PART 771—BOLL WEEVIL ERADICATION LOAN PROGRAM Authority: 5 U.S.C. 301; 7 U.S.C. 1989; and Pub. L. 104-180, 110 Stat. 1569. Source: 67 FR 59771, Sept. 24, 2002, unless otherwise noted. § 771.1 Introduction. The regulations in this part set forth the terms and conditions under which loans are made through the Boll Weevil Eradication Loan Program. The regulations in this part are applicable to applicants, borrowers, and other parties involved in the making, servicing, and liquidation of these loans. The program's objective is to assist producers and state government agencies in the eradication of boll weevils from cotton producing areas. § 771.2 Abbreviations and definitions. The following abbreviations and definitions apply to this part: (a) Abbreviations: APHIS FSA (b) Definitions: Extra payment Non-profit corporation Restructure Security State organization § 771.3 [Reserved] § 771.4 Eligibility requirements. (a) An eligible applicant must: (1) Meet all requirements prescribed by APHIS to qualify for cost-share grant funds as determined by APHIS, (FSA will accept the determination by APHIS as to an organization's qualification); (2) Have the appropriate charter and/or legal authority as a non-profit corporation or as a State organization specifically organized to operate the boll weevil eradication program in any State, biological, or geographic region of any State in which it operates; (3) Possess the legal authority to enter into contracts, including debt instruments; (4) Operate in an area in which producers have approved a referendum authorizing producer assessments and in which an active eradication or post-eradication program is underway or scheduled to begin no later than the fiscal year following the fiscal year in which the application is submitted; (5) Have the legal authority to pledge producer assessments as security for loans from FSA. (b) Individual producers are not eligible for loans. § 771.5 Loan purposes. (a) Loan funds may be used for any purpose directly related to boll weevil eradication activities, including, but not limited to: (1) Purchase or lease of supplies and equipment; (2) Operating expenses, including but not limited to, travel and office operations; (3) Salaries and benefits. (b) Loan funds may not be used to pay expenses incurred for lobbying, public relations, or related activities, or to pay interest on loans from the Agency. § 771.6 Environmental requirements. No loan will be made until all Federal and state statutory and regulatory environmental requirements have been complied with. § 771.7 Equal opportunity and non-discrimination requirements. No recipient of a boll weevil eradication loan shall directly, or through contractual or other arrangement, subject any person or cause any person to be subjected to discrimination on the basis of race, religion, color, national origin, gender, or other prohibited basis. Borrowers must comply with all applicable Federal laws and regulations regarding equal opportunity in hiring, procurement, and related matters. § 771.8 Other Federal, State, and local requirements. (a) In addition to the specific requirements in this subpart, loan applications will be coordinated with all appropriate Federal, State, and local agencies. (b) Borrowers are required to comply with all applicable: (1) Federal, State, or local laws; (2) Regulatory commission rules; and (3) Regulations which are presently in existence, or which may be later adopted including, but not limited to, those governing the following: (i) Borrowing money, pledging security, and raising revenues for repayment of debt; (ii) Accounting and financial reporting; and (iii) Protection of the environment. § 771.9 Interest rates, terms, security requirements, and repayment. (a) Interest rate. (b) Term. (c) Security requirements. (i) Assignments of assessments, taxes, levies, or other sources of revenue as authorized by State law; (ii) Investments and deposits of the applicant; and (iii) Capital assets or other property of the applicant or its members. (2) In those cases in which FSA and another lender will hold assignments of the same revenue as collateral, the other lender must agree to a prorated distribution of the assigned revenue. The distribution will be based upon the proportionate share of the applicant's debt the lender holds for the eradication zone from which the revenue is derived at the time of loan closing. (d) Repayment. § 771.10 [Reserved] § 771.11 Application. A complete application will consist of the following: (a) An application for Federal assistance (available in any FSA office); (b) Applicant's financial projections including a cash flow statement showing the plan for loan repayment; (c) Copies of the applicant's authorizing State legislation and organizational documents; (d) List of all directors and officers of the applicant; (e) Copy of the most recent audited financial statements along with updates through the most recent quarter; (f) Copy of the referendum used to establish the assessments and a certification from the Board of Directors that the referendum passed; (g) Evidence that the officers and employees authorized to disburse funds are covered by an acceptable fidelity bond; (h) Evidence of acceptable liability insurance policies; (i) Statement from the applicant addressing any current or pending litigation against the applicant as well as any existing judgments; (j) A copy of a resolution passed by the Board of Directors authorizing the officers to incur debt on behalf of the borrower; (k) Any other information deemed to be necessary by FSA to render a decision. § 771.12 Funding applications. Loan requests will be processed based on the date FSA receives the application. Loan approval is subject to the availability of funds. However, when multiple applications are received on the same date and available funds will not cover all applications received, applications from active eradication areas, which FSA determines to be most critical for the accomplishment of program objectives, will be funded first. § 771.13 Loan closing. (a) Conditions. (b) Loan instruments and legal documents. (c) Loan agreement. (1) The borrower must submit audited financial statements to FSA at least annually; (2) The borrower will immediately notify FSA of any adverse actions such as: (i) Anticipated default on FSA debt; (ii) Potential recall vote of an assessment referendum; or (iii) Being named as a defendant in litigation; (3) Submission of other specific financial reports for the borrower; (4) The right of deferral under 7 U.S.C. 1981a; and (5) Applicable liquidation procedures upon default. (d) Fees. § 771.14 Loan monitoring. (a) Annual and periodic reviews. (b) Performance monitoring. § 771.15 Loan servicing. (a) Advances. (b) Payments. (c) Restructuring. (1) The Government's interest will be protected; (2) The restructuring will be performed within FSA budgetary restrictions; and (3) The loan objectives cannot be met unless the loan is restructured. (d) Default. [67 FR 59771, Sept. 24, 2002, as amended at 72 FR 64121, Nov. 15, 2007]