Full opinion text
ORDER ALAIMO, Chief Judge. I. INTRODUCTION Plaintiffs, acting on their own behalf and on behalf of a class defined as: “all persons in Georgia who have farm operating, ownership, or emergency loans financed under the Consolidated Farm and Rural Development Act, P.L. 87-128, whose loans were, are, or will be held by the Farmers Home Administration of the United States Department of Agriculture, and whose farm loans have been foreclosed, are in foreclosure, are threatened with foreclosure, or shall be foreclosed upon or threatened with foreclosure,” have brought this action seeking declaratory and injunctive relief in a challenge to the procedures used by the Farmers Home Administration (FmHA) in implementing a 1978 amendment to the Consolidated Farm and Rural Development Act entitled “Loan moratorium and policy on foreclosures.” 7 U.S.C. § 1981a (1982 Supp.). Specifically, the plaintiffs seek a declaration by the Court that the members of the class must be given personal notice of the availability of deferral relief under § 1981a and must be granted the opportunity to apply for the same before any acceleration action is commenced. Plaintiffs also pray that the Court enjoin the defendants from foreclosing on the applicable FmHA loans without first providing the borrowers with personal notice of and an opportunity to apply for § 1981a deferral relief. A declaration is also sought that the FmHA has a duty to promulgate regulations implementing § 1981a consistent with the underlying Congressional intent. Further, plaintiffs ask the Court to enjoin the failure of the FmHA to promulgate these regulations. Finally, plaintiffs seek an Order enjoining the defendants from foreclosing on all consolidated rural housing and farm loans until they have complied with a consent Order entered in a similar case. See Williams v. Butz, No. 176-153 (S.D.Ga. Oct. 7,1977). In that case, the FmHA agreed to provide certain rural housing program borrowers with personal notice of the availability of moratorium relief under the Rural Housing Act, 42 U.S.C. § 1475 (that Act’s functional equivalent of § 1981a). Plaintiffs claim that the refusal of the FmHA to provide consolidated farm and rural housing borrowers with the rights due to rural housing borrowers (personal notice of moratorium rights) violates the Williams v. Butz consent Order. II. FACTUAL BASIS The named plaintiffs and the class they represent are farmers in rural Georgia. One way or another, each of them has become eligible for and received agricultural credit through the FmHA under the Consolidated Farm and Rural Development Act. 7 U.S.C. §§ 1921 et seq. It is apparent that most if not all of these farmers began experiencing financial difficulty in 1977 due in large part to adverse weather and economic conditions. As a re-suit, the farmers have found it desirable to maximize their use of loan servicing devices and have attacked the FmHA’s implementation of § 1981a. At this point in the litigation, it is clear that the only real issue between the parties is legal in nature. Accordingly, the parties have filed extensive cross-motions for summary judgment, and the case is now ready for final adjudication. III. BACKGROUND The legal issue in this case basically involves the interpretation and construction of a section of a Congressional enactment— section 1981a. In such situations, it is “the conventional judicial duty to give faithful meaning to the language Congress adopted in light of the evident legislative purpose in enacting the law in question.” United States v. Bornstein, 423 U.S. 303, 310, 96 S.Ct. 523, 528, 46 L.Ed.2d 513 (1976). Thus, a cursory review of the history of federal involvement in agricultural credit through 1978, and a summary of the statutory and regulatory framework, are necessary to aid this Court in determining the legislative purpose. A. History of federal involvement in agricultural credit The federal government has been involved in extending agricultural credit for some 120 years. The first such involvement was initiated in 1863 with the passage of the Homestead Act; an act designed to provide farming opportunities for small-scale, family farmers — still a goal for federal intervention in agricultural credit. Although this aspect of federal involvement remained basically the same over the next 72 years, credit to farmers was also made available through the Federal Land Banks (1916), the Federal Intermediate Credit Banks (1923), and the Banks for Cooperatives (1933). The federal government was also making “natural disaster” loans available pursuant to a presidential directive issued in 1918 in response to a severe drought. Then, in 1935, the earliest predecessor to the FmHA, the Resettlement Administration, was created by Executive Order. This agency was authorized to make small loans to farmers with the goal toward helping families settle in the rural areas. Soon thereafter, Congress again entered the agricultural credit market, this time by passing the Bankhead-Jones Farm Tenant Act of 1937. This Act created the Farm Security Administration to administer a program of supervised, long-term farm ownership loans to be made to farmers without alternative credit sources — a basic duty of the present-day FmHA. Thus, the concepts of the present farm loan programs are rooted in that mass of social legislation arising out of the Depression years. The Bankhead-Jones Farm Tenant Act of 1937 was reenacted in 1946 as a part of the Farmers Home Administration Act of 1946. This latter Act did not change the nature of federal involvement in agricultural credit; instead