{"database": "openregs", "table": "cfr_sections", "is_view": false, "human_description_en": "where part_number = 764 sorted by section_id", "rows": [["15:15:3.1.1.1.12.0.1.1", 15, "Commerce and Foreign Trade", "VII", "C", "764", "PART 764\u2014ENFORCEMENT AND PROTECTIVE MEASURES", "", "", "", "\u00a7 764.1 Introduction.", "BIS", "", "", "[85 FR 73416, Nov. 18, 2020]", "In this part, references to the EAR are references to 15 CFR chapter VII, subchapter C. This part specifies conduct that constitutes a violation of the ECRA and/or the EAR and the sanctions that may be imposed for such violations. Antiboycott violations are described in part 760 of the EAR, and the violations and sanctions specified in part 764 also apply to conduct relating to part 760, unless otherwise stated. This part describes administrative sanctions that may be imposed by BIS. This part also describes criminal sanctions that may be imposed by a United States court and other sanctions that are neither administrative nor criminal pursuant to sections 11A, B, and C of the Export Administration Act EAA and other statutes. Information is provided on how to report and disclose violations. Finally, this part identifies protective administrative measures that BIS may take in the exercise of its regulatory authority."], ["15:15:3.1.1.1.12.0.1.2", 15, "Commerce and Foreign Trade", "VII", "C", "764", "PART 764\u2014ENFORCEMENT AND PROTECTIVE MEASURES", "", "", "", "\u00a7 764.2 Violations.", "BIS", "", "", "[85 FR 73416, Nov. 18, 2020]", "(a)  Engaging in prohibited conduct.  No person may engage in any transaction or take any other action prohibited by or contrary to, or refrain from engaging in any transaction or take any other action required by ECRA, the EAR, or any order, license or authorization issued thereunder.\n\n(b)  Causing, aiding, or abetting a violation.  No person may cause or aid, abet, counsel, command, induce, procure, permit, or approve the doing of any act prohibited, or the omission of any act required, by ECRA, the EAR, or any order, license or authorization issued thereunder.\n\n(c)  Solicitation and attempt.  No person may solicit or attempt a violation of ECRA, the EAR, or any order, license, or authorization issued thereunder.\n\n(d)  Conspiracy.  No person may conspire or act in concert with one or more persons in any manner or for any purpose to bring about or to do any act that constitutes a violation of ECRA, the EAR, or any order, license, or authorization issued thereunder.\n\n(e)  Acting with knowledge of a violation.  No person may order, buy, remove, conceal, store, use, sell, loan, dispose of, transfer, transport, finance, forward, or otherwise service, in whole or in part, or conduct negotiations to facilitate such activities with respect to, any item that has been, is being, or is about to be exported, reexported, or transferred (in-country), or that is otherwise subject to the EAR, with knowledge that a violation of ECRA, the EAR, or any order, license, or authorization issued thereunder, has occurred, is about to occur, or is intended to occur in connection with the item.\n\n(f) [Reserved]\n\n(g)  Misrepresentation and concealment of facts.  (1) No person may make any false or misleading representation, statement, or certification, or falsify or conceal any material fact, either directly to BIS or an official of any other United States agency, or indirectly through any other person:\n\n(i) In the course of an investigation or other action subject to the EAR; or\n\n(ii) In connection with the preparation, submission, issuance, use, or maintenance of any \u201cexport control document\u201d or any report filed or required to be filed pursuant to the EAR; or\n\n(iii) For the purpose of or in connection with effecting an export, reexport, transfer (in-country) or other activity subject to the EAR.\n\n(2) All representations, statements, and certifications made by any person are deemed to be continuing in effect. Every person who has made any representation, statement, or certification must notify BIS, and any other relevant agency, in writing, of any change of any material fact or intention from that previously represented, stated, or certified, immediately upon receipt of any information that would lead a reasonably prudent person to know that a change of material fact or intention has occurred or may occur in the future.\n\n(h)  Evasion.  No person may engage in any transaction or take any other action with intent to evade the provisions of ECRA, the EAR, or any order, license or authorization issued thereunder.\n\n(i)  Failure to comply with reporting, recordkeeping requirements.  No person may fail or refuse to comply with any reporting or recordkeeping requirement of ECRA, the EAR, or of any order, license, or authorization issued thereunder.\n\n(j)  License alteration.  Except as specifically authorized in the EAR or in writing by BIS, no person may alter any license, authorization, export control document, or order issued under ECRA or the EAR.\n\n(k)  Acting contrary to the terms of a denial order.  No person may take any action that is prohibited by a denial order or a temporary denial order issued by BIS to prevent imminent violations of ECRA, the EAR, or any order, license or authorization issued thereunder."], ["15:15:3.1.1.1.12.0.1.3", 15, "Commerce and Foreign Trade", "VII", "C", "764", "PART 764\u2014ENFORCEMENT AND PROTECTIVE MEASURES", "", "", "", "\u00a7 764.3 Sanctions.", "BIS", "", "", "[85 FR 73417, Nov. 18, 2020]", "(a)  Administrative.  Violations of ECRA, the EAR, or any order, license or authorization issued thereunder are subject to the administrative sanctions described in this section and to any other liability, sanction, or penalty available under law. The protective administrative measures that are described in \u00a7 764.6 of this part are distinct from administrative sanctions.\n\n(1)  Civil monetary penalty.  (i) A civil monetary penalty not to exceed the amount set forth in ECRA may be imposed for each violation, and in the event that any provision of the EAR is continued or revised by IEEPA or any other authority, the maximum monetary civil penalty for each violation shall be that provided by such other authority.\n\n(ii) The payment of any civil penalty may be made a condition, for a period not exceeding two years after the imposition of such penalty, to the granting, restoration, or continuing validity of any export license, license exception, permission, or privilege granted or to be granted to the person upon whom such penalty is imposed.\n\n(iii) The payment of any civil penalty may be deferred or suspended in whole or in part during any probation period that may be imposed. Such deferral or suspension shall not bar the collection of the penalty if the conditions of the deferral, suspension, or probation are not fulfilled.\n\n(2)  Denial of export privileges.  An order may be issued that restricts the ability of the named persons to engage in exports, reexports, and transfers (in-country) involving items subject to the EAR, or that restricts access by named persons to items subject to the EAR. An order denying export privileges may be imposed either as a sanction for a violation of ECRA, the EAR, or any other statute set forth at 50 U.S.C. 4819(e)(1)(B); or as a protective administrative measure described in \u00a7 764.6(c) or (d) of this part. An order denying export privileges may suspend or revoke any or all outstanding licenses issued under the EAR to a person named in the denial order or in which such person has an interest; may deny or restrict exports, reexports, and transfers (in-country) by or to such person of any item subject to the EAR; and may restrict dealings in which that person may benefit from any export, reexport, or transfer (in-country) of such items. The standard terms of a denial order are set forth in supplement no. 1 to this part. A non-standard denial order, narrower in scope, may be issued. Authorization to engage in actions otherwise prohibited by a denial order may be given by the Office of Exporter Services, in consultation with the Office of Export Enforcement, upon a written request by a person named in the denial order or by a person seeking permission to deal with a named person. Submit such requests to: Bureau of Industry and Security, Office of Exporter Services, Room 2099b, U.S. Department of Commerce, 14th Street and Pennsylvania Ave. NW, Washington, DC 20230.\n\n(3)  Exclusion from practice.  Any person acting as an attorney, accountant, consultant, freight forwarder, or in any other representative capacity for any license application or other matter before BIS may be excluded by order from any or all such activities before BIS.\n\n(b)  Criminal.  Whoever willfully commits, willfully attempts to commit, or willfully conspires to commit, or aids and abets in the commission of, an unlawful act described in 50 U.S.C. 4819(a) shall be fined not more than $1,000,000; and in the case of the individual, shall be imprisoned for not more than 20 years, or both.\n\n(c)  Other sanctions.  Conduct that violates ECRA, the EAR, or any order, license, or authorization issued thereunder, and other conduct specified in sections 11A, B, and C of the EAA may be subject to sanctions or other measures in addition to criminal and administrative sanctions under ECRA or the EAR. These include, but are not limited to, the following:\n\n(1)  Statutory sanctions.  Statutorily-mandated sanctions may be imposed on account of specified conduct related to weapons proliferation. Such statutory sanctions are not civil or criminal penalties, but restrict imports and procurement (See section 11A of the EAA, Multilateral Export Control Violations, and section 11C of the EAA, Chemical and Biological Weapons Proliferation), or restrict export licenses (See section 11B of the EAA, Missile Proliferation Violations, and the Iran-Iraq Arms Non-Proliferation Act of 1992).\n\n(2)  Other sanctions and measures \u2014(i)  Seizure and forfeiture.  Any property seized pursuant to export laws and regulations administered or enforced by the Secretary is subject to forfeiture. (50 U.S.C. 4819(d) and 4820(j); 22 U.S.C. 401; and 13 U.S.C. 305).\n\n(ii)  Actions by other agencies.  (A) The Department of State may not issue licenses or approvals for the export or reexport of defense articles and defense services controlled under the Arms Export Control Act to persons convicted of criminal offenses specified at 22 U.S.C. 2778(g)(1)(A), or to persons denied export privileges by BIS or another agency; and may deny such licenses or approvals where the applicant is indicted for, or any party to the export is convicted of, those specified criminal offenses. (22 CFR 126.7(a) and 127.11(a)).\n\n(B) The Department of Defense, among other agencies, may suspend the right of any person to contract with the United States Government based on export control violations. (Federal Acquisition Regulations at 48 CFR 9.407-2)."], ["15:15:3.1.1.1.12.0.1.4", 15, "Commerce and Foreign Trade", "VII", "C", "764", "PART 764\u2014ENFORCEMENT AND PROTECTIVE MEASURES", "", "", "", "\u00a7 764.4 Reporting of violations.", "BIS", "", "", "[61 FR 12902, Mar. 25, 1996, as amended at 70 FR 14391, Mar. 22, 2005]", "(a)  Where to report.  If a person learns that an export control violation of the EAR has occurred or may occur, that person may notify:\n\nOffice of Export Enforcement, Bureau of Industry and Security,U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Room H-4520, Washington, D.C. 20230, Tel: (202) 482-1208, Facsimile: (202) 482-0964\n\nOffice of Export Enforcement, Bureau of Industry and Security,U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Room H-4520, Washington, D.C. 20230, Tel: (202) 482-1208, Facsimile: (202) 482-0964\n\nor, for violations of part 760 of the EAR:\n\nOffice of Antiboycott Compliance, Bureau of Industry and Security, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Room H-6099C, Washington, D.C. 20230, Tel: (202) 482-2381, Facsimile: (202) 482-0913.\n\nOffice of Antiboycott Compliance, Bureau of Industry and Security, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Room H-6099C, Washington, D.C. 20230, Tel: (202) 482-2381, Facsimile: (202) 482-0913.\n\n(b)  Failure to report violations.  Failure to report potential violations may result in the unwarranted issuance of licenses or exports without the required licenses to the detriment of the interests of the United States.\n\n(c)  Reporting requirement distinguished.  The reporting provisions in paragraph (a) of this section are not \u201creporting requirements\u201d within the meaning of \u00a7 764.2(i) of this part.\n\n(d)  Formerly embargoed destinations.  Reporting requirements for activities within the scope of \u00a7 764.2(e) that involve items subject to the EAR which may have been illegally exported or reexported to Libya prior to the lifting of the comprehensive embargo on Libya are found in \u00a7 764.7 of the EAR."], ["15:15:3.1.1.1.12.0.1.5", 15, "Commerce and Foreign Trade", "VII", "C", "764", "PART 764\u2014ENFORCEMENT AND PROTECTIVE MEASURES", "", "", "", "\u00a7 764.5 Voluntary self-disclosure.", "BIS", "", "", "[61 FR 12902, Mar. 25, 1996, as amended at 62 FR 25469, May 9, 1997; 69 FR 7870, Feb. 20, 2004; 70 FR 22250, Apr. 29, 2005; 78 FR 48605, Aug. 9, 2013; 89 FR 75482, Sept. 16, 2024]", "(a)  General policy.  BIS strongly encourages disclosure to the Office of Export Enforcement (OEE) if you believe that you may have violated the EAR, or any order, license or authorization issued thereunder. As described in supplement no. 1 to part 766, voluntary self-disclosure is a mitigating factor, and a firm's deliberate decision not to disclose significant apparent violations is an aggravating factor in determining what administrative sanctions, if any, will be sought by OEE. A deliberate decision not to disclose occurs when a firm uncovers a significant apparent violation that it has committed but then chooses not to file a VSD.\n\n(b)  Limitations.  (1) The provisions of this section do not apply to disclosures of violations relating to part 760 of the EAR.\n\n(2) The provisions of this section apply only when information is provided to OEE for its review in determining whether to take administrative action under part 766 of the EAR for violations of the export control provisions of the EAR.\n\n(3) The provisions of this section apply only when information is received by OEE for review prior to the time that OEE, or any other agency of the United States Government, has learned the same or substantially similar information from another source and has commenced an investigation or inquiry in connection with that information.\n\n(4) While voluntary self-disclosure is a mitigating factor in determining what administrative sanctions, if any, will be sought by OEE, it is a factor that is considered together with all other factors in a case. The weight given to voluntary self-disclosure is solely within the discretion of OEE, and the mitigating effect of voluntary self-disclosure may be outweighed by aggravating factors. Voluntary self-disclosure does not prevent transactions from being referred to the Department of Justice for criminal prosecution. In such a case, OEE would notify the Department of Justice of the voluntary self-disclosure, but the consideration of that factor is within the discretion of the Department of Justice.\n\n(5) A firm will not be deemed to have made a disclosure under this section unless the individual making the disclosure did so with the full knowledge and authorization of the firm's senior management.\n\n(6) The provisions of this section do not, nor should they be relied on to, create, confer, or grant any rights, benefits, privileges, or protection enforceable at law or in equity by any person, business, or entity in any civil, criminal, administrative, or other matter.\n\n(c)  Voluntary self-disclosures involving minor or technical violations \u2014(1)  General.  Any person wanting to voluntarily disclose a minor or technical violation should submit an abbreviated narrative report, as described in paragraph (c)(2) of this section. A minor or technical violation is one that does not contain any aggravating factors present as defined in section III(A) of supplement no. 1 to part 766. Examples of minor or technical violations include, but are not limited to, immaterial Electronic Export Information (EEI) filing errors, inadvertent record keeping violations resulting from failed file retrieval or retention mechanisms ( e.g.,  physical damage caused by flood or fire and/or electronic corruption due to malware, virus, or outage), incorrect use of one license exception where other license exceptions were available, etc.\n\n(2)  Abbreviated narrative report.  The abbreviated narrative report should be submitted by email to  bis_vsd_intake@bis.doc.gov  or in writing to the address in paragraph (d)(7) of this section. The email subject line should include the word \u201cabbreviated\u201d if it is an abbreviated VSD.:\n\n(i) The notification should include:\n\n(A) The name of the person making the disclosure and should designate a contact person regarding the abbreviated narrative report and provide that contact person's current business street address, email address, and telephone number; and\n\n(B) A description of the general nature and extent of the violations (including, but not limited to, the destination and parties involved in any transaction, and the number, classification, and value of any items involved). Parties may itemize the various minor or technical violations in list or spreadsheet form.\n\n(ii) The Director of OEE at their discretion may request a full narrative report pursuant to paragraph (d)(3) of this section if OEE suspects the presence of aggravating factors which will be due in 180 days from the date of the OEE Director's request.\n\n(3)  Bundling of minor/technical violations.  Parties may bundle multiple minor or technical violations into one overarching submission, if the violations occurred within the preceding quarter. Parties may submit such minor or technical violations into a single VSD submission on a quarterly basis using the abbreviated narrative account process identified in paragraph (c)(2) of this section.\n\n(d)  Voluntary self-disclosures involving significant violations \u2014(1)  General.  Any person wanting to voluntarily disclose a significant violation should, in the manner outlined in paragraph (c)(2) of this section, initially notify OEE as soon as possible after violations are discovered, and then conduct a thorough review of all export-related transactions where violations are suspected. A significant violation is one that involves one or more aggravating factors as defined in section III(A) of supplement no. 1 to part 766. Those unsure of whether their possible disclosure relates to a minor or technical violation, or a significant violation, should follow the procedure in paragraph (d)(2) of this section for a significant violation.\n\n(2)  Initial notification \u2014(i)  Manner and content of initial notification.  The initial notification should be submitted by email to  bis_vsd_intake@bis.doc.gov  or in writing to the address in paragraph (d)(7) of this section. The notification should include the name of the person making the disclosure and a brief description of the suspected violations and should designate a contact person regarding the initial notification and provide that contact person's current business street address, email address, and telephone number. The notification should describe the general nature and extent of the violations. OEE recognizes that there may be situations where it will not be practical to make an initial notification in writing. For example, written notification may not be practical if a shipment leaves the United States without the required license, yet there is still an opportunity to prevent acquisition of the items by unauthorized persons. In such situations, OEE should be contacted promptly at the office listed in paragraph (d)(7) of this section.\n\n(ii)  Initial notification date.  