(a) Proceeds from transactions affecting the real estate security may only be used as follows: (1) Applied on liens in order of priority; (2) To pay customary costs appropriate to the transaction, which meet the following conditions: (i) Are reasonable in amount; (ii) Cannot be paid by the borrower; (iii) Will not be paid by the purchaser; (iv) Must be paid to consummate the transaction; and (v) May include postage and insurance when it is necessary for the Agency to present the promissory note to the recorder to obtain a release of a portion of the real estate from the mortgage. (3) For development or enlargement of real estate owned by the borrower as follows: (i) Development or enlargement must be necessary to improve the borrower's debt repayment ability, place the borrower's farming operation on a sound basis, or otherwise enhance the objectives of the loan; (ii) Such use will not conflict with the loan purposes, restrictions or requirements of the type of loan involved; (iii) Funds will be deposited in a supervised bank account in accordance with subpart B of part 761 of this chapter; (iv) The Agency has, or will obtain, a lien on the real estate developed or enlarged; (v) Construction and development will be completed in accordance with § 761.10 of this chapter. (4) To pay capital gains taxes on real estate transactions when the following conditions are met: (i) The borrower is unable to obtain commercial credit at reasonable rates and terms to pay the capital gains taxes; (ii) The Agency approves the amount to be retained to pay capital gains taxes; (iii) The remaining Agency debt is fully secured; (iv) All other lienholders will: (A) Be fully satisfied from the sale, or (B) Consent to the use of proceeds to be used to pay capital gains taxes; (v) At the borrower's expense, funds will be held in escrow, or deposited in a supervised bank account in accordance with subpart B of part 761 of this chapter; and (vi) Funds that are not used within 18 months towards the capital gains taxes will be remitted to the Agency. (b) After acceleration, the Agency may approve transactions only when all the proceeds will be applied to the liens against the security in the order of their priority, after deducting customary costs appropriate to the transaction. Such approval will not cancel or delay liquidation, unless all loan defaults are otherwise cured." 7:7:7.1.1.4.16.8.9.3,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,H,Subpart H—Partial Release of Real Estate Security,,§ 765.353 Determining market value.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 86 FR 43392, Aug. 9, 2021]","(a) Security proposed for disposition. (1) The Agency will obtain an appraisal of the security proposed for disposition. (2) The Agency may waive the appraisal requirement when the estimated value is less than $50,000. (b) Security remaining after disposition. The Agency will obtain an appraisal of the remaining security if it determines that the transaction will reduce the value of the remaining security. (c) Appraisal requirements. Appraisals, when required, will be conducted in accordance with § 761.7 of this chapter." 7:7:7.1.1.4.16.8.9.4,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,H,Subpart H—Partial Release of Real Estate Security,,§§ 765.354-765.400 [Reserved],FSA,,,, 7:7:7.1.1.4.16.9.9.1,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,I,Subpart I—Transfer of Security and Assumption of Debt,,§ 765.401 Conditions for transfer of real estate and chattel security.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 79 FR 60745, Oct. 8, 2014]","(a) General conditions. (1) Approval of a security transfer and corresponding loan assumption obligates a new borrower to repay an existing FLP debt. (2) All transferees will become personally liable for the debt and assume the full responsibilities and obligations of the debt transferred when the transfer and assumption is complete. If the transferee is an entity, the entity and each entity member must assume personal liability for the loan. (3) A transfer and assumption will only be approved if the Agency determines it is in the Agency's financial interest. (b) Agency consent. A borrower must request and obtain written Agency consent prior to selling or transferring security to another party." 7:7:7.1.1.4.16.9.9.2,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,I,Subpart I—Transfer of Security and Assumption of Debt,,§ 765.402 Transfer of security and loan assumption on same rates and terms.