it was enacted “to simplify and improve credit services to farmers and promote farm ownership.” [1946] U.S.Code Cong.Service 1028. As implied by its title, the act abolished the ten year old Farm Security Administration and replaced it with the Farmers Home Administration. Fifteen years after the Farmers Administration Act of 1946 was passed, changing conditions in the agricultural section of this country forced Congress to update its program for agricultural credit: “[T]he revolution occasioned by the mechanization of farming operations generally, the change in character and extent of resources necessary to successful operation of family farms, and the increase in farming technology have made tremendous differences in the credit needs of farmers. While amendments have been made since 1946 to modify the Secretary’s lending authority as these changes were taking place, many of the provisions of earlier loans have ceased to serve their initial purpose and are unworkable as a basis for a Federal supplement to the financing of our Nation’s agricultural production.” [1961] U.S.Code Cong. & Ad.News 2243, 2306. As a result, Congress passed the Consolidated Farmers Home Administration Act of 1961 (as Title III of the Agricultural Credit Act of 1961). The Act, in response to the “increase in farming technology” and the “tremendous differences in the credit needs of farmers,” was designed as “a consolidation and modernization of the Secretary’s authority to make available to eligible farmers who cannot obtain credit elsewhere direct and insured loans necessary to finance their acquisition, improvement and operation of farms.” Id. at 2305. Thus, the 1961 Act placed under one more modern roof the already existing authority of the Secretary to loan money for three purposes — real estate acquisitions and improvement (Subtitle A), operating expenses (Subtitle B) and emergencies (Subtitle C). Contemporaneously with its intervention in the farmer program loans, the federal government was also involved in extending credit, through the FmHA, to farm owners to enable them to construct, improve, alter or repair their farm dwellings. See 42 U.S.C. § 1471, 63 Stat. 432 (1949). This program was a part of the Congressional action on a national housing policy designed to assist in the “elimination of substandard and other inadequate housing ..., and the realization of the goal of a decent home and a suitable living environment for every American family.” The Housing Act of 1949, 63 Stat. 413, 413 (1949). In 1972, the farmer loan program and the rural housing loan program were consolidated through an amendment to the Consolidated Farms Home Administration Act of 1961. This amendment changed the name of the 1961 Act to the Consolidated Farm and Rural Development Act and adopted provisions relevant to Rural Housing loans. It did not, however, change the nature of the fanner loan program; thus this program stands today basically as it has for almost half a century. In summary, federal intervention in agricultural credit shows a long history of farmer loans designed to aid the family farmer who cannot obtain credit from a different source. Thus, as with most programs spawned in the Depression years (the roots of todays program lie in the Bank-head-Jones Tenant Act of 1937 and not the Homestead Act of 1863), the object of the legislation is to aid the “underprivileged” farmer, and is therefore a form of social welfare legislation. B. The Statutory and Regulatory Framework The Consolidated Farm and Rural Development Act as it existed in 1978 (and presently) is divided into four subtitles. The first three subtitles contain the substantive provisions of the Act while the fourth contains the administrative provisions. Subtitle A, headed “Real Estate Loans,” authorizes the Secretary to make or insure loans to eligible persons “for (1) acquiring, enlarging, or improving farms, including farm buildings, land and water development, use and conservation, (2) recreational uses and facilities, (3) enterprises needed to supplement farm income, (4) refinancing existing indebtedness, and (5) loan closing costs.” 7 U.S.C. § 1923(a). Those persons eligible for these loans include “family farmers” unable to obtain sufficient credit elsewhere. 7 U.S.C. § 1922. To insure repayment, the Secretary is directed to take such security interest (generally the land) “as he may determine to be necessary.” 7 U.S.C. § 1927. Subtitle B, headed “Operating Loans,” authorizes the Secretary to make or insure loans to eligible persons for, inter alia, “(1) paying costs incident to reorganizing the farming system for more profitable operation, (2) purchasing livestock, poultry, and farm equipment (including equipment which utilized solar energy), (3) purchasing feed, seed, fertilizers, insecticides, and farm supplies and to meet other essential farm operating expenses including cash rent, ... (7) refinancing existing indebtedness ...” 7 U.S.C. § 1942. Those persons eligible for these loans, as with Subtitle A, include operators of “family farms” unable to obtain sufficient credit elsewhere. 7 U.S.C. § 1941. The Secretary has the discretion to make these loans “upon the full personal liability of the borrower upon such security as the Secretary may prescribe.” 7 U.S.C. § 1946(a)(1). The Secretary is further authorized to consolidate or reschedule outstanding loans. 7 U.S.C. § 1946(b). Interestingly, the conditions under which the consolidation or rescheduling can occur are not prescribed by statute. Subtitle C, headed “Emergency Loans,” authorizes the Secretary to make and insure loans where the applicant’s operations “have been substantially affected by a natural disaster in the United States or by a major disaster or emergency designated by the President under the Disaster Relief Act of 1974.” 