For purposes of calculating when a complete narrative account must be submitted under paragraph (d)(2)(iii) of this section, the initial notification date is the date the notification is received by OEE. OEE will notify the disclosing party in writing of the date that it receives the initial notification. At OEE's discretion, such writing from OEE may be on paper, or in an email message or facsimile transmission from OEE, or by any other method for the transmission of written communications. Where it is not practical to make an initial notification in writing, the person making the notification should confirm the oral notification in writing as soon as possible.\n\n(iii)  Timely completion of narrative accounts.  The full narrative account required by paragraph (d)(3) of this section must be received by OEE within 180 days of the initial notification date for purposes of paragraph (b)(3) of this section, absent an extension from the Director of OEE. If the person making the initial notification subsequently completes and submits to OEE the narrative account required by paragraph (d)(3) of this section such that OEE receives it within 180 days of the initial notification date, or within the additional time, if any, granted by the Director of OEE pursuant to paragraph (d)(2)(iv) of this section, the disclosure, including violations disclosed in the narrative account that were not expressly mentioned in the initial notification, will be deemed to have been made on the initial notification date for purposes of paragraph (b)(3) of this section if the initial notification was made in compliance with paragraphs (d)(1) and (2) of this section. Failure to meet the deadline (either the initial 180-day deadline or an extended deadline granted by the Director of OEE) would not be an additional violation of the EAR, but such failure may reduce or eliminate the mitigating impact of the voluntary disclosure under supplement no. 1 to this part. For purposes of determining whether the deadline has been met under this paragraph, a complete narrative account must contain all of the pertinent information called for in paragraphs (d)(3) through (5) of this section, and the voluntary self-disclosure must otherwise meet the requirements of this section.\n\n(iv)  Deadline extensions.  The Director of OEE may extend the 180-day deadline upon a determination in his or her discretion that U.S. Government interests would be served by an extension or that the person making the initial notification has shown that more than 180 days is reasonably needed to complete the narrative account.\n\n(A)  Conditions for extension.  The Director of OEE in his or her discretion may place conditions on the approval of an extension. For example, the Director of OEE may require that the disclosing person agree to toll the statute of limitations with respect to violations disclosed in the initial notification or discovered during the review for or preparation of the narrative account, and/or require the disclosing person to undertake specified interim remedial compliance measures.\n\n(B)  Contents of request.  ( 1 ) In most instances 180 days should be adequate to complete the narrative account. Requests to extend the 180-day deadline set forth in paragraph (d)(2)(iii) of this section will be determined by the Director of OEE pursuant to his or her authority under this paragraph (d)(2)(iv) based upon his consideration and evaluation of U.S. Government interests and the facts and circumstances surrounding the request and any related investigations. Such requests should show specifically that the person making the request:\n\n( i ) Began its review promptly after discovery of the violations;\n\n( ii ) Has been conducting its review and preparation of the narrative account as expeditiously as can be expected, consistent with the need for completeness and accuracy;\n\n( iii ) Reasonably needs the requested extension despite having begun its review promptly after discovery of the violations and having conducted its review and preparation of the narrative account as expeditiously as can be expected consistent with the need for completeness and accuracy; and\n\n( iv ) Has considered whether interim compliance or other corrective measures may be needed and has undertaken such measures as appropriate to prevent recurring or additional violations.\n\n( 2 ) Such requests also should set out a proposed timeline for completion and submission of the narrative account that is reasonable under the applicable facts and circumstances and should also designate a contact person regarding the request and provide that contact person's current business street address, email address, and telephone number. Requests may also include additional information that the person making the request reasonably believes is pertinent to the request under the applicable facts and circumstances.\n\n(C)  Timing of requests.  Requests for an extension should be made before the 180-day deadline and as soon as possible once a disclosing person determines that it will be unable to meet the deadline or the extended deadline where an extension previously has been granted, and possesses the information needed to prepare an extension request in accordance with paragraph (d)(2)(iv)(B) of this section. Requests for extension that are not received before the deadline for completing the narrative account has passed will not be considered. Parties who request an extension shortly before the deadline incur the risk that the Director of OEE will be unable to consider the request, determine whether or not to grant the extension, and communicate his or her decision before the deadline, and that any subsequently submitted narrative account will be considered untimely under paragraph (d)(2)(iii) of this section.\n\n(3)  Full narrative.  After the initial notification, a thorough review should be conducted of export-related transactions where violations with potentially aggravating factors are suspected (as defined in section III(A) of supplement no. 1 to part 766). OEE recommends that the review cover a period of five years prior to the date of the initial notification. If your review goes back less than five years, you risk failing to discover violations that may later become the subject of an investigation. Any violations not voluntarily disclosed do not receive consideration under this section. However, the failure to make such disclosures will not be treated as a separate violation unless some other section of the EAR or other provision of law requires disclosure. Upon completion of the review, OEE should be furnished with a narrative account that sufficiently describes the suspected violations so that their nature and gravity can be assessed. The narrative account should also describe the nature of the review conducted and measures that may have been taken to minimize the likelihood that violations will occur in the future. The narrative account should include:\n\n(i) The kind of violation involved, for example, a shipment without the required license or dealing with a party denied export privileges;\n\n(ii) An explanation of when and how the violations occurred;\n\n(iii) The complete identities and addresses of all individuals and organizations, whether foreign or domestic, involved in the activities giving rise to the violations;\n\n(iv) License numbers;\n\n(v) The description, quantity, value in U.S. dollars and ECCN or other classification of the items involved; and\n\n(vi) A description of any mitigating circumstances.\n\n(4)  Supporting documentation.  (i) The narrative account should be accompanied by copies of documents that explain and support it, including:\n\n(A) Licensing documents such as licenses, license applications, import certificates and end-user statements;\n\n(B) Shipping documents such as Shipper's Export Declarations, air waybills, bills of lading and packing lists; and\n\n(C) Other documents such as letters, facsimiles, telexes and other evidence of written or oral communications, internal memoranda, purchase orders, invoices, letters of credit and brochures.\n\n(ii) Any relevant documents not attached to the narrative account must be retained by the person making the disclosure until OEE requests them, or until a final decision on the disclosed information has been made. After a final decision, the documents should be maintained in accordance with the recordkeeping rules in part 762 of the EAR (15 CFR part 762).\n\n(5)  Certification.  A certification must be submitted stating that all of the representations made in connection with the voluntary self-disclosure are true and correct to the best of that person's knowledge and belief. Certifications made by a corporation or other organization should be signed by an official of the corporation or other organization with the authority to do so. \u00a7 764.2(g), relating to false or misleading representations, applies in connection with the disclosure of information under this section.\n\n(6)  Oral presentations.  OEE believes that oral presentations are generally not necessary to augment the written narrative account and supporting documentation. If the person making the disclosure believes otherwise, a request for a meeting should be included with the disclosure.\n\n(7)  Where to make voluntary self-disclosures.  The information constituting a voluntary self-disclosure or any other correspondence pertaining to a voluntary self-disclosure may be submitted by email to  bis_vsd_intake@bis.doc.gov  or mailed to: Director, Office of Export Enforcement, 1401 Constitution Ave., Room H4514, Washington, DC 20230, Tel: (202) 482-5036.\n\n(e)  Dual-track processing of Voluntary Self-Disclosures by the Office of Export Enforcement.  (1) For VSDs that involve minor or technical infractions, including abbreviated VSDs, OEE will generally resolve the VSD within 60 days of a final VSD submission with one of the actions in paragraphs (e)(1)(i) and (ii) of this section.\n\n(i) Inform the person making the disclosure that, based on the facts disclosed, it plans to take no action; or\n\n(ii) Issue a warning letter.\n\n(2) For VSDs that indicate significant violations, OEE will conduct an investigation, and as quickly as the facts and circumstances of a given case permit, OEE may take any of the following actions:\n\n(i) Inform the person making the disclosure that, based on the facts disclosed, it plans to take no action;\n\n(ii) Issue a warning letter;\n\n(iii) Issue a proposed charging letter pursuant to \u00a7 766.18 of the EAR and attempt to settle the matter;\n\n(iv) Issue a charging letter pursuant to \u00a7 766.3 of the EAR if a settlement is not reached; and/or\n\n(v) Refer the matter to the Department of Justice for criminal prosecution.\n\n(f)  Criteria.  Supplement no. 1 to part 766 describes how BIS typically exercises its discretion regarding whether to pursue an administrative enforcement case under part 766 and what administrative sanctions to seek in settling such a case.\n\n(g)  Treatment of unlawfully exported items.  (1) Any person taking certain actions with knowledge that a violation of ECRA or the EAR has occurred has violated \u00a7 764.2(e).\n\n(i) Any person who has made a voluntary self-disclosure knows that a violation may have occurred. Therefore, at the time that a voluntary self-disclosure is made, the person making the disclosure may request permission from BIS to engage in the activities described in \u00a7 764.2(e) that would otherwise be prohibited.\n\n(ii) Any person may also notify the Director of OEE that a violation has occurred and request permission from BIS to engage in the activities described in \u00a7 764.2(e) that would otherwise be prohibited.\n\n(iii) Actions to return to the United States an item that has been unlawfully exported and disclosed under this section only require notification to the Director of OEE. Items subject to a violation that have been returned to the United States do not require further authorization under this paragraph (g) for future activities, provided that those future activities comply with any applicable EAR requirements.\n\n(2) How to submit a request under paragraphs (g)(1)(i) through (iii) of this section: A request should be submitted on letterhead, signed, and sent to the Director of the Office of Exporter\n\nServices at  emcd@bis.doc.gov  with a copy sent to  bis_vsd_intake@bis.doc.gov.  The request should be specific and detail the following information: nature of the violation including when and how the violations occurred; description, quantity, value in U.S. dollars and ECCN or other classification of the items involved; license numbers, if applicable; identities and addresses of all individuals and organizations subject to the request, the scope of the request specifying the \u00a7 764.2(e) activities, including end-use, and point of contact. A copy of the initial or final VSD or notification made to the Director of OEE should be attached to the request.\n\n(3) If a request submitted pursuant to paragraph (g)(1)(i) or (ii) of this section is granted by the Office of Exporter Services in consultation with OEE, future activities with respect to those items that would otherwise violate \u00a7 764.2(e) will not constitute violations.\n\nEven if permission is granted, the person making a voluntary self-disclosure pursuant to paragraph (g)(1)(i) of this section is not absolved from liability for any violations disclosed nor relieved of the obligation to obtain any required reexport authorizations.\n\n(4)  Reexports and transfers (in-country).  To reexport or transfer (in-country) items that are the subject of a voluntary self-disclosure or notification, and that have been exported contrary to the provisions of ECRA or the EAR, authorization may be requested from BIS in accordance with the provisions of part 748 of the EAR (15 CFR part 748). If the applicant who submitted the reexport or transfer authorization knows that the items are the subject of a voluntary self-disclosure or notification, the request should state that a voluntary self-disclosure or notification was made in connection with the export of the items for which authorization is sought and a copy of the voluntary self-disclosure or notification should be included with the license application.\n\nIf the items are otherwise eligible for reexport or transfer under a license exception or the No License Required (NLR) designation, a request under this paragraph (g) may be submitted to obtain permission for the use of the license exception or NLR designation for such reexport or transfer, provided the transaction otherwise meets the terms and conditions of the license exception or NLR designation.\n\n(5)  Automated Export System (AES) filing errors.  Disclosures and notifications of AES filing errors reported to OEE under paragraphs (g)(1)(i) and (ii) of this section, where no other violation of the EAR only require notification to OEE and do not require authorization under this paragraph (g) to engage in activities subject to the EAR. The AES filing must be corrected with the Census Bureau before proceeding with such activities provided the activities meet any applicable EAR requirements. If another violation, such as failure to obtain a required license, has occurred in addition to the AES filing error, authorization under this paragraph (g) is required."], ["15:15:3.1.1.1.12.0.1.6", 15, "Commerce and Foreign Trade", "VII", "C", "764", "PART 764\u2014ENFORCEMENT AND PROTECTIVE MEASURES", "", "", "", "\u00a7 764.6 Protective administrative measures.", "BIS", "", "", "", "(a)  License Exception limitation.  As provided in \u00a7 740.2(b) of the EAR, all License Exceptions are subject to revision, suspension, or revocation.\n\n(b)  Revocation or suspension of licenses.  As provided in \u00a7 750.8 of the EAR, all licenses are subject to revision, suspension, or revocation.\n\n(c)  Temporary denial orders.  BIS may, in accordance with \u00a7 766.24 of the EAR, issue an order temporarily denying export privileges when such an order is necessary in the public interest to prevent the occurrence of an imminent violation.\n\n(d)  Denial based on criminal conviction.  BIS may, in accordance with \u00a7 766.25 of the EAR, issue an order denying the export privileges of any person who has been convicted of an offense specified in \u00a7 11(h) of the EAA."], ["15:15:3.1.1.1.12.0.1.7", 15, "Commerce and Foreign Trade", "VII", "C", "764", "PART 764\u2014ENFORCEMENT AND PROTECTIVE MEASURES", "", "", "", "\u00a7 764.7 Activities involving items that may have been illegally exported or reexported to Libya.", "BIS", "", "", "[70 FR 14391, Mar. 22, 2005, as amended at 71 FR 51719, Aug. 31, 2006; 73 FR 49331, Aug. 21, 2008]", "(a)  Introduction.  As set forth in \u00a7 764.2(e) of this part, and restated in General Prohibition Ten at \u00a7 736.2(b)(10) of the EAR, no person (including a non-U.S. Third Party) may order, buy, remove, conceal, store, use, sell, loan, dispose of, transfer, finance, forward, or otherwise service, in whole or in part, any item subject to the EAR with knowledge that a violation has occurred, or will occur, in connection with the item. This section addresses the application of \u00a7 764.2(e) of this part to activities involving items subject to the EAR that may have been illegally exported or reexported to Libya before the comprehensive embargo on Libya ended (April 29, 2004) (\u201cinstalled base\u201d items).\n\n(b)  Libya \u2014(1)  Activities involving installed base items in Libya for which no license is required.  Subject to the reporting requirement set forth in paragraph (b)(1)(ii) of this section, activities within the scope of \u00a7 764.2(e) of this part involving installed base items described in paragraph (b)(1)(i) of this section that are located in Libya and that were exported or reexported before April 29, 2004 do not require a license from BIS.\n\n(i)  Scope.  An installed base item is within the scope of paragraph (b)(1) of this section if:\n\n(A) It is not on the Commerce Control List in supplement no. 1 to part 774 of the EAR;\n\n(B) It is on the Commerce Control List, but is authorized for export or reexport pursuant to a License Exception to Libya; or\n\n(C) It is on the Commerce Control List and controlled only for AT reasons or for NS and AT reasons only, and is not listed on the Wassenaar Arrangement's Sensitive List (Annex 1) or Very Sensitive List (Annex 2) posted on the Wassenaar Arrangement's Web site ( www.wassenaar.org ) at the Control Lists web page.\n\nAn item being exported or reexported to Libya may require a license based on the classification of the item to be exported or reexported regardless of whether the item will be used in connection with an installed base item. See paragraph (b)(4) of this section.\n\nNot all items listed on the Wassenaar Arrangement's Annex 1, Sensitive List, and Annex 2, Very Sensitive List, fall under the export licensing jurisdiction of the Department of Commerce. Please refer to the Commerce Control List for additional jurisdictional information related to those items. Also, if you do not have access to the internet to review the Wassenaar Arrangement's Sensitive List and Very Sensitive List, please contact the Office of Exporter Services, Division of Exporter Counseling for assistance at telephone number (202) 482-4811.\n\n(ii)  Reporting requirement.  Any person engaging in activity described in paragraph (b)(1) of this section must submit to BIS's Office of Export Enforcement (OEE) a report including all known material facts with respect to how the installed base item arrived in Libya. The report must be submitted to OEE at the address identified in \u00a7 764.4(a) of the EAR within ninety (90) days of the first activity relating to the installed base item in Libya. A report may address more than one activity and/or more than one installed base item. An additional report must be submitted if any new material information regarding the export or reexport to Libya of the installed base item is discovered.\n\n(2)  Licensing procedure for activities involving installed base items in Libya \u2014(i)  License requirement.  