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 79 FR 60745, Oct. 8, 2014; 89 FR 65043, Aug. 8, 2024]","An eligible applicant may assume an FLP loan on the same rates and terms as the original note if: (a) The original borrower has died and the spouse, other relative, or joint tenant who is not obligated on the note inherits the security property; (b) A relative of the borrower or an entity comprised solely of relatives of the borrower assumes the debt along with the original borrower; (c) An individual with an ownership interest in the borrower entity buys the entire ownership interest of the other members and continues to operate the farm in accordance with loan requirements. The new owner must assume personal liability for the loan; (d) A new entity consisting of the same members as the borrower entity buys the borrower entity and continues to operate the farm in accordance with loan requirements; or (e) The original loan is an EM loan for physical or production losses and persons who were directly involved in the farm's operation at the time of the loss will assume the loan. If the original loan was made to: (1) An individual borrower, the transferee must be a relative of the original borrower or an entity in which the entity members are comprised solely of relatives of the original borrower. (2) A trust, partnership or joint operation, the transferee must have been a member, partner or joint operator when the Agency made the original loan or remain an entity comprised solely of people who were original entity members, partners or joint operators when the entity received the original loan. (3) A corporation, limited liability company, cooperative, or other legal business organization, the transferee must: (i) Have been a corporate stockholder, cooperative member or other member of a legal business organization, when the Agency made the original loan or will be an entity comprised solely of entity members who were entity members when the entity received the loan; and (ii) Assume only the portion of the physical or production loss loan equal to the transferee's percentage of ownership. In the case of entity transferees, the transferee must assume that portion of the loan equal to the combined percentages of ownership of the individual stockholders or entity members in the transferee. (f) Application requirements. Transferees must submit a complete application in accordance with § 764.51 of this chapter. (g) Security. All security must be transferred to the transferee with possession taken in accordance with the requirements of part 764 of this chapter for the type of loan being assumed." 7:7:7.1.1.4.16.9.9.3,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,I,Subpart I—Transfer of Security and Assumption of Debt,,§ 765.403 Transfer of security to and assumption of debt by eligible applicants.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 89 FR 65043, Aug. 8, 2024]","(a) Transfer of real estate and chattel security. The Agency may approve transfers of security with assumption of FLP debt, other than EM loans for physical or production losses, by transferees eligible for the type of loan being assumed if: (1) The transferee meets all loan and security requirements in part 764 of this chapter for the type of loan being assumed; and (2) The outstanding loan balance (principal and interest) does not exceed the maximum loan limit for the type of loan as contained in § 761.8 of this chapter. (b) Assumption of Non-program loans. Applicants eligible for FO loans under part 764 of this chapter may assume Non-program loans made for real estate purposes if the Agency determines the property meets program requirements. In such case, the Agency will reclassify the Non-program loan as an FO loan. (c) Loan types that the Agency no longer makes. Real estate loan types the Agency no longer makes ( i.e. EE, RL, RHF) may be assumed and reclassified as FO loans if the transferee is eligible for an FO loan under part 764 of this chapter and the property proposed for transfer meets program requirements. (d) Amount of assumption. The transferee must assume the lesser of: (1) The outstanding balance of the transferor's loan; or (2) The market value of the security, less prior liens and authorized costs, if the outstanding loan balance exceeds the market value of the property. (e) Rates and terms. The interest rate and loan term will be determined according to rates and terms established in part 764 of this chapter for the type of loan being assumed. (f) Application requirements. Transferees must submit a complete application in accordance with 7 CFR 764.51. (g) Security. All security must be transferred to the transferee with possession taken in accordance with the requirements of part 764 of this chapter for the type of loan being assumed." 7:7:7.1.1.4.16.9.9.4,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,I,Subpart I—Transfer of Security and Assumption of Debt,,§ 765.404 Transfer of security to and assumption of debt by ineligible applicants.