7 U.S.C. § 1961(a). Loans can also be made based on extreme production losses. 7 U.S.C. § 1970. The emergency loans can be made for any purpose consistent with Subtitle A or Subtitle B, 7 U.S.C. § 1963. The persons eligible for these emergency loans, unlike under Subtitle A and Subtitle B, include those able to obtain credit elsewhere, although it is apparent that there must be a “reasonable prospect for successful operation with the assistance of such a loan.” 7 U.S.C. § 1961(a)(b). Again, the Secretary is directed to try to insure repayment by taking adequate security interests. Loans are made “upon the full personal liability of the borrower and upon the best security available .... Provided that the security is adequate to assure repayment of the loans, except that if such security is not available because of the disaster, the Secretary shall (1) accept as security such collateral as is available, ... together with the Secretary’s confidence in the repayment ability of the applicant.” 7 U.S.C. § 1964(d). Subtitle D, headed “Administrative Provisions,” outlines the various procedures to be used by the Secretary in implementing the three loan programs and supplies miscellaneous grants of authority. For example, one section authorizes the creation of national, area, state and local offices to aid in administration. 7 U.S.C. § 1981(a). For the purposes of this case, however, only two sections are relevant. Section 1981(d) provides the source authority for many of the loan servicing devices used by the FmHA and provides that “[t]he Secretary may ... (d) compromise, adjust, or reduce claims, and adjust and modify the terms of mortgage, leases, contracts and agreements entered into or administered by the Farmers Home Administration under any of its programs, as circumstances may require, ...” 7 U.S.C. § 1981(d). The other section, § 1981a, the interpretation of which is the subject of this litigation, provides in pertinent part: “In addition to any other authority that the Secretary may have to defer principal and interest and forego foreclosure, the Secretary may permit, at the request of the borrower, the deferral of principal and interest on any outstanding loan made, insured or held by the Secretary under this chapter, or under the provisions of any other law administered by the Farmers Home Administration, and may forego foreclosure of any such loan, for such period as the Secretary deems necessary upon a showing by the borrower that due to circumstances beyond the borrower’s control, the borrower is temporarily unable to continue making payments of such principal and interest when due without unduly impairing the standard of living of the borrowers.” 7 U.S.C. § 1981a. A comparison between § 1981a and § 1981(d) reveals important differences. First, the fact that the former establishes authority “in addition to any other authority ... to defer principal and interest and forego foreclosure,” necessitates the conclusion that § 1981a provides a loan servicing mechanism above and beyond that provided for in § 1981(d). Second, and more importantly, while § 1981(d) contains broad language of discretion — “as circumstances may require” — § 1981a contains no such provision. In fact, § 1981a lists eligibility criteria that must be met before the deferral benefits of that section can be enjoyed. The importance of these differences will become apparent later. Beyond this statutory framework, there are certain administrative regulations placing obligations on the FmHA. For example, a major obligation of the FmHA is to provide “management assistance to individual borrowers and applicants.” 7 C.F.R. Part 1924, Subpart B. This assistance, which includes credit counselling, planning, recordkeeping, supervision, review and evaluation, is designed to assist the FmHA borrower to move in a positive direction toward a better financial position so that he may no longer require government agricultural credit. While “management assistance” regulations tend to indicate that the loan program is a form of social welfare legislation, the extensive regulations governing security interests are a reminder that the government has become a lending institution desirous of receiving adequate repayment of its loans. Without recounting the regulations governing security interests, it is sufficient to note that these regulations cover farm ownership loans, operating loans, emergency loans and the disposition of security. The FmHA has also promulgated regulations discussing the use of loan servicing devices. For the purposes of this case, only two of these regulations are important; 7 C.F.R. § 1951.33 outlines the requirements for deferrals on operating loans, while 7 C.F.R. § 1951.40 outlines the requirements for deferrals on farm ownership loans. C. Nature of the Program The foregoing recitation of the history of and the statutory and regulatory framework of the Consolidated Farm and Rural Development Act, while seemingly long and superfluous, is actually necessary to aid this Court in properly construing the mandates, if any, of section 1981a. “Reference to the entire statutory scheme is necessary in analyzing a statute .... A court must look to the legislation as a whole in order to discern its statutory purpose.” Plaskolite, Inc. v. Baxt Industries, Inc., 486 F.Supp. 213, 216 (N.D.Ga.1980). An examination of the prefatory material reveals that