Any person seeking to undertake activities within the scope of \u00a7 764.2(e) of the EAR with respect to any installed base item located in Libya and not described in paragraph (b)(1)(i) of this section must obtain a license from BIS prior to engaging in any such activities. License applications should be submitted in accordance with \u00a7\u00a7 748.1, 748.4 and 748.6 of the EAR, and should fully describe the relevant activity within the scope of \u00a7 764.2(e) of this part which is the basis of the application. License applications should include all known material facts as to how the installed base item originally was exported or reexported to Libya. This section also applies if you know that an item to be exported or reexported to a third party will be used on an installed base item not described in paragraph (b)(1)(i) of this section.\n\n(ii)  Licensing policy.  BIS will review license applications submitted pursuant to paragraph (b)(2)(i) of this section on a case-by-case basis. Favorable consideration will be given for those applications related to civil end-uses in Libya. Applications related to military, police, intelligence, or other sensitive end-uses in Libya will be subject to a general policy of denial.\n\n(3)  Exclusion.  The provisions of this section are not applicable to any activities within the scope of \u00a7 764.2(e) of the EAR undertaken with respect to an installed base item in Libya by a person who was party to the original illegal export or reexport of the related installed base item to Libya. Such persons should voluntarily self-disclose violations pursuant to the procedures set forth in \u00a7 764.5 of this part, which in some cases may allow activities related to unlawfully exported or reexported items to be undertaken based on permission from BIS.\n\n(4)  Relationship to other Libya license requirements.  Notwithstanding this section, a license may be required pursuant to another provision of the EAR to engage in activity involving Libya. If a license is required pursuant to another section of the EAR, and the transaction also involves activity within the scope of \u00a7 764.2(e) of this part related to an installed base item in Libya, this information should be specified on the license application. Such applications must also include all known information as to how the installed base item originally arrived in Libya. If granted, the license for the proposed transaction will also authorize the related activity within the scope of \u00a7 764.2(e) of this part."], ["15:15:3.1.1.1.12.0.1.8", 15, "Commerce and Foreign Trade", "VII", "C", "764", "PART 764\u2014ENFORCEMENT AND PROTECTIVE MEASURES", "", "", "", "\u00a7 764.8 Voluntary self-disclosures for boycott violations.", "BIS", "", "", "[72 FR 39004, July 17, 2007]", "This section sets forth procedures for disclosing violations of part 760 of the EAR\u2014Restrictive Trade Practices or Boycotts and violations of part 762\u2014Recordkeeping\u2014with respect to records related to part 760. In this section, these provisions are referred to collectively as the \u201cantiboycott provisions.\u201d This section also describes BIS's policy regarding such disclosures.\n\n(a)  General policy.  BIS strongly encourages disclosure to the Office of Antiboycott Compliance (OAC) if you believe that you may have violated the antiboycott provisions. Voluntary self-disclosures are a mitigating factor with respect to any enforcement action that OAC might take.\n\n(b)  Limitations.  (1) This section does not apply to disclosures of violations relating to provisions of the EAR other than the antiboycott provisions. Section 764.5 of this part describes how to prepare disclosures of violations of the EAR other than the antiboycott provisions.\n\n(2) The provisions of this section apply only when information is provided to OAC for its review in determining whether to take administrative action under parts 764 and 766 of the EAR for violations of the antiboycott provisions.\n\n(3)  Timing.  The provisions of this section apply only if OAC receives the voluntary self-disclosure as described in paragraph (c)(2) of this section before it commences an investigation or inquiry in connection with the same or substantially similar information it received from another source.\n\n(i)  Mandatory reports.  For purposes of this section, OAC's receipt of a report required to be filed under \u00a7 760.5 of the EAR that discloses that a person took an action prohibited by part 760 of the EAR constitutes the receipt of information from another source.\n\n(ii)  Requests for advice.  For purposes of this section, a violation that is revealed to OAC by a person who is seeking advice, either by telephone or e-mail, about the antiboycott provisions does not constitute the receipt of information from another source. Such revelation also does not constitute a voluntary self-disclosure or initial notification of a voluntary self-disclosure for purposes of this section.\n\n(4) Although a voluntary self-disclosure is a mitigating factor in determining what administrative sanctions, if any, will be sought by BIS, it is a factor that is considered together with all other factors in a case. The weight given to voluntary self-disclosure is solely within the discretion of BIS, and the mitigating effect of voluntary self-disclosure may be outweighed by aggravating factors. Voluntary self-disclosure does not prevent transactions from being referred to the Department of Justice for criminal prosecution. In such a case, BIS would notify the Department of Justice of the voluntary self-disclosure, but the decision as to how to consider that factor is within the discretion of the Department of Justice.\n\n(5) A firm will not be deemed to have made a disclosure under this section unless the individual making the disclosure did so with the full knowledge and authorization of the firm's senior management or of a person with authority to make such disclosures on behalf of the firm.\n\n(6) The provisions of this section do not, nor should they be relied on to, create, confer, or grant any rights, benefits, privileges, or protection enforceable at law or in equity by any person, business, or entity in any civil, criminal, administrative, or other matter.\n\n(c)  Information to be provided \u2014(1)  General.  Any person wanting to disclose information that constitutes a voluntary self-disclosure should, in the manner outlined below, initially notify OAC as soon as possible after violations are discovered, and then conduct a thorough review of all transactions where violations of the antiboycott provisions are suspected.\n\n(2)  Initial notification.  The initial notification must be in writing and be sent to the address in \u00a7 764.8(c)(7) of this part. The notification should include the name of the person making the disclosure and a brief description of the suspected violations. The notification should describe the general nature and extent of the violations. If the person making the disclosure subsequently completes the narrative account required by \u00a7 764.8(c)(3) of this part, the disclosure will be deemed to have been made on the date of the initial notification for purposes of \u00a7 764.8(b)(3) of this part.\n\n(3)  Narrative account.  After the initial notification, a thorough review should be conducted of all business transactions where possible antiboycott provision violations are suspected. OAC recommends that the review cover a period of five years prior to the date of the initial notification. If your review goes back less than five years, you risk failing to discover violations that may later become the subject of an investigation. Any violations not voluntarily disclosed do not receive the same mitigation as the violations voluntarily self-disclosed under this section. However, the failure to make such disclosures will not be treated as a separate violation unless some other section of the EAR or other provision of law enforced by BIS requires disclosure. Upon completion of the review, OAC should be furnished with a narrative account that sufficiently describes the suspected violations so that their nature and gravity can be assessed. The narrative account should also describe the nature of the review conducted and measures that may have been taken to minimize the likelihood that violations will occur in the future. The narrative account should include:\n\n(i) The kind of violation involved, for example, the furnishing of a certificate indicating that the goods supplied did not originate in a boycotted country;\n\n(ii) An explanation of when and how the violations occurred, including a description of activities surrounding the violations (e.g., contract negotiations, sale of goods, implementation of letter of credit, bid solicitation);\n\n(iii) The complete identities and addresses of all individuals and organizations, whether foreign or domestic, involved in the activities giving rise to the violations; and\n\n(iv) A description of any mitigating factors.\n\n(4) Supporting documentation.\n\n(i) The narrative account should be accompanied by copies of documents that explain and support it, including:\n\n(A) Copies of boycott certifications and declarations relating to the violation, or copies of documents containing prohibited language or prohibited requests for information;\n\n(B) Other documents relating to the violation, such as letters, facsimiles, telexes and other evidence of written or oral communications, negotiations, internal memoranda, purchase orders, invoices, bid requests, letters of credit and brochures;\n\n(ii) Any relevant documents not attached to the narrative account must be retained by the person making the disclosure until the latest of the following: the documents are supplied to OAC; BIS informs the disclosing party that it will take no action; BIS issues a warning letter for the violation; BIS issues an order that constitutes the final agency action in the matter and all avenues for appeal are exhausted; or the documents are no longer required to be kept under part 762 of the EAR.\n\n(5)  Certification.  A certification must be submitted stating that all of the representations made in connection with the voluntary self-disclosure are true and correct to the best of that person's knowledge and belief. Certifications made by a corporation or other organization should be signed by an official of the corporation or other organization with the authority to do so. Section 764.2(g) of this part relating to false or misleading representations applies in connection with the disclosure of information under this section.\n\n(6)  Oral presentations.  OAC believes that oral presentations are generally not necessary to augment the written narrative account and supporting documentation. If the person making the disclosure believes otherwise, a request for a meeting should be included with the disclosure.\n\n(7)  Where to make voluntary self-disclosures.  The information constituting a voluntary self-disclosure or any other correspondence pertaining to a voluntary self-disclosure should be submitted to: Office of Antiboycott Compliance, 14th and Pennsylvania Ave., NW., Room 6098, Washington, DC 20230, tel: (202) 482-2381, facsimile: (202) 482-0913.\n\n(d)  Action by the Office of Antiboycott Compliance.  After OAC has been provided with the required narrative and supporting documentation, it will acknowledge the disclosure by letter, provide the person making the disclosure with a point of contact, and take whatever additional action, including further investigation, it deems appropriate. As quickly as the facts and circumstances of a given case permit, BIS may take any of the following actions:\n\n(1) Inform the person making the disclosure that, based on the facts disclosed, it plans to take no action;\n\n(2) Issue a warning letter;\n\n(3) Issue a proposed charging letter and attempt to settle the matter pursuant to \u00a7 766.18 of the EAR;\n\n(4) Issue a charging letter pursuant to \u00a7 766.3 of the EAR if a settlement is not reached or BIS otherwise deems appropriate; and/or\n\n(5) Refer the matter to the Department of Justice for criminal prosecution.\n\n(e)  Criteria.  Supplement no. 2 to part 766 of the EAR describes how BIS typically exercises its discretion regarding whether to pursue an antiboycott administrative enforcement case under part 766 and what administrative sanctions to seek in settling such a case."], ["7:7:7.1.1.4.15.1.9.1", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "A", "Subpart A\u2014Overview", "", "\u00a7 764.1 Introduction.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 75 FR 54015, Sept. 3, 2010; 78 FR 3835, Jan. 17, 2013; 81 FR 3292, Jan. 21, 2016]", "(a)  Purpose.  This part describes the Agency's policies for making direct FLP loans.\n\n(b)  Types of loans.  The Agency makes the following types of loans:\n\n(1) FO, including ML and Downpayment loans;\n\n(2) OL, including ML and Youth loans;\n\n(3) EM; and\n\n(4) CL."], ["7:7:7.1.1.4.15.1.9.2", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "A", "Subpart A\u2014Overview", "", "\u00a7 764.2 Abbreviations and definitions.", "FSA", "", "", "", "Abbreviations and definitions for terms used in this part are provided in \u00a7 761.2 of this chapter."], ["7:7:7.1.1.4.15.1.9.3", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "A", "Subpart A\u2014Overview", "", "\u00a7\u00a7 764.3-764.50 [Reserved]", "FSA", "", "", "", ""], ["7:7:7.1.1.4.15.10.9.1", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "J", "Subpart J\u2014Loan Decision and Closing", "", "\u00a7 764.401 Loan decision.", "FSA", "", "", "", "(a)  Loan approval.  (1) The Agency will approve a loan only if it determines that:\n\n(i) The applicant's farm operating plan reflects a feasible plan, which includes repayment of the proposed loan and demonstrates that all other credit needs can be met;\n\n(ii) The proposed use of loan funds is authorized for the type of loan requested;\n\n(iii) The applicant has been determined eligible for the type of loan requested;\n\n(iv) All security requirements for the type of loan requested have been, or will be met before the loan is closed;\n\n(v) The applicant's total indebtedness to the Agency, including the proposed loan, will not exceed the maximum limits established in \u00a7 761.8 of this chapter;\n\n(vi) There have been no significant changes in the farm operating plan or the applicant's financial condition since the time the Agency received a complete application; and\n\n(vii) All other pertinent requirements have been, or will be met before the loan is closed.\n\n(2) The Agency will place conditions upon loan approval it determines necessary to protect its interest and maximize the applicant's potential for success.\n\n(b)  Loan denial.  The Agency will not approve a loan if it determines that:\n\n(1) The applicant's farm operating plan does not reflect a feasible plan;\n\n(2) The proposed use of loan funds is not authorized for the type of loan requested;\n\n(3) The applicant does not meet the eligibility requirements for the type of loan requested;\n\n(4) There is inadequate security for the type of loan requested;\n\n(5) Approval of the loan would cause the applicant's total indebtedness to the Agency to exceed the maximum limits established in \u00a7 761.8 of this chapter;\n\n(6) The applicant's circumstances may not permit continuous operation and management of the farm; or\n\n(7) The applicant, the farming operation, or other circumstances surrounding the loan are inconsistent with the authorizing statutes, other Federal laws, or Federal credit policies.\n\n(c)  Overturn of an Agency decision by appeal.  If an FLP loan denial is overturned on administrative appeal, the Agency will not automatically approve the loan. Unless prohibited by the final appeal determination or otherwise advised by the Office of General Counsel, the Agency will:\n\n(1) Request current financial information from the applicant as necessary to determine whether any changes in the applicant's financial condition or agricultural conditions which occurred after the Agency's adverse decision was made will adversely affect the applicant's farming operation;\n\n(2) Approve a loan for crop production:\n\n(i) Only if the Agency can determine that the applicant will be able to produce a crop in the production cycle for which the loan is requested; or\n\n(ii) For the next production cycle, upon review of current financial data and a farm operating plan for the next production cycle, if the Agency determines the loan can be repaid. The new farm operating plan must reflect any financial issues resolved in the appeal.\n\n(3) Determine whether the applicant's farm operating plan, as modified based on the appeal decision, reflects a feasible plan, which includes repayment of the proposed loan and demonstrates that all other credit needs can be met."], ["7:7:7.1.1.4.15.10.9.2", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "J", "Subpart J\u2014Loan Decision and Closing", "", "\u00a7 764.402 Loan closing.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007. Redesignated at 75 FR 54015, Sept. 3, 2010, as amended at 77 FR 15939, Mar. 19, 2012; 79 FR 60745, Oct. 8, 2014; 87 FR 13124, Mar. 9, 2022; 89 FR 65041, Aug. 8, 2024]", "(a)  Signature requirements.  Signatures on loan documents are required as follows:\n\n(1) For individual applicants, only the applicant is required to sign the promissory note.\n\n(2) For entity applicants, the promissory note will be executed to evidence the liability of the entity, any embedded entities, and the individual liability of all entity members.\n\n(3) Despite minority status, a youth executing a promissory note for a Youth loan will incur full personal liability for the debt.\n\n(4) A cosigner will be required to sign the promissory note if they assist the applicant in meeting the repayment requirements for the loan requested.\n\n(5) All signatures needed for the Agency to acquire the required security interests will be obtained according to State law.\n\n(b)  Payment of fees.  The applicant, or in the case of a real estate purchase, the applicant and seller, must pay all filing, recording, notary, lien search, and any other fees necessary to process and close a loan.\n\n(c)  Chattel-secured loans.  The following requirements apply to loans secured by chattel:\n\n(1) The Agency will close a chattel loan only when it determines the Agency requirements for the loan have been satisfied;\n\n(2) A financing statement is required for every loan except when a filed financing statement covering the applicant's property is still effective, covers all types of chattel property that will serve as security for the loan, describes the land on which crops and fixtures are or will be located, and complies with the law of the jurisdiction where filed;\n\n(3) A new security agreement is required for new loans, as necessary to secure the loan under State law, prior to the disbursement of loan funds.\n\n(d)  Real estate-secured loans.  (1) The Agency will close a real estate loan only when it determines that the Agency requirements for the loan have been satisfied and the closing agent can issue a policy of title insurance or final title opinion as of the date of closing. The title insurance or final title opinion requirement may be waived:\n\n(i) For loans of $25,000 or less;\n\n(ii) As provided in \u00a7 764.235 for CLs and \u00a7 764.355 for EMs;\n\n(iii) When the real estate is considered additional security by the Agency; or\n\n(iv) When the real estate is a non-essential asset.\n\n(2) The title insurance or final title opinion must show title vested as required by the Agency, the lien of the Agency's security instrument in the priority required by the Agency, and title to the security property, subject only to those exceptions approved in writing by the Agency.\n\n(3) The Agency must approve agents who will close FLP loans. Closing agents must meet all of the following requirements to the Agency's satisfaction:\n\n(i) Be licensed in the state where the loan will be closed;\n\n(ii) Not be debarred or suspended from participating in any Federal programs;\n\n(iii) Maintain liability insurance;\n\n(iv) Have a fidelity bond that covers all employees with access to loan funds;\n\n(v) Have current knowledge of the requirements of State law in connection with the loan closing and title clearance;\n\n(vi) Not represent both the buyer and seller in the transaction;\n\n(vii) Not be a relative or business associate with the applicant; and\n\n(viii) Act promptly to provide required services.