GM 15-084

Highly Fractionated Indian Land Loan Program Final Rule Issued

On December 1, 2015, the Farm Service Agency (FSA) of the Department of Agriculture issued a final rule for the Highly Fractionated Indian Land Loan Program. Under that program, authorized in the 2014 Farm Bill, FSA provides revolving loan funds to intermediary lenders who in turn loan funds to tribal members, tribes and tribal entities to purchase highly fractionated Indian land. While the rule became effective December 1, FSA will consider comments received by February 26, 2016, and could change the regulations accordingly. We attach the final rule.

Under the rule FSA will work with the intermediary lenders, providing oversight of the loan process and procedures, but will not provide oversight to the ultimate loan recipients. FSA will also work with the Bureau of Indian Affairs on procedures for the loan recipients “to resolve the undivided interests in the fractionated land.” The intermediary lender must have “a record of successful lending in Indian Country and knowledge and experience working with the BIA.” Eligible lenders are private and tribal nonprofit corporations, public agenices, tribes and tribal corporations.

The fractionated land purchased through the Highly Fractionted Indian Land Loan Program must be used for agricultural purposes during the period of the loan. It must be used to acquire at least 50 percent of the parcel and interests in the land – interests include rights-of-way, water rights, and easements. The loan may also be used to pay costs incidental to land acquisition – i.e, title clearance, legal services, surveys, loan closing.

The rule includes a number of definitions, including “Indian Country land”, “Native American tribe”, and “Tribal entity.” It defines “highly fractionated” as being an undivided interest held by four or more individuals – this differs with the definition in 25 U.S.C. 2201 which requires 50 or more undivided owners. FSA explains that comments were received during tribal consultation that requiring 50 undivided owners would exclude too many parcels of land.

Please let us know if we may provide futher information or assistance on the Highly Fractionated Indian Land Loan Program.