the farmers loan program is a unique mixture of social welfare legislation and legislation carefully designed to supplement the business needs of high credit risk farmers. Despite this obvious mixture of objectives, it is the position of the government that this Court should interpret § 1981a with the notion that the FmHA is in the business of making loans and is not a social welfare organization. The loans are made with the expectation that they will be repaid and must be adequately secured to assure such repayment. Since the government is catering to high-risk borrowers, and since the borrower must be able to generate income in order to pay back the loan, the FmHA must get involved in virtually all aspects of the farmer’s operation. Thus, for its own protection, management assistance must be rendered that includes planning, reviewing and evaluating. Yet it must be recognized that, at some point, the government must protect its own interest in the funds expended and, if the farmer is experiencing severe financial problems, it must attempt to collect the debt or liquidate the collateral. Thus, it is argued, the Court must look at the statutory scheme with a business bias. The plaintiffs, on the other hand, argue that the farmer loan program is a type of social welfare legislation designed to lift the living standards of lower echelon farmers, and that the legislation should be interpreted accordingly (i.e. liberally in favor of the farmers). As support, the plaintiffs cite to United States v. Kimbell Foods, Inc., 440 U.S. 715, 99 S.Ct 1448, 59 L.Ed.2d 711 (1979) wherein it was noted that: “The overriding purpose of the tax law statute obviously is to ensure prompt revenue collection. The same cannot be said of the SBA and FHA lending programs. They are a form of social welfare legislation, primarily designed to assist farmers and businesses that cannot obtain funds from private lenders on reasonable terms.” Id. at 734-35, 99 S.Ct. at 1461-62 (emphasis added). Further, Congress, in commenting on the use of qualified personnel by the Department of Agriculture, refutes the notion that the program is strictly a business venture. “It is the sense of Congress that in carrying out the provisions of the Consolidated Farm and Rural Development Act, the Secretary of Agriculture should ensure that— 1) only officers and employees of the Department of Agriculture who are adequately prepared to understand the particular needs and problems of farmers in an area are assigned to such area; and 2) a high priority is placed on keeping existing farm operations operating.” Pub.L. No. 95-334, Title I § 126, 92 Stat. 429 (August 4,1978), reprinted in, Congressional Findings, 7 U.S.C. § 1921 (Supp. 1982). It is obvious to this Court from an examination of the above materials that the interpretation of § 1981a should reflect the fact that the farmers loan program is predominately a form of social welfare legislation. Accordingly, in interpreting § 1981a, this Court will attempt to implement the social welfare goals of Congress as well as its directive to keep “existing farm operations operating” by placing a liberal, but not a strained, gloss on that section. IV. DISCUSSION As stated, the plaintiffs have brought this suit to challenge the procedures used by the FmHA in implementing the provisions of 7 U.S.C. § 1981a. This section, added in 1978 as an amendment to the Consolidated Farm and Rural Development Act, provides: “In addition to any other authority that the Secretary may have to defer principal and interest and forego foreclosure, the Secretary may permit, at the request of the borrower, the deferral of principal and interest on any outstanding loan made, insured, or held by the Secretary under this chapter, or under the provisions of any other law administered by the Farmers Home Administration, and may forego foreclosure of any such loan, for such period as the Secretary deems necessary upon a showing by the borrower that due to circumstances beyond the borrower’s control, the borrower is temporarily unable to continue making payments of such principal and interest when due without unduly impairing the standard of living of the borrower. The Secretary may permit interest that accrues during the deferral period on any loan deferred under this section to bear no interest during or after such period: Provided, that if the security instrument securing such loan is foreclosed such interest as is included in the purchase price at such foreclosure shall become part of the principal and draw interest from the date of foreclosure at the rate prescribed by law.” 7 U.S.C. § 1981a. The plaintiffs desire the initiation of two procedures not presently being used by the FmHA. First, they desire personal notice of their right to apply for this deferral relief and an opportunity to be heard. Second, they desire the promulgation of regulations concerning the eligibility criteria similar to that used by the FmHA for the Rural Housing loan moratorium statute, 42 U.S.C. § 1475. The government argues that since § 1981a is permissive in nature, the plaintiffs have no legal basis on which to demand such relief. Also, it argues that even if such relief could be demanded, the present practices of the FmHA provide sufficient compliance with any statutory or constitutional mandates. Thus, it is left to this Court to decide whether § 1981a creates a mandatory duty on the Secretary to provide FmHA borrowers with personal notice of the substantive provisions of that section. In finding that such personal notice is required, this Court must then determine whether the present