\n\n(e)  Disbursement of funds.  (1) Loan funds will be made available to the applicant within 15 days of loan approval, subject to the availability of funding.\n\n(2) If the loan is not closed within 90 days of loan approval or if the applicant's financial condition changes significantly, the Agency must reconfirm the requirements for loan approval prior to loan closing. The applicant may be required to provide updated information for the Agency to reconfirm approval and proceed with loan closing.\n\n(3) The Agency or closing agent will be responsible for disbursing loan funds. The electronic funds transfer process, followed by Treasury checks, are the Agency's preferred methods of loan funds disbursement. The Agency will use these processes on behalf of borrowers to disburse loan proceeds directly to creditors being refinanced with loan funds or to sellers of chattel property that is being acquired with loan funds. A supervised bank account will be used according to subpart B of part 761 of this chapter when these processes are not practicable."], ["7:7:7.1.1.4.15.10.9.3", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "J", "Subpart J\u2014Loan Decision and Closing", "", "\u00a7\u00a7 764.403-764.450 [Reserved]", "FSA", "", "", "", ""], ["7:7:7.1.1.4.15.11.9.1", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "K", "Subpart K\u2014Borrower Training and Training Vendor Requirements", "", "\u00a7 764.451 Purpose.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 89 FR 65041, Aug. 8, 2024]", "The purpose of borrower training is to help an applicant develop and improve skills necessary to:\n\n(a) Successfully operate a farm;\n\n(b) Build equity in the operation; and\n\n(c) Become financially successful and prepared to graduate from Agency financing to commercial sources of credit."], ["7:7:7.1.1.4.15.11.9.2", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "K", "Subpart K\u2014Borrower Training and Training Vendor Requirements", "", "\u00a7 764.452 Borrower training requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 89 FR 65041, Aug. 8, 2024]", "(a) The applicant must agree to complete  financial management training, unless the Agency provides a waiver in accordance with \u00a7 764.453, or the applicant has previously satisfied the training requirements. In the case of an entity:\n\n(1) Any individual member holding a majority interest in the entity or who is operating the farm must complete training on behalf of the entity, except as provided in paragraph (a)(2) of this section;\n\n(2) If one entity member is solely responsible for  financial management, then only that member will be required to complete training.\n\n(b) When the Agency determines that financial management training is required, the applicant must agree to complete course work covering all aspects of farm accounting and integrating accounting elements into a financial management system.\n\n(c) Even if a waiver is granted, the borrower must complete borrower training as a condition for future loans if and when Agency supervision provided in 7 CFR part 761 subpart C reflects that such training is needed.\n\n(d) The Agency cannot reject a request for a direct loan based solely on an applicant's need for training.\n\n(e) The Agency will provide written notification of required training or waiver of training."], ["7:7:7.1.1.4.15.11.9.3", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "K", "Subpart K\u2014Borrower Training and Training Vendor Requirements", "", "\u00a7 764.453 Agency waiver of training requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 86 FR 43392, Aug. 9, 2021; 89 FR 65042, Aug. 8, 2024]", "(a) The applicant must request the waiver in writing.\n\n(b) The Agency will grant a waiver for training in financial management under the following conditions:\n\n(1) The applicant submits evidence of successful completion of a course similar to a course approved under section \u00a7 764.457 and the Agency determines that additional training is not needed; or\n\n(2) The applicant submits evidence which demonstrates to the Agency's satisfaction the applicant's experience and training necessary for a successful and efficient operation.\n\n(c) If the financial functions of the operation are shared among individual entity members, the Agency will consider the collective knowledge and skills of those individuals when determining whether to waive training requirements.\n\n(d) When considering subsequent loan actions, previous training requirements that have not yet been satisfied may be waived by the Agency should the borrower submit satisfactory evidence in accordance with paragraph (b) of this section."], ["7:7:7.1.1.4.15.11.9.4", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "K", "Subpart K\u2014Borrower Training and Training Vendor Requirements", "", "\u00a7 764.454 Actions that an applicant must take when training is required.", "FSA", "", "", "", "(a)  Deadline for completion of training.  (1) If the Agency requires an applicant to complete training, at loan closing the applicant must agree in writing to complete all required training within 2 years.\n\n(2) The Agency will grant a one-year extension to complete training if the applicant is unable to complete training within the 2-year period due to circumstances beyond the applicant's control.\n\n(3) The Agency will grant an extension longer than one year for extraordinary circumstances as determined by the Agency.\n\n(4) An applicant who does not complete the required training within the specified time-period will be ineligible for additional direct FLP loans until the training is completed.\n\n(b)  Arranging training with a vendor.  The applicant must select and contact an Agency approved vendor and make all arrangements to begin training.\n\n(c)  Payment of training fees.  (1) The applicant is responsible for the cost of training and must include training fees in the farm operating plan as a farm operating expense.\n\n(2) The payment of training fees is an authorized use of OL funds.\n\n(3) The Agency is not a party to fee or other agreements between the applicant and the vendor.\n\n(d)  Evaluation of a vendor.  Upon completion of the required training, the applicant will complete an evaluation of the course and submit it to the vendor. The vendor will forward the completed evaluation forms to the Agency."], ["7:7:7.1.1.4.15.11.9.5", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "K", "Subpart K\u2014Borrower Training and Training Vendor Requirements", "", "\u00a7 764.455 Potential training vendors.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 89 FR 65041, Aug. 8, 2024]", "The Agency will contract for training services with State or private providers of financial management training services."], ["7:7:7.1.1.4.15.11.9.6", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "K", "Subpart K\u2014Borrower Training and Training Vendor Requirements", "", "\u00a7 764.456 Applying to be a vendor.", "FSA", "", "", "", "(a) A vendor for borrower training services must apply to the Agency for approval.\n\n(b) The vendor application must include:\n\n(1) A sample of the course materials and a description of the vendor's training methods;\n\n(2) Specific training objectives for each section of the course;\n\n(3) A detailed course agenda specifying the topics to be covered, the time devoted to each topic, and the number of sessions to be attended;\n\n(4) A list of instructors and their qualifications;\n\n(5) The criteria by which additional instructors will be selected;\n\n(6) The proposed locations where training will take place;\n\n(7) The cost per participant, including cost for additional members of a farming operation;\n\n(8) The minimum and maximum class size;\n\n(9) The vendor's experience in developing and administering training to farmers;\n\n(10) The monitoring and quality control methods the vendor will use;\n\n(11) The policy on allowing Agency employees to attend the course for monitoring purposes;\n\n(12) A plan of how the needs of applicants with physical, mental, or learning disabilities will be met; and\n\n(13) A plan of how the needs of applicants who do not speak English as their primary language will be met."], ["7:7:7.1.1.4.15.11.9.7", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "K", "Subpart K\u2014Borrower Training and Training Vendor Requirements", "", "\u00a7 764.457 Vendor requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 89 FR 65041, Aug. 8, 2024]", "(a)  Minimum experience.  The vendor must demonstrate a minimum of 3 years of experience in conducting training courses or teaching the subject matter.\n\n(b)  Training objectives.  The courses provided by a vendor must enable the applicant to accomplish one or more of the following objectives:\n\n(1) Describe the specific goals of the farming operation, any changes required to attain the goals, and outline how these changes will occur using present and projected cash flow budgets;\n\n(2) Maintain and use a financial management information system to make financial decisions;\n\n(3) Understand and use an income statement;\n\n(4) Understand and use a balance sheet; and\n\n(5) Understand and use a cash flow budget.\n\n(c)  Curriculum.  At least one of the following subjects must be covered:\n\n(1) Business planning courses, covering general goal setting, risk management, and planning; or\n\n(2) Financial management courses, covering all aspects of farm accounting and focusing on integrating accounting elements into a financial management system.\n\n(d)  Instructor qualifications.  All instructors must have:\n\n(1) Sufficient knowledge of the material and experience in adult education;\n\n(2) A bachelor's degree or comparable experience in the subject area to be taught; and\n\n(3) A minimum of 3 years experience in conducting training courses or teaching."], ["7:7:7.1.1.4.15.11.9.8", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "K", "Subpart K\u2014Borrower Training and Training Vendor Requirements", "", "\u00a7 764.458 Vendor approval.", "FSA", "", "", "", "(a)  Agreement to conduct training.  (1) Upon approval, the vendor must sign an agreement to conduct training for the Agency's borrowers.\n\n(2) The agreement to conduct training is valid for 3 years.\n\n(3) Any changes in curriculum, instructor, or cost require prior approval by the Agency.\n\n(4) The vendor may revoke the agreement by giving the Agency a written 30-day notice.\n\n(5) The Agency may revoke the agreement if the vendor does not comply with the responsibilities listed in the agreement by giving the vendor a written 30-day notice.\n\n(b)  Renewal of agreement to conduct training.  (1) To renew the agreement to conduct training, the vendor must submit in writing to the Agency:\n\n(i) A request to renew the agreement;\n\n(ii) Any changes in curricula, instructor, or cost; and\n\n(iii) Documentation that the vendor is providing effective training.\n\n(2) The Agency will review renewal requests in accordance with \u00a7 764.457."], ["7:7:7.1.1.4.15.11.9.9", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "K", "Subpart K\u2014Borrower Training and Training Vendor Requirements", "", "\u00a7 764.459 Evaluation of borrower progress.", "FSA", "", "", "", "(a) The vendor must provide the Agency with a periodic progress report for each borrower enrolled in training in accordance with the agreement to complete training. The reports will indicate whether the borrower is attending sessions, completing the training program, and demonstrating an understanding of the course material.\n\n(b) Upon borrower completion of the training, the vendor must provide the Agency with an evaluation of the borrower's knowledge of the course material and assign a score. The following table lists the possible scores, the criteria used to assign each score, and Agency consideration of each score:"], ["7:7:7.1.1.4.15.2.9.1", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "B", "Subpart B\u2014Loan Application Process", "", "\u00a7 764.51 Loan application.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 75 FR 54015, Sept. 3, 2010; 76 FR 75434, Dec. 2, 2011; 77 FR 15938, Mar. 19, 2012; 78 FR 3835, Jan. 17, 2013; 79 FR 60744, Oct. 8, 2014; 81 FR 3292, Jan. 21, 2016; 81 FR 51284, Aug. 3, 2016; 89 FR 65039, Aug. 8, 2024]", "(a) A loan application must be submitted in the name of the actual operator of the farm. Two or more applicants applying jointly will be considered an entity applicant. The Agency will consider tax filing status and other business dealings as indicators of the operator of the farm.\n\n(b) A complete loan application, except as provided in paragraphs (c) through (f) of this section, will include:\n\n(1) The completed Agency application form;\n\n(2) If the applicant is an entity:\n\n(i) A complete list of entity members showing the address, citizenship, principal occupation, and the number of shares and percentage of ownership or stock held in the entity by each member, or the percentage of interest in the entity held by each member;\n\n(ii) A current financial statement from each member of the entity;\n\n(iii) A current financial statement from the entity itself;\n\n(iv) A copy of the entity's charter or any entity agreement, any articles of incorporation and bylaws, any certificate or evidence of current registration (good standing), and a resolution adopted by the Board of Directors or entity members authorizing specified officers of the entity to apply for and obtain the desired loan and execute required debt, security and other loan instruments and agreements;\n\n(v) In the form of married couples applying as a joint operation, items (i) and (iv) will not be required. The Agency may request copies of the marriage license, prenuptial agreement or similar documents as needed to verify loan eligibility and security. Items (ii) and (iii) are only required to the extent needed to show the individual and joint finances of the husband and wife without duplication.\n\n(3) A written description of the applicant's farm training and experience, including each entity member who will be involved in managing or operating the farm. Farm experience of the applicant, without regard to any lapse of time between the farm experience and the new application, may be included in the applicant's written description. If farm experience occurred more than 5 years prior to the date of the new application, the applicant must demonstrate sufficient on-the-job training or education within the last 5 years to demonstrate managerial ability;\n\n(4) The last 3 years of farm financial records, including tax returns, unless the applicant has been farming less than three years;\n\n(5) The last 3 years of farm production records, unless the applicant has been farming less than 3 years;\n\n(6) Except for CL, documentation that the applicant and each member of an entity applicant cannot obtain sufficient credit elsewhere on reasonable rates and terms, including a loan guaranteed by the Agency. The authorized Agency official will evaluate and document whether or not rates and terms of available credit in the applicant's region will result in a reasonable amount of cash flow margin to increase working capital reserves and savings, including reasonable savings for retirement and education, to support operational stability and growth;\n\n(7) Documentation of compliance with the Agency's environmental regulations contained in part 799 of this chapter;\n\n(8) Verification of all non-farm income;\n\n(9) A current financial statement and the operation's farm operating plan, including the projected cash flow budget reflecting production, income, expenses, and loan repayment plan;\n\n(10) A legal description of the farm property owned or to be acquired and, upon Agency request, any leases, contracts, options, and other agreements related to the operation;\n\n(11) Payment to the Agency for ordering a credit report on the applicant;\n\n(12) Verification of all debts;\n\n(13) Any additional information deemed necessary by the Agency to effectively evaluate the applicant's eligibility and farm operating plan;\n\n(14) For EM loans, a statement of loss or damage on the appropriate Agency form;\n\n(15) For CL only, a conservation plan or Forest Stewardship Management Plan as defined in \u00a7 761.2 of this chapter; and\n\n(16) For CL only, and if the applicant wishes to request consideration for priority funding, plans to transition to organic or sustainable agriculture when the funds requested will be used to facilitate the transition.\n\n(c) For an ML for OL purposes request, all of the following criteria must be met:\n\n(1) The loan requested for OL purposes is:\n\n(i) To pay annual or term operating expenses, and\n\n(ii) $50,000 or less and the applicant's total outstanding Agency OL debt at the time of loan closing will be $50,000 or less,\n\n(2) The applicant must submit the following:\n\n(i) Items (1), (2), (3), (6), (7), (9), and (11) of paragraph (b) of this section;\n\n(ii) Financial and production records for the most recent production cycle, if available, and practicable to project the cash flow of the operating cycle, and\n\n(iv) Verification of all non-farm income relied upon for repayment; and\n\n(3) The Agency may require an ML applicant to submit any other information listed in paragraph (b) of this section upon request when specifically needed to make a determination on the loan application.\n\n(d) For an ML request for FO purposes, all of the following criteria must be met:\n\n(1) The loan requested is:\n\n(i) To pay for any authorized purpose under the FO Program, which are specified in \u00a7 764.151; and\n\n(ii) $50,000 or less and the applicant's total outstanding Agency FO debt at the time of loan closing will be $50,000 or less,\n\n(2) The applicant must submit the following:\n\n(i) Items specified in paragraphs (b)(1), (2), (3), (6), (7), (9), (10), and (11) of this section;\n\n(ii) Financial and production records for the most recent production cycle, if available and practicable to project the cash flow of the operating cycle; and\n\n(iv) Verification of all non-farm income relied upon for repayment; and\n\n(v) Verification of applicant's farm experience;\n\n(3) The Agency may require an ML applicant to submit any other information listed in paragraph (b) of this section upon request when necessary to make a determination on the loan application.\n\n(e) For a CL Program streamlined application, the applicant must meet all of the following:\n\n(1) Be current on all payments to all creditors including the Agency (if currently an Agency borrower).\n\n(2) Have not received primary loan servicing on any FLP debt within the past 5 years.\n\n(3) Have a debt to asset ratio that is 40 percent or less.\n\n(4) Have a balance sheet that indicates a net worth of 3 times the requested loan amount or greater.\n\n(5) Have a FICO credit score from the Agency obtained credit report of at least 700. For entity applicants, the FICO credit score of the majority of the individual members of the entity must be at least 700.\n\n(6) Submit the following items:\n\n(i) Items specified in paragraphs (b)(1), (b)(2), (b)(3), (b)(7), (b)(11), (b)(15), and (b)(16) of this section,\n\n(ii) A current financial statement less than 90 days old, and\n\n(iii) Upon Agency request, other information specified in paragraph (b) of this section necessary to make a determination on the loan application.\n\n(f) For a youth loan request:\n\n(1) The applicant must submit items (1), (7), and (9) of paragraph (b) of this section.\n\n(2) Applicants 18 years or older, must also provide items (11) and (12) of paragraph (b) of this section.\n\n(3) The Agency may require a youth loan applicant to submit any other information listed in paragraph (b) of this section as needed to make a determination on the loan application.\n\n(g) The applicant need not submit any information under this section that already exists in the applicant's Agency file and is still current."], ["7:7:7.1.1.4.15.2.9.2", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "B", "Subpart B\u2014Loan Application Process", "", "\u00a7 764.52 Processing an incomplete application.