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 89 FR 65043, Aug. 8, 2024]","(a) General. (1) The Agency will allow the transfer of real estate and chattel security property to applicants who are ineligible for the type of loan being assumed only on Non-program loan rates and terms. (2) The Agency will reclassify the assumed loan as a Non-program loan. (b) Eligibility. Transferees must: (1) Provide written documentation verifying their credit worthiness and debt repayment ability; (2) Not have received debt forgiveness from the Agency; (3) Not be ineligible for loans as a result of a conviction for controlled substances according to 7 CFR part 718; and (4) Not be ineligible due to disqualification resulting from Federal crop insurance violation according to 7 CFR part 718. (c) Assumption amount. The transferee must assume the total outstanding FLP debt or if the value of the property is less than the entire amount of debt, an amount equal to the market value of the security less any prior liens. The total outstanding FLP debt will include any unpaid deferred interest that accrued on the loan to the extent that the debt does not exceed the security's market value. (d) Down payment. Non-program transferees must make a down payment to the Agency of not less than 10 percent of the lesser of the market value or unpaid debt. (e) Interest rate. The interest rate will be the Non-program interest rate in effect at the time of loan approval. (f) Loan terms. (1) For a Non-program loan secured by real estate, the Agency schedules repayment in 25 years or less, based on the applicant's repayment ability. (2) For a Non-program loan secured by chattel property only, the Agency schedules repayment in 5 years or less, based on the applicant's repayment ability. (g) Security. All security must be transferred to the transferee with possession taken in accordance with the requirements of part 764 of this chapter for the type of loan being assumed." 7:7:7.1.1.4.16.9.9.5,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,I,Subpart I—Transfer of Security and Assumption of Debt,,§ 765.405 Payment of costs associated with transfers.,FSA,,,,"The transferor and transferee are responsible for paying transfer costs such as real estate taxes, title examination, attorney's fees, surveys, and title insurance. When the transferor is unable to pay its portion of the transfer costs, the transferee, with Agency approval, may pay these costs provided: (a) Any cash equity due the transferor is applied first to payment of costs and the transferor does not receive any cash payment above these costs; (b) The transferee's payoff of any junior liens does not exceed $5,000; (c) Fees are customary and reasonable; (d) The transferee can verify that personal funds are available to pay transferor and transferee fees; and (e) Any equity due the transferor is held in escrow by an Agency designated closing agent and is disbursed at closing." 7:7:7.1.1.4.16.9.9.6,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,I,Subpart I—Transfer of Security and Assumption of Debt,,§ 765.406 Release of transferor from liability.,FSA,,,"[72 FR 63309, Nov. 8, 2007, as amended at 85 FR 36693, June 17, 2020]","(a) General. Agency approval of an assumption does not automatically release the transferor from liability. (b) Requirements for release. (1) The Agency may release the transferor from liability when all of the security is transferred and the total outstanding debt is assumed. (2) If an outstanding debt balance will remain and only part of the transferor's Agency security is transferred, the written request for release of liability will not be approved, unless the deficiency is otherwise resolved to the Agency's satisfaction. (3) If an outstanding balance will remain and all of the transferor's security has been transferred, the transferor may pay the remaining balance or request debt settlement in accordance with part 761 subpart F of this chapter. If the transferor does not resolve the debt by paying the remaining balance or submitting a debt settlement offer that is acceptable to the Agency, the Agency will service the debt in accordance with part 3 of this title using all applicable collection tools including, but not limited to, administrative offset, AWG, cross-servicing, Federal salary offset, and TOP. (4) Except for loans in default being serviced under 7 CFR part 766, if an individual who is jointly liable for repayment of an FLP loan withdraws from the farming operation and conveys all of their interest in the security to the remaining borrower, the withdrawing party may be released from liability under the following conditions: (i) A divorce decree or property settlement states that the withdrawing party is no longer responsible for repaying the loan; (ii) All of the withdrawing party's interests in the security are conveyed to the persons with whom the loan will be continued; and (iii) The persons with whom the loan will be continued can demonstrate the ability to repay all of the existing and proposed debt obligations." 7:7:7.1.1.4.16.9.9.7,7,Agriculture,VII,D,765,PART 765—DIRECT LOAN SERVICING—REGULAR,I,Subpart I—Transfer of Security and Assumption of Debt,,§§ 765.407-765.450 [Reserved],FSA,,,,