practices of the FmHA are sufficient to provide FmHA borrowers with the requisite notice. Finally, this Court must also decide whether the regulatory scheme utilized by the FmHA to implement its loan deferral program is consistent with the Congressionally mandated program for loan deferral contained in § 1981a. The latter issue will be discussed first. A. Is the present deferral procedure used by the FmHA consistent with the Congressional mandates of § 1981al It is the position of the government that § 1981a is entirely permissive and therefore leaves the final decision as to the promulgation of regulations with the Secretary of Agriculture. Thus, it is argued, the use of the deferral mechanism already present in the statute for real estate loans and operating loans is a sufficient implementation of the provisions of § 1981a. The plaintiffs, on the other hand, argue that § 1981a creates an affirmative duty on the Secretary to implement a deferral program comparable to the moratorium procedure used in the rural housing scheme. See 7 C.F.R. § 1951.17. They argue that the practices and regulations used by the FmHA, being inconsistent with this mandate, must be restrained. In finding for the plaintiff, this Court will look not only to the plain meaning of the statute but also to the legislative history of § 1981a (in conjunction with the history of federal intervention in agricultural credit as hereinbefore described) as well as at the regulations promulgated pursuant to the comparable provision of the Rural Housing Act. 1. Language of the Statute “[O]ur duty is to give effect to the intent of Congress, and in doing so our first reference is ... to the literal meaning of the words employed.” United States v. Second National Bank of North Miami, 502 F.2d 535, 539 (5th Cir. 1974), cert. denied, 421 U.S. 912, 95 S.Ct. 1567, 43 L.Ed.2d 777 (1975) (citation omitted). The government argues that the inclusion in the statute of the phrases “the Secretary may permit ... the deferral of principle and interest,” “may forego foreclosure” and the like, unambiguously shows this Court that Congress did not intend to impose that duty on the Secretary as requested by the plaintiffs, but that instead the decision as to how to implement § 1981a was left to his discretion. As support, the government cites cases enunciating the general rule that the word “may” is permissive “and will be construed to vest discretionary power unless the context of its use clearly indicates a purpose to use it in a mandatory sense.” Koch Refining Co. v. United States Department of Energy, 504 F.Supp. 593, 596 (D.Minn.1980), aff’d, 658 F.2d 799 (Em.Ct. of Appeals 1981). See also United States v. Reeb, 433 F.2d 381 (9th Cir. 1970), cert. denied, 402 U.S. 912, 91 S.Ct. 1391, 28 L.Ed.2d 654 (1971); Thompson v. Clifford, 408 F.2d 154, 158 (D.C.Cir.1968). As plaintiffs point out, and as the cases establish, the existence of the word “may” in a statute does not necessarily render the procedural implementation of that statute by the appropriate agency discretionary. For example, in Pealo v. Farmers Home Administration, 361 F.Supp. 1320 (D.D.C.1973) the Court held that the FmHA did not have the discretionary authority to suspend the interest credit loan programs established by Congress. Although in this case the FmHA has not suspended the implementation of § 1981a, and the case is therefore arguably distinguishable, the approach of the court in Pealo is helpful in guiding this Court as to the proper interpretation of the word “may.” “The Court is cognizant that Section 521 may be susceptible of varying interpretations concerning the mandatory nature of the language employed therein. In interpreting the statute, the Court has therefore attempted to ascertain the intent and mandate of Congress consonant with its overall policies. In this regard, it is instructive to note a portion of an opinion by former Assistant Attorney General William H. Rehnquist, now a Justice of the Supreme Court. He stated: ‘[O]n the question of trying to find a mandatory intent on the part of Congress, it is not a question of looking for the word “shall” as opposed to “may.” ’ ” Id. at 1323-24. In this case, a reading of the language of § 1981a does not leave this Court with the impression that Congress intended to permit the Secretary to decide whether and what regulations to prescribe in implementing the deferral mechanism. Instead, the Secretary would appear to have discretion only whether to either grant a deferral or forego foreclosure once the eligibility criteria established by the statute have been met, and for what period of time. Thus, as in Pealo, the statute is susceptible to varying interpretations and the Court should look beyond the language of the statute to its legislative history and the policies behind its enactment. However, before diving into the murky waters of the legislative history behind the passage of § 1981a, two points concerning the “plain language” of the act should be made. First, the government contends that the regulations implemented pursuant to the FmHA’s already existing authority to defer loan payments (i.e., those used pursuant to § 1981(d)) are also sufficient to implement § 1981a. Yet, § 1981a expressly provides that its authority is u[i]n addition to any other authority that the Secretary may have to defer principal and interest.” Thus, it is apparent that Congress intended that § 1981(d) (which is discretionary) and § 1981a should operate in different ways. Second, while Congress indicated in § 1981(d) that the FmHA could use these loan servicing devices “as circumstances may require” with insignificant limitations on that discretion (see note 4, supra), in § 1981a Congress has established explicit criteria of eligibility for FmHA borrowers seeking payment deferrals. Thus, it can be again concluded that these two sections were intended to operate differently and that while § 1981(d) is discretionary, § 1981a imposes a mandatory duty on the Secretary to implement it through regulations consistent with its underlying purposes. 