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 86 FR 43391, Aug. 9, 2021]", "(a) Within 7 calendar days of receipt of an incomplete application, the Agency will provide the applicant written notice of any additional information which must be provided. The applicant must provide the additional information within 15 calendar days of the date of this notice.\n\n(b) If the additional information is not received, the Agency will provide written notice that the application will be withdrawn if the information is not received within 15 calendar days of the date of this second notice."], ["7:7:7.1.1.4.15.2.9.3", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "B", "Subpart B\u2014Loan Application Process", "", "\u00a7 764.53 Processing the complete application.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 75 FR 54015, Sept. 3, 2010]", "Upon receiving a complete loan application, the Agency will:\n\n(a) Consider the loan application in the order received, based on the date the application was determined to be complete.\n\n(b) Provide written notice to the applicant that the application is complete.\n\n(c) Within 60 calendar days after receiving a complete loan application, the Agency will complete the processing of the loan request and notify the applicant of the decision reached, and the reason for any disapproval.\n\n(d) Except for CL requests, if based on the Agency's review of the application, it appears the applicant's credit needs could be met through the guaranteed loan program, the Agency will assist the applicant in securing guaranteed loan assistance under the market placement program as specified in \u00a7 762.110(h) of this chapter.\n\n(e) In the absence of funds for a direct loan, the Agency will keep an approved loan application on file until funding is available. At least annually, the Agency will contact the applicant to determine if the Agency should retain the application or if the applicant wants the application withdrawn.\n\n(f) If funding becomes available, the Agency will resume processing of approved loans in accordance with this part."], ["7:7:7.1.1.4.15.2.9.4", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "B", "Subpart B\u2014Loan Application Process", "", "\u00a7 764.54 Preferences when there is limited funding.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 86 FR 43391, Aug. 9, 2021]", "(a)  First priority.  When there is a shortage of loan funds, approved applications will be funded in the order of the date the application was received, whether or not complete.\n\n(b)  Secondary priorities.  If two or more applications were received on the same date, the Agency will give preference to:\n\n(1) First, an applicant who is a veteran of any war;\n\n(2) Second, an applicant who is not a veteran, but:\n\n(i) Has a dependent family;\n\n(ii) Is able to make a down payment; or\n\n(iii) Owns livestock and farm implements necessary to farm successfully.\n\n(3) Third, to other eligible applicants."], ["7:7:7.1.1.4.15.2.9.5", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "B", "Subpart B\u2014Loan Application Process", "", "\u00a7\u00a7 764.55-764.100 [Reserved]", "FSA", "", "", "", ""], ["7:7:7.1.1.4.15.3.9.1", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "C", "Subpart C\u2014Requirements for All Direct Program Loans", "", "\u00a7 764.101 General eligibility requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 75 FR 54015, Sept. 3, 2010; 76 FR 75434, Dec. 2, 2011; 78 FR 3835, Jan. 17, 2013; 79 FR 60744, Oct. 8, 2014; 81 FR 3293, Jan. 21, 2016; 81 FR 10063, Feb. 29, 2016; 86 FR 43391, Aug. 9, 2021; 89 FR 65039, Aug. 8, 2024]", "The following requirements must be met unless otherwise provided in the eligibility requirements for the particular type of loan.\n\n(a)  Controlled substances.  The applicant, and anyone who will sign the promissory note, must not be ineligible for loans as a result of a conviction for controlled substances according to 7 CFR part 718 of this chapter.\n\n(b)  Legal capacity.  The applicant, and anyone who will sign the promissory note, must possess the legal capacity to incur the obligation of the loan. A Youth loan applicant will incur full personal liability upon execution of the promissory note without regard to the applicant's minority status.\n\n(c)  Citizenship.  The applicant, and anyone who will sign the promissory note, must be a citizen of the United States, United States non-citizen national, or a qualified alien under applicable Federal immigration laws.\n\n(d)  Credit history.  The applicant, and all entity members in the case of an entity, must have acceptable credit history demonstrated by debt repayment.\n\n(1) As part of the credit history, the Agency will determine whether the applicant, and all entity members in the case of an entity, will carry out the terms and conditions of the loan and deal with the Agency in good faith. In making this determination, the Agency may examine whether the applicant, and all entity members in the case of an entity, has properly fulfilled its obligations to other parties, including other agencies of the Federal Government.\n\n(2) When the applicant, or an entity member in the case of an entity, caused the Agency a loss by receiving debt forgiveness, the applicant may be ineligible for assistance in accordance with eligibility requirements for the specific loan type. If the debt forgiveness is cured by repayment of the Agency's loss, the Agency may still consider the debt forgiveness in determining the applicant's credit worthiness.\n\n(3) A history of failures to repay past debts as they came due will demonstrate unacceptable credit history when the ability to repay was within the control of the applicant, or entity member in the case of an entity. The circumstances in paragraphs (d)(3)(i) through (iv) of this section, for example, do not automatically indicate an unacceptable credit history:\n\n(i) Foreclosures, judgments, delinquent payments which occurred more than 36 months before the application, if no recent similar situations have occurred, or Agency delinquencies that have been resolved through loan servicing programs available under 7 CFR part 766;\n\n(ii) Isolated incidents of delinquent payments which do not represent a general pattern of unsatisfactory or slow payment;\n\n(iii) \u201cNo history\u201d of credit transactions; and\n\n(iv) Recent foreclosure, judgment, bankruptcy, or delinquent payment of the applicant, or an entity member in the case of an entity, when it can be satisfactorily demonstrated that the adverse action or delinquency was caused by circumstances that were of a temporary nature and beyond the individual's control; or the result of a refusal to make full payment because of defective goods or services or other justifiable dispute relating to the purchase or contract for goods or services.\n\n(e)  Availability of credit elsewhere.  Except for CL, the applicant, and all entity members in the case of an entity, must be unable to obtain sufficient credit elsewhere to finance actual needs at reasonable rates and terms. The Agency will evaluate the ability to obtain credit based on factors including, but not limited to:\n\n(1) Loan amounts, rates, and terms available in the marketplace. The authorized Agency official will evaluate and document whether rates and terms of available credit will result in a reasonable amount of cash flow margin to increase working capital reserves and savings, including reasonable savings for retirement and education, to support operational stability and growth; and\n\n(2) Property interests, income, and significant non-essential assets.\n\n(f)  Not in delinquent status on Federal debt.  As provided in 31 CFR part 285, except for EM loan applicants, the applicant, and anyone who will sign the promissory note, must not be in delinquent status on any Federal debt, other than a debt under the Internal Revenue Code of 1986 at the time of loan closing. All delinquent debts, however, will be considered in determining credit history and ability to repay under this part.\n\n(g)  Outstanding judgments.  The applicant, and anyone who will sign the promissory note, must have no outstanding unpaid judgments obtained by the United States in any court. Such judgments do not include those filed as a result of action in the United States Tax Courts.\n\n(h)  Federal crop insurance violation.  The applicant, and all entity members in the case of an entity, must not be ineligible due to disqualification resulting from Federal crop insurance violation according to 7 CFR part 718.\n\n(i)  Managerial ability.  The applicant, and in the case of an entity, the individuals holding a majority interest in the entity, must have sufficient managerial ability to assure reasonable prospects of loan repayment, as determined by the Agency. Managerial ability must be demonstrated by:\n\n(1)  Education.  For example, the applicant or entity member obtained a 4-year college degree in agricultural business, horticulture, animal science, agronomy, or other agricultural-related field;\n\n(2)  On-the-job training.  For example, the applicant or entity member is currently working on a farm as part of an apprenticeship program;\n\n(3)  Farming experience.  For example, the applicant or entity member has been a manager or operator of a farm business for at least one entire production cycle or for MLs, made for OL purposes, the applicant may have obtained and successfully repaid one FSA Youth-OL. Farm experience of the applicant, without regard to any lapse of time between the farm experience and the new application, will be taken into consideration in determining loan eligibility. If farm experience occurred more than 10 years prior to the date of the new application, the applicant must demonstrate sufficient on-the-job training or education within the last 10 years to demonstrate managerial ability; or\n\n(4)  Alternatives for MLs made for OL purposes.  Applicants for MLs made for OL purposes, also may demonstrate managerial ability by one of the following:\n\n(i) Certification of a past participation with an agriculture-related organization, such as, but not limited to, 4-H Club, FFA, beginning farmer and rancher development programs, or Community Based Organizations, that demonstrates experience in a related agricultural enterprise; or\n\n(ii) A written description of a self-directed apprenticeship combined with either prior sufficient experience working on a farm or significant small business management experience. As a condition of receiving the loan, the self-directed apprenticeship requires that the applicant seek, receive, and apply guidance from a qualified person during the first cycle of production and marketing typical for the applicant's specific operation. The individual providing the guidance must be knowledgeable in production, management, and marketing practices that are pertinent to the applicant's operation, and agree to form a developmental partnership with the applicant to share knowledge, skills, information, and perspective of agriculture to foster the applicant's development of technical skills and management ability.\n\n(j)  Borrower training.  The applicant must agree to meet the training requirements in subpart K of this part.\n\n(k)  Operator of a family farm.  Except for CL:\n\n(1) The applicant must be the operator of a family farm after the loan is closed.\n\n(2) For an entity applicant, if the entity members holding a majority interest are:\n\n(i) Related by blood or marriage, at least one member must be the operator of a family farm;\n\n(ii) Not related by blood or marriage, the entity members holding at least 50 percent interest must be operators of a family farm.\n\n(3) Except for EM loans, the collective interests of the members may be larger than a family farm only if:\n\n(i) Each member's ownership interest is not larger than a family farm;\n\n(ii) All of the members of the entity are related by blood or marriage; and\n\n(iii) All of the members are or will become operators of the family farm; and\n\n(4) If the entity applicant has an operator and ownership interest for farm ownership loans and emergency loans for farm ownership loan purposes, in any other farming operation, that farming operation must not exceed the requirements of a family farm.\n\n(l)  Entity composition.  If the applicant has one or more embedded entities, at least 75 percent of the individual ownership interests of each embedded entity must be owned by members actively involved in managing or operating the family farm."], ["7:7:7.1.1.4.15.3.9.2", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "C", "Subpart C\u2014Requirements for All Direct Program Loans", "", "\u00a7 764.102 General limitations.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 75 FR 54015, Sept. 3, 2010; 76 FR 75434, Dec. 2, 2011]", "(a) Limitations specific to each loan program are contained in subparts D through I of this part.\n\n(b) The total principal balance owed to the Agency at any one time by the applicant, or any one who will sign the promissory note, cannot exceed the limits established in \u00a7 761.8 of this chapter.\n\n(c) The funds from the FLP loan must be used for farming operations located in the United States.\n\n(d) The Agency will not make a loan if the proceeds will be used:\n\n(1) For any purpose that contributes to excessive erosion of highly erodible land, or to the conversion of wetlands;\n\n(2) To drain, dredge, fill, level, or otherwise manipulate a wetland; or\n\n(3) To engage in any activity that results in impairing or reducing the flow, circulation, or reach of water, except in the case of activity related to the maintenance of previously converted wetlands as defined in the Food Security Act of 1985.\n\n(e) Any construction financed by the Agency must comply with the standards established in \u00a7 761.10 of this chapter.\n\n(f) Loan funds will not be used to establish or support a non-eligible enterprise, even if the non-eligible enterprise contributes to the farm. Notwithstanding this limitation, an EM loan may cover qualified equine losses as specified in subpart I of this part."], ["7:7:7.1.1.4.15.3.9.3", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "C", "Subpart C\u2014Requirements for All Direct Program Loans", "", "\u00a7 764.103 General security requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008; 75 FR 54015, Sept. 3, 2010; 78 FR 3835, Jan. 17, 2013; 86 FR 43391, Aug. 9, 2021; 89 FR 65039, Aug. 8, 2024]", "(a) Security requirements specific to each loan program are outlined in subparts D through I of this part.\n\n(b) All loans must be secured by assets having a security value of at least 100 percent of the loan amount, except for EM loans as provided in subpart I of this part. If the applicant's assets do not provide adequate security, the Agency may accept:\n\n(1) A pledge of security from a third party; or\n\n(2) Interests in property not owned by the applicant (such as leases that provide a mortgageable value, water rights, easements, mineral rights, and royalties).\n\n(c) An additional amount of security will be required, if available, to reach a 125 percent security margin. Total loan security in excess of what is needed to achieve a security margin of 125 percent will only be taken when it is not practicable to separate the security, or if necessary to satisfy the requirements of \u00a7 764.254(b)(2)(i). Loans that do not require additional security are down payment loans, MLs, youth loans, and FOs for the purchase of a farm where the applicant provides a cash down payment equal to 5 percent or greater of the purchase price. Non-real estate assets will not be taken as additional security for any loan where real estate serves as adequate security.\n\n(d) The Agency will choose the best security available when there are several alternatives that meet the Agency's security requirements.\n\n(e) The Agency will take a lien on all assets that are not essential to the farming operation and are not being converted to cash to reduce the loan amount when each such asset, or aggregate value of like assets (such as stocks), has a value in excess of $15,000. The value of this security is not included in the Agency's additional security requirement stated in paragraph (c) of this section. This requirement does not apply to downpayment loans, CL, ML, or youth loans."], ["7:7:7.1.1.4.15.3.9.4", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "C", "Subpart C\u2014Requirements for All Direct Program Loans", "", "\u00a7 764.104 General real estate security requirements.", "FSA", "", "", "", "(a)  Agency lien position requirements.  If real estate is pledged as security for a loan, the Agency must obtain a first lien, if available. When a first lien is not available, the Agency may take a junior lien under the following conditions:\n\n(1) The prior lien does not contain any provisions that may jeopardize the Agency's interest or the applicant's ability to repay the FLP loan;\n\n(2) Prior lienholders agree to notify the Agency prior to foreclosure;\n\n(3) The applicant must agree not to increase an existing prior lien without the written consent of the Agency; and\n\n(4) Equity in the collateral exists.\n\n(b)  Real estate held under a purchase contract.  If the real estate offered as security is held under a recorded purchase contract:\n\n(1) The applicant must provide a security interest in the real estate;\n\n(2) The applicant and the purchase contract holder must agree in writing that any insurance proceeds received for real estate losses will be used only for one or more of the following purposes:\n\n(i) To replace or repair the damaged real estate improvements which are essential to the farming operation;\n\n(ii) To make other essential real estate improvements; or\n\n(iii) To pay any prior real estate lien, including the purchase contract.\n\n(3) The purchase contract must provide the applicant with possession, control and beneficial use of the property, and entitle the applicant to marketable title upon fulfillment of the contract terms.\n\n(4) The purchase contract must not:\n\n(i) Be subject to summary cancellation upon default;\n\n(ii) Contain provisions which jeopardize the Agency's security position or the applicant's ability to repay the loan.\n\n(5) The purchase contract holder must agree in writing to:\n\n(i) Not sell or voluntarily transfer their interest without prior written consent of the Agency;\n\n(ii) Not encumber or cause any liens to be levied against the property;\n\n(iii) Not take any action to accelerate, forfeit, or foreclose the applicant's interest in the security property until a specified period of time after notifying the Agency of the intent to do so;\n\n(iv) Consent to the Agency making the loan and taking a security interest in the applicant's interest under the purchase contract as security for the FLP loan;\n\n(v) Not take any action to foreclose or forfeit the interest of the applicant under the purchase contract because the Agency has acquired the applicant's interest by foreclosure or voluntary conveyance, or because the Agency has subsequently sold or assigned the applicant's interest to a third party who will assume the applicant's obligations under the purchase contract;\n\n(vi) Notify the Agency in writing of any breach by the applicant; and\n\n(vii) Give the Agency the option to rectify the conditions that amount to a breach within 30 days after the date the Agency receives written notice of the breach.\n\n(6) If the Agency acquires the applicant's interest under the purchase contract by foreclosure or voluntary conveyance, the Agency will not be deemed to have assumed any of the applicant's obligations under the contract, provided that if the Agency fails to perform the applicant's obligations while it holds the applicant's interest is grounds for terminating the purchase contract.\n\n(c)  Tribal lands held in trust or restricted.  The Agency may take a lien on Indian Trust lands as security provided the applicant requests the Bureau of Indian Affairs to furnish Title Status Reports to the agency and the Bureau of Indian Affairs provides the reports and approves the lien.\n\n(d)  Security for more than one loan.  The same real estate may be pledged as security for more than one direct or guaranteed loan.