2. Legislative History of § 1981a In analyzing, for interpretive purposes, the words or phrases used in a statute, the court must “give effect to the intent of Congress.” United States v. Second National Bank of North Miami, supra, 502 F.2d at 539. The legislative history behind the enactment of a statute can provide clues to that intent. The first substantive legislative discussion of the proposed § 1981a meriting consideration by this Court is found in H.R. Rep.No.986,95th Cong., 2d Sess. (1978), U.S. Code Cong. & Admin.News 1978, p. 1106. After noting that the purpose of proposed § 1981a was to “clarify” the Secretary’s authority with respect to moratoriums on loan payments, id. at 4, the report discussed the proposal: “In another amendment to Title I, Mr. Moore proposed that the Secretary should have explicit authority to provide a moratorium on payment of principal and interest and to forego foreclosure on Farmers Home Administration loans, upon a showing by the borrower that due to circumstances beyond his control he was temporarily unable to meet an installment when due without unduly impairing his standard of living. Comparable language appears in the Housing Act with respect to housing loans by the Farmers Home Administration and was recommended by Mr. Moore in order to clarify the Secretary’s authority. The amendment was accepted by the committee with a change offered by Mr. Moore to provide that this would be in addition to any authority the Secretary may have under existing law, so that the Secretary’s authority under current law would not be reduced or impaired by the proposed amendment.” Id. at 27, U.S.Code Cong. & Admin.News 1978, p. 1132 (emphasis added). This language would appear to be ambivalent with respect to a conclusion that § 1981a should be interpreted as imposing a mandatory duty upon the Secretary. However, the reference to “comparable language ... in the Housing Act” indicates a Congressional intent to have the programs implemented in the same manner. It should be noted at this point that the regulations implementing the Housing Act’s moratorium provision (42 U.S.C. § 1475) — the same regulations for which the plaintiffs desire to be promulgated for § 1981a — were initially adopted on July 10, 1974 and finalized on October 13, 1977. Thus, in drafting § 1981a Congress knowingly used language “comparable” to that found in § 1475 at a time when the latter section was being implemented pursuant to regulations prescribing the type of eligibility criteria that the plaintiffs desire be promulgated under § 1981a. Congress, therefore, impliedly intended § 1981a to be implemented in a similar manner. The government responds to the assertion of comparability on two levels. First, it argues that the language of the two acts, while containing some similarities, is not comparable. Second, the government argues that the rural housing and the farmer loan programs are not comparable and therefore should not be accorded similar treatment. With respect to the latter argument, the government notes that Rural Housing loans are generally one-time personal loans designed to assist the borrower in obtaining shelter and are paid back from an income source not generated by the borrowed funds. Farmer program loans, on the other hand, consist of a series of loans to assist the borrower in purchasing a farm and operating the enterprise. These funds become the investment capital from which the income to pay back the loan is generated. Thus, if a farmer has a bad year or is hurt by “disaster” conditions, there is a ripple effect. Not only does he lose the income to pay back prior loans, but he must borrow a sufficient amount more to generate enough income to pay off the old loans as well as the new loan. If these “disaster” years string together, at some point the farmer will be unable to generate sufficient income to pay off all of the loans. Thus, it is argued, not only does § 1981a give the Secretary greater discretion in implementing the deferral under the Farm Program loans, but it should provide him with greater discretion. The distinction between the programs is enlightening and points out important differences. However, it does not change the language of sections 1475 and 1981a, nor the fact that Congress knew said language was comparable. Further, the Secretary does have discretion under § 1981a. Once the eligibility criteria are met, the Secretary can control the length of the deferral period and even deny the use of deferral if it is determined that the borrower lacks “clean hands.” See 7 C.F.R. § 1951.17(bX2)(i)(A), Appendix C (regulation re Housing Act moratorium provision). Thus, it is apparent that through Section 1981a, Congress is demanding that the FmHA strike a balance between the business nature of the loans and the predominant social welfare nature of the legislation by buying those farmers crippled by circumstances beyond their control a little time to get back on their feet. With respect to the first argument, despite the government’s contentions to the contrary, the language of sections 1475 and 1981a is comparable. The provisions of