\n\n(e)  Loans secured by leaseholds.  A loan may be secured by a mortgage on a leasehold, if the leasehold has negotiable value and can be mortgaged."], ["7:7:7.1.1.4.15.3.9.5", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "C", "Subpart C\u2014Requirements for All Direct Program Loans", "", "\u00a7 764.105 General chattel security requirements.", "FSA", "", "", "", "The same chattel may be pledged as security for more than one direct or guaranteed loan."], ["7:7:7.1.1.4.15.3.9.6", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "C", "Subpart C\u2014Requirements for All Direct Program Loans", "", "\u00a7 764.106 Exceptions to security requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 81 FR 51284, Aug. 3, 2016; 89 FR 65040, Aug. 8, 2024]", "Notwithstanding any other provision of this part, the Agency will not take a security interest:\n\n(a) When adequate security is otherwise available and the lien will prevent the applicant from obtaining credit from other sources;\n\n(b) When the property could have significant environmental problems or costs as described in part 799 of this chapter;\n\n(c) When the Agency cannot obtain a valid lien;\n\n(d) Unless the applicant provides a written request for an exemption, when the property includes the primary personal residence and appurtenances of the applicant or any entity member(s) and:\n\n(1) They are located on a separate parcel of up to the greater of 10 acres or the minimum size that meets all State and local requirements for a division into a separate legal lot; and\n\n(2) The security requirements of \u00a7 764.103(b) can be satisfied without the use of the primary personal residence and appurtenances;\n\n(e) When the property is subsistence livestock, cash, working capital accounts the applicant uses for the farming operation, retirement accounts, education savings accounts, personal vehicles necessary for family living, household contents, or small equipment such as hand tools and lawn mowers; or\n\n(f) On marginal land and timber that secures an outstanding ST loan."], ["7:7:7.1.1.4.15.3.9.7", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "C", "Subpart C\u2014Requirements for All Direct Program Loans", "", "\u00a7 764.107 General appraisal requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 81 FR 3293, Jan. 21, 2016]", "(a)  Establishing value for real estate.  The value of real estate will be established by an appraisal completed in accordance with \u00a7 761.7 of this chapter, except that for MLs made for FO purposes, the appraisal requirement may be satisfied by an evaluation by an authorized agency official that establishes the value of the real estate.\n\n(b)  Establishing value for chattels.  The value of chattels will be established as follows:\n\n(1)  Annual production.  The security value of annual livestock and crop production is presumed to be 100 percent of the amount loaned for annual operating and family living expenses, as outlined in the approved farm operating plan.\n\n(2)  Livestock and equipment.  The value of livestock and equipment will be established by an appraisal completed in accordance with \u00a7 761.7 of this chapter."], ["7:7:7.1.1.4.15.3.9.8", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "C", "Subpart C\u2014Requirements for All Direct Program Loans", "", "\u00a7 764.108 General insurance requirements.", "FSA", "", "", "", "The applicant must obtain and maintain insurance, equal to the lesser of the value of the security at the time of loan closing or the principal of all FLP and non-FLP loans secured by the property, subject to the following:\n\n(a) All security, except growing crops, must be covered by hazard insurance if it is readily available (sold by insurance agents in the applicant's normal trade area) and insurance premiums do not exceed the benefit. The Agency must be listed as loss payee for the insurance indemnity payment or as a beneficiary in the mortgagee loss payable clause.\n\n(b) Real estate security located in flood or mudslide prone areas must be covered by flood or mudslide insurance. The Agency must be listed as a beneficiary in the mortgagee loss payable clause.\n\n(c) Growing crops used to provide adequate security must be covered by crop insurance if such insurance is available. The Agency must be listed as loss payee for the insurance indemnity payment.\n\n(d) Prior to closing the loan, the applicant must have obtained at least the catastrophic risk protection level of crop insurance coverage for each crop which is a basic part of the applicant's total operation, if such insurance is available, unless the applicant executes a written waiver of any emergency crop loss assistance with respect to such crop. The applicant must execute an assignment of indemnity in favor of the Agency for this coverage."], ["7:7:7.1.1.4.15.3.9.9", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "C", "Subpart C\u2014Requirements for All Direct Program Loans", "", "\u00a7\u00a7 764.109-764.150 [Reserved]", "FSA", "", "", "", ""], ["7:7:7.1.1.4.15.4.9.1", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "D", "Subpart D\u2014Farm Ownership Loan Program", "", "\u00a7 764.151 Farm Ownership loan uses.", "FSA", "", "", "", "FO loan funds may only be used to:\n\n(a) Acquire or enlarge a farm or make a down payment on a farm;\n\n(b) Make capital improvements to a farm owned by the applicant, for construction, purchase or improvement of farm dwellings, service buildings or other facilities and improvements essential to the farming operation. In the case of leased property, the applicant must have a lease to ensure use of the improvement over its useful life or to ensure that the applicant receives compensation for any remaining economic life upon termination of the lease;\n\n(c) Promote soil and water conservation and protection;\n\n(d) Pay loan closing costs;\n\n(e) Refinance a bridge loan if the following conditions are met:\n\n(1) The applicant obtained the loan to be refinanced to purchase a farm after a direct FO was approved;\n\n(2) Direct FO funds were not available to fund the loan at the time of approval;\n\n(3) The loan to be refinanced is temporary financing; and\n\n(4) The loan was made by a commercial or cooperative lender."], ["7:7:7.1.1.4.15.4.9.2", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "D", "Subpart D\u2014Farm Ownership Loan Program", "", "\u00a7 764.152 General eligibility requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 79 FR 60744, Oct. 8, 2014; 81 FR 3293, Jan. 21, 2016; 86 FR 43391, Aug. 9, 2021; 87 FR 13124, Mar. 9, 2022; 89 FR 65040, Aug. 8, 2024]", "The applicant:\n\n(a) Must comply with the general eligibility requirements established at \u00a7 764.101;\n\n(b) And anyone who will sign the promissory note, must not have received debt forgiveness from the Agency on any direct or guaranteed loan;\n\n(c) Must be the owner-operator of the farm financed with Agency funds after the loan is closed. Ownership of the family farm operation and farm real estate may be held either directly in the individual's name or indirectly through interest in a legal entity. In the case of an entity:\n\n(1) The entity is controlled by farmers engaged primarily and directly in farming in the United States, after the loan is made;\n\n(2) An ownership entity must be authorized to own a farm in the state or states in which the farm is located. An operating entity must be authorized to operate a farm in the state or states in which the farm is located.\n\n(3) If the entity members holding majority interest are:\n\n(i) Related by blood or marriage, at least one member of the entity must operate the family farm and at least one member of the entity or the entity must own the farm; or,\n\n(ii) Not related by blood or marriage, the entity members holding at least 50 percent interest must operate the family farm and the entity members holding at least 50 percent interest or the entity must own the farm.\n\n(4) If the entity is an operator only entity, the individuals that own the farm (real estate) must own at least 50 percent of the family farm (operating entity).\n\n(d) And in the case of an entity, at least one member who will be the operator of the family farm, must have participated in the business operations of a farm for at least 3 years out of the 10 years prior to the date the application is submitted.\n\n(1) The following experiences can substitute for up to 2 of the 3 years:\n\n(i) Not less than 16 credit hours of post-secondary education in an agriculture-related field;\n\n(ii) Successful completion of a farm management curriculum offered by a cooperative extension service, community college, adult vocational agriculture program, non-profit organization, or land-grant college or university;\n\n(iii) One (1)-year experience as a farm laborer with substantial management responsibility;\n\n(iv) Successful completion of an internship, mentorship, or apprenticeship in day-to-day farm management;\n\n(v) Significant business management experience;\n\n(vi) Honorable discharge from the armed forces of the United States;\n\n(vii) Successful repayment of an FSA financed youth loan; or\n\n(viii) Established relationship with a counselor in the Service Corps of Retired Executives (SCORE) program who has experience in farming or ranching, or with Agency-approved local individuals or organizations that are committed to providing mentorship in farming or ranching; or\n\n(2) The 3-year requirement in this paragraph (d) will be waived if the applicant, or in the case of an entity at least one member who will be the operator of the family farm, meets the requirements of both paragraphs (d)(1)(iii) and (viii) of this section.\n\n(e) For an ML made for FO purposes, if an ML applicant has successfully repaid an FSA financed youth loan, the term of that loan may be used toward the 3 years of management experience required for a FO direct loan.\n\n(f) And anyone who will sign the promissory note, must satisfy at least one of the following conditions:\n\n(1) Meet the definition of a beginning farmer;\n\n(2) Have not had a direct FO loan outstanding for more than a total of 10 years prior to the date the new FO loan is closed;\n\n(3) Have never received a direct FO loan."], ["7:7:7.1.1.4.15.4.9.3", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "D", "Subpart D\u2014Farm Ownership Loan Program", "", "\u00a7 764.153 Limitations.", "FSA", "", "", "", "The applicant must:\n\n(a) Comply with the general limitations established at \u00a7 764.102;\n\n(b) Have dwellings and other buildings necessary for the planned operation of the farm available for use after the loan is made."], ["7:7:7.1.1.4.15.4.9.4", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "D", "Subpart D\u2014Farm Ownership Loan Program", "", "\u00a7 764.154 Rates and terms.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 79 FR 78693, Dec. 31, 2014; 81 FR 3293, Jan. 21, 2016; 89 FR 65040, Aug. 8, 2024]", "(a)  Rates.  (1) The interest rate is the Agency's Direct Farm Ownership rate, available in each Agency office.\n\n(2) The limited resource Farm Ownership interest rate is available to applicants who are unable to develop a feasible plan at regular interest rates.\n\n(3) If the FO loan is part of a joint financing arrangement and the amount of the Agency's loan does not exceed 50 percent of the total amount financed, the interest rate charged will be the greater of the following:\n\n(i) The Agency's Direct Farm Ownership rate, available in each Agency office, minus 2 percent; or\n\n(ii) 2.5 percent.\n\n(4) The interest rate charged will be the lower of the rate in effect at the time of loan approval or loan closing.\n\n(b)  Terms.  The repayment terms are:\n\n(1) The standard repayment term of an FO will be equal to the useful life of the security or 40 years, whichever is less. Repayment terms less than the standard term must be requested by the applicant in writing. In no event will the term be more than 40 years from the date of the note. Repayment schedules may include equal installments, or unequal installments if needed to establish a new enterprise, develop a farm, recover from a disaster or economic reversal, or reasonably increase cash flow margin to increase working capital reserves and savings, including reasonable savings for retirement and education. Notwithstanding any other provision of this section, repayment schedules must be designed to ensure the loan is fully secured for the life of the loan.\n\n(2) The first installment of an FO will be an interest-only installment scheduled 12 months from the date of loan closing. An alternative repayment agreement that schedules the first installment sooner than 12 months from the date of closing, or in an amount greater than interest-only, may be provided upon written request from the applicant, or if the Agency determines it necessary to ensure the loan is fully secured for the life of the loan.\n\n(3) The minimum scheduled installments for the first 3 years of an FO must be the interest accrued on the principal balance. Interest-only installments may be permitted for additional years, if determined necessary by the Agency, to establish a new enterprise where production income is delayed, to develop a farm, or to recover from a disaster or economic reversal."], ["7:7:7.1.1.4.15.4.9.5", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "D", "Subpart D\u2014Farm Ownership Loan Program", "", "\u00a7 764.155 Security requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 81 FR 3293, Jan. 21, 2016]", "An FO loan must be secured:\n\n(a) In accordance with \u00a7\u00a7 764.103 through 764.106;\n\n(b) At a minimum, by the real estate being purchased or improved.\n\n(1) An ML made for FO purposes, may be secured only by the real estate being purchased or improved, as long as its value is at least 100 percent of the loan amount.\n\n(2) [Reserved]"], ["7:7:7.1.1.4.15.4.9.6", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "D", "Subpart D\u2014Farm Ownership Loan Program", "", "\u00a7\u00a7 764.156-764.200 [Reserved]", "FSA", "", "", "", ""], ["7:7:7.1.1.4.15.5.9.1", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "E", "Subpart E\u2014Downpayment Loan Program", "", "\u00a7 764.201 Down payment loan uses.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008; 86 FR 43392, Aug. 9, 2021; 87 FR 13124, Mar. 9, 2022]", "Down payment loan funds may be used to partially finance the purchase of a family farm by an eligible beginning farmer, socially disadvantaged farmer, or veteran farmer farmer."], ["7:7:7.1.1.4.15.5.9.2", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "E", "Subpart E\u2014Downpayment Loan Program", "", "\u00a7 764.202 Eligibility requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008; 87 FR 13124, Mar. 9, 2022]", "The applicant must:\n\n(a) Comply with the general eligibility requirements established at \u00a7 764.101 and the FO eligibility requirements of \u00a7 764.152; and\n\n(b) Be a beginning farmer, socially disadvantaged farmer, or veteran farmer."], ["7:7:7.1.1.4.15.5.9.3", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "E", "Subpart E\u2014Downpayment Loan Program", "", "\u00a7 764.203 Limitations.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008; 79 FR 78693, Dec. 31, 2014; 81 FR 3293, Jan. 21, 2016; 86 FR 43392, Aug. 9, 2021]", "(a) The applicant must:\n\n(1) Comply with the general limitations established at \u00a7 764.102; and\n\n(2) Provide a minimum down payment of 5 percent of the purchase price of the farm.\n\n(b) Down payment loans will not exceed 45 percent of the lesser of:\n\n(1) The purchase price,\n\n(2) The appraised value of the farm to be acquired, or\n\n(3) $667,000; subject to the direct FO dollar limit specified in 7 CFR 761.8(a)(1)(i).\n\n(c) Down payment loans made as an ML for FO purposes may not exceed $50,000.\n\n(d) Financing provided by the Agency and all other creditors must not exceed 95 percent of the purchase price. Financing provided by eligible lenders may be guaranteed by the Agency under part 762 of this chapter."], ["7:7:7.1.1.4.15.5.9.4", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "E", "Subpart E\u2014Downpayment Loan Program", "", "\u00a7 764.204 Rates and terms.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008; 86 FR 43392, Aug. 9, 2021]", "(a)  Rates.  The interest rate for Down payment loans will be the regular direct FO rate minus 4 percent, but in no case less than 1.5 percent.\n\n(b)  Terms.  (1) The Agency schedules repayment of Down payment loans in equal, annual installments over a term not to exceed 20 years.\n\n(2) The non-Agency financing must have an amortization period of at least 30 years and cannot have a balloon payment due within the first 20 years of the loan."], ["7:7:7.1.1.4.15.5.9.5", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "E", "Subpart E\u2014Downpayment Loan Program", "", "\u00a7 764.205 Security requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 73 FR 74345, Dec. 8, 2008; 86 FR 43392, Aug. 9, 2021]", "A Down payment loan must:\n\n(a) Be secured in accordance with \u00a7\u00a7 764.103 through 764.106;\n\n(b) Be secured by a lien on the property being acquired with the loan funds and junior only to the party financing the balance of the purchase price."], ["7:7:7.1.1.4.15.5.9.6", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "E", "Subpart E\u2014Downpayment Loan Program", "", "\u00a7\u00a7 764.206-764.230 [Reserved]", "FSA", "", "", "", ""], ["7:7:7.1.1.4.15.6.9.1", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "F", "Subpart F\u2014Conservation Loan Program", "", "\u00a7 764.231 Conservation loan uses.", "FSA", "", "", "[75 FR 54015, Sept. 3, 2010, as amended at 77 FR 15938, Mar. 19, 2012]", "(a) CL funds may be used for any conservation activities included in a conservation or Forestry Service Stewardship Management Plan, including but not limited to:\n\n(1) The installation of conservation structures to address soil, water, and related resources;\n\n(2) The establishment of forest cover for sustained yield timber management, erosion control, or shelter belt purposes;\n\n(3) The installation of water conservation measures;\n\n(4) The installation of waste management systems;\n\n(5) The establishment or improvement of permanent pasture; and\n\n(6) Other purposes including the adoption of any other emerging or existing conservation practices, techniques, or technologies.\n\n(b) [Reserved]"], ["7:7:7.1.1.4.15.6.9.2", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "F", "Subpart F\u2014Conservation Loan Program", "", "\u00a7 764.232 Eligibility requirements.", "FSA", "", "", "", "(a) The applicant:\n\n(1) Must comply with general eligibility requirements specified in \u00a7 764.101 except paragraphs (e) and (k) of that section;\n\n(2) And anyone who will sign the promissory note, must not have received debt forgiveness from the Agency on any direct or guaranteed loan; and\n\n(3) Must be the owner-operator or tenant-operator of a farm and be engaged in agricultural production after the time of loan is closed. In the case of an entity:\n\n(i) The entity is controlled by farmers engaged primarily and directly in farming in the United States;\n\n(ii) The entity must be authorized to operate a farm in the State in which the farm is located.\n\n(b) [Reserved]"], ["7:7:7.1.1.4.15.6.9.3", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "F", "Subpart F\u2014Conservation Loan Program", "", "\u00a7 764.233 Limitations.", "FSA", "", "", "", "(a) The applicant must comply with the general limitations specified in \u00a7 764.102 except \u00a7 764.102(f), which does not apply to applicants for the CL Program.\n\n(b) The applicant must agree to repay any duplicative financial benefits or assistance to CL."], ["7:7:7.1.1.4.15.6.9.4", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "F", "Subpart F\u2014Conservation Loan Program", "", "\u00a7 764.234 Rates and terms.", "FSA", "", "", "", "(a)  Rates.  The interest rate:\n\n(1) Will be the Agency's Direct Farm Ownership rate, available in each Agency office.\n\n(2) Charged will be the lower rate in effect either at the time of loan approval or loan closing.\n\n(b)  Terms.  The following terms apply to CLs:\n\n(1) The Agency schedules repayment of a CL based on the useful life of the security.\n\n(2) The maximum term for loans secured by chattels only will not exceed 7 years from the date of the note.\n\n(3) In no event will the term of the loan exceed 20 years from the date of the note."], ["7:7:7.1.1.4.15.6.9.5", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "F", "Subpart F\u2014Conservation Loan Program", "", "\u00a7 764.235 Security requirements.", "FSA", "", "", "[77 FR 15938, Mar. 19, 2012]", "(a) The loan must be secured in accordance with requirements established in \u00a7\u00a7 764.103 through 764.106.\n\n(b) Loans to purchase chattels will be secured by a first lien on chattels purchased with loan funds. Real estate may be taken as additional security if needed.\n\n(c) Loans of $25,000 of less for real estate purposes will be secured in the following order of priority:\n\n(1) By a lien on chattels determined acceptable by the Agency, and then\n\n(2) By a lien on real estate, if available and necessary. When real estate is taken as security a certification of ownership in real estate is required. Certification of ownership may be in the form of an affidavit that is signed by the applicant, names all of the record owners of the real estate in question and lists the balances due on all known debts against the real estate. Whenever the Agency is uncertain of the record owner or debts against the real estate security, a tile search is required.\n\n(d) Loans greater than $25,000 for real estate purposes will be secured in the following order of priority:\n\n(1) By a lien on real estate, if available, and then\n\n(2) By a lien on chattels, if needed and determined acceptable by the Agency.\n\n(e) For loans greater than $25,000 title clearance is required when real estate is taken as security."], ["7:7:7.1.1.4.15.6.9.6", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "F", "Subpart F\u2014Conservation Loan Program", "", "\u00a7\u00a7 764.236-764.250 [Reserved]", "FSA", "", "", "", ""], ["7:7:7.1.1.4.15.7.9.1", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "G", "Subpart G\u2014Operating Loan Program", "", "\u00a7 764.251 Operating loan uses.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 78 FR 3835, Jan. 17, 2013; 81 FR 3293, Jan. 21, 2016; 89 FR 65040, Aug. 8, 2024]", "(a) Except as provided in paragraph (b), OL and ML used for OL purposes loan funds may only be used for:\n\n(1) Costs associated with reorganizing a farm to improve its profitability;\n\n(2) Purchase of livestock, including poultry, farm equipment or fixtures, quotas and bases, and cooperative stock for credit, production, processing or marketing purposes;\n\n(3) Farm operating expenses, including, but not limited to, feed, seed, fertilizer, pesticides, farm supplies, repairs and improvements which are to be expensed, cash rent and family living expenses;\n\n(4) Scheduled principal and interest payments on term debt provided the debt is for authorized FO or OL purposes;\n\n(5) Other farm needs;\n\n(6) Costs associated with land and water development, use, or conservation;\n\n(7) Loan closing costs;\n\n(8) Costs associated with Federal or State-approved standards under the Occupational Safety and Health Act of 1970 (29 U.S.C. 655 and 667) if the applicant can show that compliance or non-compliance with the standards will cause substantial economic injury;\n\n(9) Borrower training costs required or recommended by the Agency;\n\n(10) Refinancing farm-related debts other than real estate to improve the farm's profitability provided the applicant has refinanced direct or guaranteed OL loans four times or fewer and one of the following conditions is met:\n\n(i) A designated or declared disaster caused the need for refinancing; or\n\n(ii) The debts to be refinanced are owed to a creditor other than the USDA;\n\n(11) Costs for minor real estate repairs or improvements, provided the loan is made primarily for agricultural purposes and can be repaid within 7 years. In the case of leased property, the applicant must have a lease to ensure use of the improvement over its useful life or to ensure that the applicant receives compensation for any remaining economic life upon termination of the lease.\n\n(b) [Reserved]"], ["7:7:7.1.1.4.15.7.9.2", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "G", "Subpart G\u2014Operating Loan Program", "", "\u00a7 764.252 Eligibility requirements.", "FSA", "", "", "[79 FR 78693, Dec. 31, 2014]", "(a) The applicant must comply with the general eligibility requirements established in \u00a7 764.101.\n\n(b) The applicant and anyone who will sign the promissory note, except as provided in paragraph (c) of this section, must not have received debt forgiveness from the Agency on any direct or guaranteed loan.\n\n(c) The applicant and anyone who will sign the promissory note, may receive direct OL loans to pay annual farm operating and family living expenses, provided that the applicant meets all other applicable requirements under this part, if the applicant:\n\n(1) Received a write-down under section 353 of the Act;\n\n(2) Is current on payments under a confirmed reorganization plan under Chapter 11, 12, or 13 of Title 11 of the United States Code; or\n\n(3) Received debt forgiveness on not more than one occasion after April 4, 1996, resulting directly and primarily from a Presidentially-designated emergency for the county or contiguous county in which the applicant operates. Only applicants who were current on all existing direct and guaranteed FLP loans prior to the beginning date of the incidence period of a Presidentially-designated emergency and received debt forgiveness on that debt within 3 years after the designation of such emergency meet this exception.\n\n(d) In the case of an entity applicant, the entity must be:\n\n(1) Controlled by farmers engaged primarily and directly in farming in the United States; and\n\n(2) Authorized to operate the farm in the State in which the farm is located.\n\n(e) The applicant and anyone who will sign the promissory note, may close an OL in no more than 7 calendar years, either as an individual or as a member of an entity, except as provided in paragraphs (e)(1) through (4) of this section. The years may be consecutive or nonconsecutive, and there is no limit on the number of OLs closed in a year. Microloans made to a beginning farmer or a veteran farmer are not counted toward this limitation. Youth loans are not counted toward this limitation. The following exceptions apply:\n\n(1) This limitation does not apply if the applicant and anyone who will sign the promissory note is a beginning farmer.\n\n(2) This limitation does not apply if the applicant's land is subject to the jurisdiction of an Indian tribe, the loan is secured by one or more security instruments subject to the jurisdiction of an Indian tribe, and commercial credit is generally not available to such farm operations.\n\n(3) If the applicant, and anyone who will sign the promissory note, has closed direct OL loans in 4 or more previous calendar years as of April 4, 1996, the applicant is eligible to close OL loans in any 3 additional years after that date.\n\n(4) On a case-by-case basis, may be granted a one-time waiver of OL term limits for a period of 2 years, not subject to administrative appeal, if the applicant:\n\n(i) Has a financially viable operation;\n\n(ii) And in the case of an entity, the members holding the majority interest, applied for commercial credit from at least two lenders and were unable to obtain a commercial loan, including an Agency-guaranteed loan; and\n\n(iii) Has successfully completed, or will complete within one year, borrower training. Previous waivers to the borrower training requirements are not applicable under this paragraph."], ["7:7:7.1.1.4.15.7.9.3", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "G", "Subpart G\u2014Operating Loan Program", "", "\u00a7 764.253 Limitations.", "FSA", "", "", "", "The applicant must comply with the general limitations established at \u00a7 764.102."], ["7:7:7.1.1.4.15.7.9.4", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "G", "Subpart G\u2014Operating Loan Program", "", "\u00a7 764.254 Rates and terms.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 79 FR 78694, Dec. 31, 2014; 86 FR 43392, Aug. 9, 2021; 89 FR 65040, Aug. 8, 2024]", "(a)  Rates.  (1) The interest rate is the Agency's Direct Operating Loan rate, available in each Agency office.\n\n(2) The limited resource Operating Loan interest rate is available to applicants who are unable to develop a feasible plan at regular interest rates.\n\n(3) The interest rate charged will be the lower rate in effect at the time of loan approval or loan closing.\n\n(4) The Agency's Direct ML-OL interest rate on an ML to a beginning farmer or veteran farmer is available in each Agency office. The interest rate will be the lower of the regular direct OL interest rate in effect at the time of loan approval or loan closing, or 5 percent.\n\n(b)  Terms.  (1) The Agency schedules repayment of OL loans made for annual farm operating and family living expenses when planned income is projected to be available.\n\n(i) The term of the loan may not exceed 24 months from the date of the note, except as provided in paragraph (b)(1)(ii) of this section.\n\n(ii) The term of the loan may exceed 24 months in unusual situations such as establishing a new enterprise, developing a farm, purchasing feed while crops are being established, marketing plans, or recovery from a disaster or economic reverse. In no event will the term of the loan exceed 7 years from the date of the note. Crops and livestock produced for sale will not be considered adequate security for such loans.\n\n(2) The standard repayment term of all other OLs must be equal to the useful life of the security or 7 years, whichever is less. Repayment terms less than the standard term must be requested by the applicant in writing. In no event will the term of the loan exceed 7 years from the date of the note. Repayment schedules may include equal installments, or unequal or balloon installments if needed to establish a new enterprise, develop a farm, recover from a disaster or economic reversal, or reasonably increase cash flow margin to increase working capital reserves and savings, including reasonable savings for retirement and education. Notwithstanding any other provision of this section, repayment schedules must be designed to ensure the loan is fully secured for the life of the loan. Loans with balloon installments:\n\n(i) Must be secured by an amount projected at the time of loan closing to be at least equal to the direct loan balance outstanding at the time the balloon installment comes due, which may exceed the additional security requirements of \u00a7 764.103(c) of this chapter. Total loan security in excess of the requirements of this provision (paragraph (b)(2)(i) of this section) will only be taken when it is not practicable to separate the security. Crops, livestock other than breeding stock, or livestock products produced are not adequate collateral for such loans.\n\n(ii) Are only authorized when the applicant can project the ability to refinance or restructure the remaining debt at the time the balloon payment comes due based on the expected financial condition of the operation, the depreciated value of the collateral, and the principal balance on the loan.\n\n(iii) Are not authorized when loan funds are used for real estate repairs or improvements.\n\n(3) The first installment of an OL, for purposes other than annual farm operating and family living expenses, will be an interest-only installment scheduled 12 months from the date of loan closing. An alternative repayment agreement that schedules the first installment sooner than 12 months from the date of closing, or in an amount greater than interest-only, may be provided upon written request from the applicant, or if the Agency determines it necessary to ensure the loan is fully secured for the life of the loan.\n\n(4) The minimum scheduled installments for the first 3 years of an OL, for purposes other than annual farm operating and family living expenses, must be the interest accrued on the principal balance. Interest-only installments may be permitted for additional years, if determined necessary by the Agency, to establish a new enterprise where production income is delayed, to develop a farm, or to recover from a disaster or economic reversal."], ["7:7:7.1.1.4.15.7.9.5", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "G", "Subpart G\u2014Operating Loan Program", "", "\u00a7 764.255 Security requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 78 FR 3835, Jan. 17, 2013; 81 FR 3293, Jan. 21, 2016; 89 FR 65041, Aug. 8, 2024]", "An OL loan must be secured:\n\n(a) In accordance with \u00a7\u00a7 764.103 through 764.106.\n\n(b) Except for MLs or OLs made for the purpose of minor real estate repairs or improvements, by a:\n\n(1) First lien on all property or products acquired or produced with loan funds;\n\n(2) Lien of equal or higher position of that held by the creditor being refinanced with loan funds.\n\n(c) For MLs used for OL purposes:\n\n(1) For annual operating purposes, loans must be secured by a first lien on farm property or products having a security value of at least 100 percent of the loan amount.\n\n(2) For loans made for purposes other than annual operating purposes or for the purpose of minor real estate repairs or improvements, loans must be secured by a first lien on farm property or products purchased with loan funds and having a security value of at least 100 percent of the loan amount.\n\n(3) A lien on real estate is not required unless the value of the farm products, farm property, and other assets available to secure the loan is not at least equal to 100 percent of the loan amount.\n\n(4) Notwithstanding the provisions of paragraphs (c)(1), (c)(2), and (c)(3) of this section, FSA will not require a lien on a personal residence.\n\n(d) For OLs made for the purpose of minor real estate repairs or improvements, the Agency must obtain a lien on the real estate repaired or improved in accordance with the requirements of \u00a7 764.104, while also ensuring the provisions of \u00a7 764.103(b) requiring adequate security are satisfied."], ["7:7:7.1.1.4.15.7.9.6", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "G", "Subpart G\u2014Operating Loan Program", "", "\u00a7\u00a7 764.256-764.300 [Reserved]", "FSA", "", "", "", ""], ["7:7:7.1.1.4.15.8.9.1", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "H", "Subpart H\u2014Youth Loan Program", "", "\u00a7 764.301 Youth loan uses.", "FSA", "", "", "", "Youth loan funds may only be used to finance a modest, income-producing, agriculture-related, educational project while participating in 4-H, FFA, or a similar organization."], ["7:7:7.1.1.4.15.8.9.2", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "H", "Subpart H\u2014Youth Loan Program", "", "\u00a7 764.302 Eligibility requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007. Redesignated at 75 FR 54015, Sept. 3, 2010, as amended at 79 FR 78694, Dec. 31, 2014]", "The applicant:\n\n(a) Must comply with the general eligibility requirements established at \u00a7 764.101(a) through (g);\n\n(b) And anyone who will sign the promissory note, must not have received debt forgiveness from the Agency on any direct or guaranteed loan;\n\n(c) Must be at least 10 but not yet 21 years of age at the time the loan is closed;\n\n(d) Must be recommended and continuously supervised by a project advisor, such as a 4-H Club advisor, a vocational teacher, a county extension agent, or other agriculture-related organizational sponsor; and\n\n(e) Must obtain a written recommendation and consent from a parent or guardian if the applicant has not reached the age of majority under state law."], ["7:7:7.1.1.4.15.8.9.3", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "H", "Subpart H\u2014Youth Loan Program", "", "\u00a7 764.303 Limitations.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 89 FR 65041, Aug. 8, 2024]", "(a) The applicant must comply with the general limitations established at \u00a7 764.102.\n\n(b) The total principal balance owed by the applicant to the Agency on all Youth loans at any one time cannot exceed $10,000."], ["7:7:7.1.1.4.15.8.9.4", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "H", "Subpart H\u2014Youth Loan Program", "", "\u00a7 764.304 Rates and terms.", "FSA", "", "", "", "(a)  Rates.  (1) The interest rate is the Agency's Direct Operating Loan rate, available in each Agency office.\n\n(2) The limited resource Operating Loan interest rate is not available for Youth loans.\n\n(3) The interest rate charged will be the lower rate in effect at the time of loan approval or loan closing.\n\n(b)  Terms.  Youth loan terms are the same as for an OL established at \u00a7 764.254(b)."], ["7:7:7.1.1.4.15.8.9.5", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "H", "Subpart H\u2014Youth Loan Program", "", "\u00a7 764.305 Security requirements.", "FSA", "", "", "", "A first lien will be obtained on property or products acquired or produced with loan funds."], ["7:7:7.1.1.4.15.8.9.6", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "H", "Subpart H\u2014Youth Loan Program", "", "\u00a7\u00a7 764.306-764.350 [Reserved]", "FSA", "", "", "", ""], ["7:7:7.1.1.4.15.9.9.1", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "I", "Subpart I\u2014Emergency Loan Program", "", "\u00a7 764.351 Emergency loan uses.", "FSA", "", "", "", "(a)  Physical losses \u2014(1)  Real estate losses.  EM loan funds for real estate physical losses may only be used to repair or replace essential property damaged or destroyed as a result of a disaster as follows:\n\n(i) For any FO purpose, as specified in \u00a7 764.151, except subparagraph (e) of that section;\n\n(ii) To establish a new site for farm dwelling and service buildings outside of a flood or mudslide area; and\n\n(iii) To replace land from the farm that was sold or conveyed, if such land is necessary for the farming operation to be effective.\n\n(2)  Chattel losses.  EM loan funds for chattel physical losses may only be used to repair or replace essential property damaged or destroyed as a result of a disaster as follows:\n\n(i) Purchase livestock, farm equipment, quotas and bases, and cooperative stock for credit, production, processing, or marketing purposes;\n\n(ii) Pay customary costs associated with obtaining and closing a loan that an applicant cannot pay from other sources (e.g., fees for legal, architectural, and other technical services, but not fees for agricultural management consultation, or preparation of Agency forms);\n\n(iii) Repair or replace household contents damaged in the disaster;\n\n(iv) Pay the costs to restore perennials, which produce an agricultural commodity, to the stage of development the damaged perennials had obtained prior to the disaster;\n\n(v) Pay essential family living and farm operating expenses, in the case of an operation that has suffered livestock losses not from breeding stock, or losses to stored crops held for sale; and\n\n(vi) Refinance farm-related debts other than real estate to improve farm profitability, if the applicant has refinanced direct or guaranteed loans four times or fewer and one of the following conditions is met:\n\n(A) A designated or declared disaster caused the need for refinancing; or\n\n(B) The debts to be refinanced are owed to a creditor other than the USDA.\n\n(b)  Production losses.  