both sections permit the FmHA borrower to apply for moratorium relief upon request and upon a showing that due to circumstances beyond his control, the borrower is unable to continue making payments without unduly impairing his standard of living. In fact, the obvious similarities between the language used in sections 1981a and 1475 implicates a rule of statutory construction in support of the plaintiffs’ position. A short digression from the legislative history of § 1981a to this standard rule is at once helpful and necessary. “Simpson’s teaching, therefore, is that the difficult task of divining Congressional intent is to be aided by the use of several tools of statutory construction.” United States v. Rodriguez, 612 F.2d 906, 911 (5th Cir. 1980), aff’d, 450 U.S. 333, 101 S.Ct. 1137, 67 L.Ed.2d 275 (1981) (referring to Simpson v. United States, 435 U.S. 6, 98 S.Ct. 909, 55 L.Ed.2d 70 (1977)). A standard rule of statutory construction is that similar language should be given a similar interpretation. “The similarity of language in § 718 and § 204(6) is, of course, a strong indication that the two statutes should be interpreted pari passu.” Northcross v. Board of Education of Memphis City Schools, 412 U.S. 427, 428, 93 S.Ct. 2201, 2202, 37 L.Ed.2d 48 (1973). See also Hotel Equities Corp. v. C. I. R., 546 F.2d 725, 728 (7th Cir. 1976) (“ ‘there is a natural presumption that identical words used in different parts of the same act are intended to have the same meaning.’ Atlantic Cleaners & Dryers, Inc. v. United States, 286 U.S. 427, 433, 52 S.Ct. 607, 608, 76 L.Ed. 1204 ... (1932).”); United Shoe Workers of America v. Bedell, 506 F.2d 174, 183 (D.C. Cir.1974). Further, “[i]t is a settled rule of statutory construction that a legislature is presumed to act with knowledge of existing law on the subject.” Finberg v. Sullivan, 461 F.Supp. 253, 258 (E.D.Pa.1978), vacated on other grounds, 634 F.2d 50 (3d Cir. 1980). See also Cannon v. University of Chicago, 441 U.S. 677, 696-97, 99 S.Ct. 1946, 1957-58, 60 L.Ed.2d 560 (1979) (It is always appropriate to assume that our elected representatives, like other citizens, know the law, ... ”). The fact that § 1981a contains comparable language to that used in § 1475, when coupled with the rules of statutory construction providing that similar language should be given similar treatment and that legislators are deemed to be aware, of the existing law on the subject, strongly supports a conclusion by this Court that Congress intended that FmHA would implement § 1981a pursuant to regulations fashioned after those used to implement § 1475. Thus, H.R.Rep.No.986 supports the position of the plaintiffs that the FmHA has not been properly implementing the § 1981a deferral mechanism. The other substantive discussion of the legislative history of § 1981a is found at 124 Cong.Rec. S56,648 (daily ed. May 2, 1978). The government cites a portion of this discussion as supportive of its position that § 1981a was intended to be entirely permissive. An examination of a larger portion of this legislative history reveals otherwise: “MR. EAGLETON. Madam President, the Food and Agriculture Act of 1977 provides specific authority for the Secretary of Agriculture to use funds contained in the Agricultural Credit Insurance Fund to pay installments of principal and interest to the holders of notes of Farmers Home Administration borrowers. “It was the intent of Congress in providing the Secretary this authority to allow him simply to postpone the payment of principal and interest on FmHA loans for farmers hard pressed due to natural disasters. It was our belief that the Department of Agriculture should carry out a program of loan deferrals for farmers equivalent to what the Small Business Administration provides small businesses. This was very clear in the legislative history. Both in comments I made on the floor of the Senate and in the statement of Representative BURLISON on the floor of the House, reference was made to the loan deferral program of the Small Business Administration which does not charge the borrower additional interest when his loan is deferred. “FmHA is now in the final stages of developing its system of deferral in order to carry out the provisions of the 1977 farm bill. The FmHA system of deferral requires that deferred interest be added to the outstanding principal, with interest then being charged on the basis of the new adjusted principal. What this means to a farmer with a $50,000 operating loan which is deferred for 2 years is that he will have to pay an additional $1,200 in interest above and beyond what a small businessman in the same circumstances would pay on a deferred SBA loan. “So far as I am concerned, there is no justification for denying farmers the kind of loan deferral program which is available to small businessmen. My amendment is aimed at correcting this inequity by prohibiting the FmHA from charging interest on interest on deferred loans. This will be effective only in areas which are eligible for emergency loans. “The loan deferral program originally was intended to give farmers hard pressed by natural disasters a little breathing room when bill-paying time came around. The Farmers Home Administration has instead turned it into a program which burdens farmers with more debt and higher payments. In my opinion and in that of most of the farmers with whom I have discussed this proposal, the deferral program as proposed by FmHA would cause more financial distress than it would relieve. “This amendment will correct this situation and will make the loan deferral program a viable