EM loan funds for production losses to agricultural commodities (except the losses associated with the loss of livestock) may be used to:\n\n(1) Pay costs associated with reorganizing the farm to improve its profitability except that such costs must not include the payment of bankruptcy expenses;\n\n(2) Pay annual operating expenses, which include, but are not limited to, feed, seed, fertilizer, pesticides, farm supplies, and cash rent;\n\n(3) Pay costs associated with Federal or State-approved standards under the Occupational Safety and Health Act of 1970 (29 U.S.C. 655 and 667) if the applicant can show that compliance or non-compliance with the standards will cause substantial economic injury;\n\n(4) Pay borrower training costs required or recommended by the Agency;\n\n(5) Pay essential family living expenses;\n\n(6) Refinance farm-related debts other than real estate to improve farm profitability, if the applicant has refinanced direct or guaranteed loans four times or fewer and one of the following conditions is met:\n\n(i) A designated or declared disaster caused the need for refinancing; or\n\n(ii) The debts to be refinanced are owed to a creditor other than the USDA; and\n\n(7) Replace lost working capital."], ["7:7:7.1.1.4.15.9.9.2", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "I", "Subpart I\u2014Emergency Loan Program", "", "\u00a7 764.352 Eligibility requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 76 FR 75434, Dec. 2, 2011; 87 FR 13124, Mar. 9, 2022; 89 FR 65041, Aug. 8, 2024]", "The applicant:\n\n(a) Must comply with the general eligibility requirements established at \u00a7 764.101.\n\n(b) Must be an established farmer.\n\n(c) Must be the owner-operator or tenant-operator as follows:\n\n(1) For a loan made under \u00a7 764.351(a)(1), must have been:\n\n(i) The owner-operator of the farm at the time of the disaster; or\n\n(ii) The tenant-operator of the farm at the time of the disaster whose lease on the affected real estate exceeds the term of the loan. The operator will provide prior notification to the Agency if the lease is proposed to terminate during the term of the loan. The lessor will provide the Agency a mortgage on the real estate as security for the loan;\n\n(2) For a loan made under \u00a7 764.351(a) (2) or (b), must have been the operator of the farm at the time of the disaster; and\n\n(3) In the case of an entity, the entity must be:\n\n(i) Engaged primarily and directly in farming in the United States; and\n\n(ii) Authorized to operate and own the farm, if the funds are used for farm ownership loan purposes, in the State in which the farm is located.\n\n(d) Must demonstrate the intent to continue the farming operation after the designated or declared disaster.\n\n(e) And all entity members must be unable to obtain sufficient credit elsewhere at reasonable rates and terms. To establish this, the applicant must obtain written declinations of credit, specifying the reasons for declination, from legally organized commercial lending institutions within reasonable proximity of the applicant as follows:\n\n(1) In the case of a loan in excess of $300,000, two written declinations of credit are required;\n\n(2) In the case of a loan of $300,000 or less, one written declination of credit is required; and\n\n(3) In the case of a loan of $100,000 or less, the Agency may waive the requirement for obtaining a written declination of credit, if the Agency determines that it would pose an undue burden on the applicant, the applicant certifies that they cannot get credit elsewhere, and based on the applicant's circumstances credit is not likely to be available.\n\n(4) Notwithstanding the applicant's submission of the required written declinations of credit, the Agency may contact other commercial lending institutions within reasonable proximity of the applicant and make an independent determination of the applicant's ability to obtain credit elsewhere.\n\n(f) And all entity members in the case of an entity, must not have received debt forgiveness from the Agency on more than one occasion on or before April 4, 1996, or any time after April 4, 1996. A write-down associated with a restructuring action under Section 353 of the Act is not considered debt forgiveness for EM Loan purposes.\n\n(g) Must submit an application to be received by the Agency no later than 8 months after the date the disaster is declared or designated in the county of the applicant's operation.\n\n(h) For production loss loans, must have a disaster yield that is below the normal production yield of the crop, as determined by the Agency, which comprises a basic part of an applicant's total farming operation.\n\n(i) For physical loss loans, must have suffered disaster-related damage to chattel or real estate essential to the farming operation, or to household contents that must be repaired or replaced, to harvested or stored crops, or to perennial crops.\n\n(j) Must meet all of the following requirements if the ownership structure of the family farm changes between the time of a qualifying loss and the time an EM loan is closed:\n\n(1) The applicant, including all owners must meet all of the eligibility requirements;\n\n(2) The individual applicant, or all owners of a entity applicant, must have had an ownership interest in the farming operation at the time of the disaster; and\n\n(3) The amount of the loan will be based on the percentage of the former farming operation transferred to the applicant and in no event will the individual portions aggregated equal more than would have been authorized for the former farming operation.\n\n(k) Must agree to repay any duplicative Federal assistance to the agency providing such assistance. An applicant receiving Federal assistance for a major disaster or emergency is liable to the United States to the extent that the assistance duplicates benefits available to the applicant for the same purpose from another source.\n\n(l) Whose primary enterprise is to breed, raise, and sell horses may be eligible under this part."], ["7:7:7.1.1.4.15.9.9.3", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "I", "Subpart I\u2014Emergency Loan Program", "", "\u00a7 764.353 Limitations.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 76 FR 75434, Dec. 2, 2011; 89 FR 65041, Aug. 8, 2024]", "(a) EM loans must comply with the general limitations established at \u00a7 764.102.\n\n(b) EM loans may not exceed the lesser of:\n\n(1) The amount of credit necessary to restore the farming operation to its pre-disaster condition;\n\n(2) In the case of a physical loss loan, the total eligible physical losses caused by the disaster; or\n\n(3) In the case of a production loss loan, 100 percent of the total actual production loss sustained by the applicant as calculated in paragraph (c) of this section.\n\n(c) For production loss loans, the applicant's actual crop production loss will be calculated as follows:\n\n(1) Subtract the disaster yield from the normal yield to determine the per acre production loss;\n\n(2) Multiply the per acre production loss by the number of acres of the farming operation devoted to the crop to determine the volume of the production loss;\n\n(3) Multiply the volume of the production loss by the market price for such crop as determined by the Agency to determine the dollar value for the production loss; and\n\n(4) Subtract any related compensation or insurance indemnities received or to be received by the applicant for the loss.\n\n(d) For a physical loss loan, the applicant's total eligible physical losses will be calculated as follows:\n\n(1) Add the allowable costs associated with replacing or repairing chattel covered by hazard insurance (excluding labor, machinery, equipment, or materials contributed by the applicant to repair or replace chattel);\n\n(2) Add the allowable costs associated with repairing or replacing real estate, covered by hazard insurance;\n\n(3) Add the value of replacement livestock and livestock products for which the applicant provided:\n\n(i) Written documentation of inventory on hand immediately preceding the loss;\n\n(ii) Records of livestock product sales sufficient to allow the Agency to establish a value;\n\n(4) Add the allowable costs to restore perennials to the stage of development the damaged perennials had obtained prior to the disaster;\n\n(5) Add, in the case of an individual applicant, the allowable costs associated with repairing or replacing household contents, not to exceed $20,000; and\n\n(6) Subtract any other disaster related compensation or insurance indemnities received or to be received by the applicant for the loss or damage to the chattel or real estate.\n\n(e) EM loan funds may not be used for physical loss purposes unless:\n\n(1) The physical property was covered by general hazard insurance at the time that the damage caused by the natural disaster occurred. The level of the coverage in effect at the time of the disaster must have been the tax or cost depreciated value, whichever is less. Chattel property must have been covered at the tax or cost depreciated value, whichever is less, when such insurance was readily available and the benefit of the coverage was greater than the cost of the insurance; or\n\n(2) The loan is to a poultry farmer to cover the loss of a chicken house for which the applicant did not have hazard insurance at the time of the loss and the applicant:\n\n(i) Applied for, but was unable to obtain hazard insurance for the chicken house;\n\n(ii) Uses the loan to rebuild the chicken house in accordance with industry standards in effect on the date the applicant submits an application for the loan;\n\n(iii) Obtains, for the term of the loan, hazard insurance for the full market value of the chicken house; and\n\n(iv) Meets all other requirements for the loan.\n\n(f) EM loan funds may not be used to refinance consumer debt, such as automobile loans, or credit card debt unless such credit card debt is directly attributable to the farming operation.\n\n(g) Losses associated with horses used for racing, showing, recreation, or pleasure or loss of income derived from racing, showing, recreation, boarding, or pleasure are not considered qualified losses under this section."], ["7:7:7.1.1.4.15.9.9.4", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "I", "Subpart I\u2014Emergency Loan Program", "", "\u00a7 764.354 Rates and terms.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 86 FR 43392, Aug. 9, 2021; 89 FR 65041, Aug. 8, 2024]", "(a)  Rates.  (1) The interest rate is the Agency's Emergency Loan Actual Loss rate, available in each Agency office.\n\n(2) The interest rate charged will be the lower rate in effect at the time of loan approval or loan closing.\n\n(b)  Terms.  (1) The Agency schedules repayment of EMs based on the useful life of the security and the type of loss.\n\n(2) The repayment schedule must include at least one payment every year.\n\n(3) EMs for annual farm operating and family living expenses, except expenses associated with establishing a perennial crop that are subject to paragraph (b)(4), must be repaid within 12 months. The Agency may extend this term to not more than 24 months to accommodate the production cycle of the agricultural commodities.\n\n(4) The standard repayment term of an EM for production losses or physical losses to chattel security (including assets with an expected life between 1 and 7 years) will be equal to the useful life of the security or 7 years, whichever is less. Repayment terms less than the standard term must be requested by the applicant in writing. The Agency may extend the repayment term up to a total length not to exceed 20 years, if adequate security is available, and repayment schedules may include equal installments, or unequal installments, if needed to establish a new enterprise, develop a farm, recover from a disaster or economic reversal, or reasonably increase cash flow margin to increase working capital reserves and savings, including reasonable savings for retirement and education, and security is adequate to support the term of the loan. Notwithstanding any other provision of this section, repayment schedules must be designed to ensure the loan is fully secured for the life of the loan.\n\n(5) The standard repayment term of an EM for physical losses to real estate will be equal to the useful life of the security or 40 years, whichever is less. Repayment terms less than the standard term must be requested by the applicant in writing. In no event will the term be more than 40 years from the date of the note, and repayment schedules may include equal installments, or unequal installments, if needed to establish a new enterprise, develop a farm, recover from a disaster or economic reversal, or reasonably increase cash flow margin to increase working capital reserves and savings, including reasonable savings for retirement and education, and security is adequate to support the term of the loan. Notwithstanding any other provision of this section, repayment schedules must be designed to ensure the loan is fully secured for the life of the loan.\n\n(6) The first installment of an EM, for purposes other than annual farm operating and family living expenses, will be an interest-only installment scheduled 12 months from the date of loan closing. An alternative repayment agreement that schedules the first installment sooner than 12 months from the date of closing, or in an amount greater than interest-only, may be provided upon written request from the applicant, or if the Agency determines it necessary to ensure the loan is fully secured for the life of the loan.\n\n(7) The minimum scheduled installments for the first 3 years of an EM, for purposes other than annual farm operating and family living expenses, must be the interest accrued on the principal balance. Interest-only installments may be permitted for additional years, if determined necessary by Agency, to establish a new enterprise where production income is delayed, to develop a farm, or to recover from a disaster or economic reversal."], ["7:7:7.1.1.4.15.9.9.5", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "I", "Subpart I\u2014Emergency Loan Program", "", "\u00a7 764.355 Security requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 76 FR 75434, Dec. 2, 2011]", "(a) EM loans made under \u00a7 764.351(a)(1) must comply with the general security requirements established at \u00a7\u00a7 764.103, 764.104 and 764.155(b).\n\n(b) EM loans made as specified in \u00a7 764.351(a)(2) and (b) must generally comply with the general security requirements established in \u00a7\u00a7 764.103, 764.104, and 764.255(b). These general security requirements, however, do not apply to equine loss loans to the extent that a lien is not obtainable or obtaining a lien may prevent the applicant from carrying on the normal course of business. Other security may be considered for an equine loss loan in the order of priority as follows:\n\n(1) Real estate,\n\n(2) Chattels and crops, other than horses,\n\n(3) Other assets owned by the applicant,\n\n(4) Third party pledges of property not owned by the applicant,\n\n(5) Repayment ability under paragraph (c) of this section.\n\n(c) Notwithstanding the requirements of paragraphs (a) and (b) of this section, when adequate security is not available because of the disaster, the loan may be approved if the Agency determines, based on an otherwise feasible plan, there is a reasonable assurance that the applicant has the ability to repay the loan provided:\n\n(1) The applicant has pledged as security for the loan all available personal and business security, except as provided in \u00a7 764.106;\n\n(2) The farm operating plan, approved by the Agency, indicates the loan will be repaid based upon the applicant's production and income history; addresses applicable pricing risks through the use of marketing contracts, hedging, options, or other revenue protection mechanisms, and includes a marketing plan or similar risk management practice;\n\n(3) The applicant has had positive net cash farm income in at least 3 of the past 5 years; and\n\n(4) The applicant has provided the Agency an assignment on any USDA program payments to be received.\n\n(d) For loans over $25,000, title clearance is required when real estate is taken as security.\n\n(e) For loans of $25,000 or less, when real estate is taken as security, a certification of ownership in real estate is required. Certification of ownership may be in the form of an affidavit which is signed by the applicant, names the record owner of the real estate in question and lists the balances due on all known debts against the real estate. Whenever the Agency is uncertain of the record owner or debts against the real estate security, a title search is required."], ["7:7:7.1.1.4.15.9.9.6", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "I", "Subpart I\u2014Emergency Loan Program", "", "\u00a7 764.356 Appraisal and valuation requirements.", "FSA", "", "", "[72 FR 63298, Nov. 8, 2007, as amended at 76 FR 75435, Dec. 2, 2011]", "(a) In the case of physical losses associated with livestock, the applicant must have written documentation of the inventory of livestock and records of livestock product sales sufficient to allow the Agency to value such livestock or livestock products just prior to the loss.\n\n(b) In the case of farm assets damaged by the disaster, the value of such security shall be established as of the day before the disaster occurred.\n\n(c) In the case of an equine loss loan:\n\n(1) The applicant's Federal income tax and business records will be the primary source of financial information. Sales receipts, invoices, or other official sales records will document the sales price of individual animals.\n\n(2) If the applicant does not have 3 complete years of business records, the Agency will obtain the most reliable and reasonable information available from sources such as the Cooperative Extension Service, universities, and breed associations to document production for those years for which the applicant does not have a complete year of business records."], ["7:7:7.1.1.4.15.9.9.7", 7, "Agriculture", "VII", "D", "764", "PART 764\u2014DIRECT LOAN MAKING", "I", "Subpart I\u2014Emergency Loan Program", "", "\u00a7\u00a7 764.357-764.400 [Reserved]", "FSA", "", "", "", ""]], "truncated": false, "filtered_table_rows_count": 74, "expanded_columns": [], "expandable_columns": [], "columns": ["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"], "primary_keys": ["section_id"], "units": {}, "query": {"sql": "select 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 from cfr_sections where \"part_number\" = :p0 order by section_id limit 101", "params": {"p0": "764"}}, "facet_results": {"title_number": {"name": "title_number", "type": "column", "hideable": false, "toggle_url": "/openregs/cfr_sections.json?part_number=764", "results": [{"value": 7, "label": 7, "count": 66, "toggle_url": "https://www.pawtectors.org/openregs/cfr_sections.json?part_number=764&title_number=7", "selected": false}, {"value": 15, "label": 15, "count": 8, "toggle_url": "https://www.pawtectors.org/openregs/cfr_sections.json?part_number=764&title_number=15", "selected": false}], "truncated": false}, "agency": {"name": "agency", "type": "column", "hideable": false, "toggle_url": "/openregs/cfr_sections.json?part_number=764", "results": [{"value": "FSA", "label": "FSA", "count": 66, "toggle_url": "https://www.pawtectors.org/openregs/cfr_sections.json?part_number=764&agency=FSA", "selected": false}, {"value": "BIS", "label": "BIS", "count": 8, "toggle_url": "https://www.pawtectors.org/openregs/cfr_sections.json?part_number=764&agency=BIS", "selected": false}], "truncated": false}, "part_number": {"name": "part_number", "type": "column", "hideable": false, "toggle_url": "/openregs/cfr_sections.json?part_number=764", "results": [{"value": "764", "label": "764", "count": 74, "toggle_url": "https://www.pawtectors.org/openregs/cfr_sections.json", "selected": true}], "truncated": false}}, "suggested_facets": [{"name": "title_name", "toggle_url": "https://www.pawtectors.org/openregs/cfr_sections.json?part_number=764&_facet=title_name"}, {"name": "subchapter", "toggle_url": "https://www.pawtectors.org/openregs/cfr_sections.json?part_number=764&_facet=subchapter"}, {"name": "part_name", "toggle_url": "https://www.pawtectors.org/openregs/cfr_sections.json?part_number=764&_facet=part_name"}, {"name": "subpart", "toggle_url": "https://www.pawtectors.org/openregs/cfr_sections.json?part_number=764&_facet=subpart"}, {"name": "subpart_name", "toggle_url": "https://www.pawtectors.org/openregs/cfr_sections.json?part_number=764&_facet=subpart_name"}], "next": null, "next_url": null, "private": false, "allow_execute_sql": true, "query_ms": 2317.1044159680605, "source": "Federal Register API & Regulations.gov API", "source_url": "https://www.federalregister.gov/developers/api/v1", "license": "Public Domain (U.S. Government data)", "license_url": "https://www.regulations.gov/faq"}