tool for assisting hard pressed farmers once again. “I should note that the original form of my amendment gave the Secretary of Agriculture no discretion in the implementation of the loan deferral program. However, as the result of the personal assurance I have received from the Secretary of Agriculture that the loan deferral program will be carried out without interest being charged on interest, I have modified my amendment so that this deferral program will be within the Secretary’s discretionary authority. I hasten to add, however, that the prohibition on the charging of interest on interest remains mandatory for this program. “It is important to note that the House-passed version of this bill contains a section which provides the Secretary with the authority to grant a moratorium on payments of principal and interest for borrowers who can demonstrate that they are temporarily unable to continue making payments. I have recently received a letter from Representative MOORE of Louisiana, the chief sponsor of this section, which indicates that it was his intent that interest not be charged on interest when a moratorium is granted. I ask unanimous consent that Representative MOORE’s letter be printed in the RECORD at this point. “There being no objection, the letter was ordered to be printed in the RECORD as follows: House of Representatives Washington, D. C. May 1, 1978 Hon. Thomas P. Eagleton Chairman, Subcommittee on Agriculture and Related Agencies, Senate Committee on Appropriations, Washington, D. C. Dear Senator Eagleton: It has come to my attention that you are interested in an amendment I offered to the Agricultural Credit Act of 1978. H.R. 11501, and which was adopted by the House Agriculture Committee and included in the bill as reported to the House. This legislation passed the House of Representatives on April 24,1978 by a vote of 347-23.... I believe your primary interest in this new authority granted the Secretary involves whether the Farmers Home Administration charges interest upon the interest due under the terms of any loan covered by this legislation. I assure you I had no intention of creating a situation where Farmers Home would take such action, because in fact I feel this action would negate any good a moratorium could provide. It does not seem logical to me to allow a farmer the special provision of delaying the payment of principal and interest on a loan on one hand to help him through difficult financial problems, and turn around on the other hand and ask him to pay interest fees in order to obtain this special consideration. I simply had the desire to allow hard-pressed farmers the chance to place principal and interest payments they could not now meet, at the end of a normal payment period; hopefully, a time when they could meet these obligations. I feel it would be far better to help keep farmers in business as viable producers, especially young farmers, than have them leave agriculture because of the inability to obtain sufficient credit. I hope this explanation has answered your question about my amendment, and that it will be useful to you. I support H.R. 11501 as being a needed shot in the arm for our overall farm credit situation, and hope you are successful in clarifying this matter before the Senate.... “MR. EAGLETON. Madam President, it is evident to me, therefore, that both Houses of Congress are in support of this concept that interest should not be charged on interest when loans are deferred. Farmers in dire need of relief from adverse financial pressure should not be burdened by such charges. I urge my colleagues to accept my amendment. “I reserve the remainder of my time. “MR. ALLEN. Madam President. I yield myself such time as I may require. “The amendment which the distinguished Senator from Missouri (MR. EAGLETON) had planned to offer provided that the Secretary shall defer the payment of principal and interest on a loan in a disaster area, whether it be a disaster loan or other type of farmers home loan, for a period of 3 years, which seemed to be an amendment that could not be accepted because it required the Secretary to defer payments on a loan for a period of 3 years and obviously that is not a very sound provision because too many people would ask that their loans be deferred for a period of 3 years and since there would be no interest on interest a large number of borrowers would do that. “The distinguished Senator from Missouri (MR. EAGLETON) has modified his amendment and has given the Secretary the right to so defer loans and in case of the deferral not to charge interest on interest for a period up to 3 years. So this would allow the Secretary in emergency or distressed situations regarding borrowers to defer payments and to charge only the interest on the principal amount and not to charge interest on interest. “With this change, making it discretionary or optional on the part of the Secretary, the committee will accept the amendment.” Id. at 56649-50 (Remarks of Senator Eagle-ton and Senator Allen) (emphasis added). A couple of important points can be drawn from this expanded discussion of § 1981a. First, this portion of the legislative history dealt with the Secretary’s discretion with respect to charging interest on interest; it does not support the government’s contention that § 1981a was intended to be permissive. Quite to the contrary, the excerpt shows that the legislators thought they were creating new authority designed to help the farmers through troubled times. This is inconsistent with the government’s position that regulations promulgated pursuant to already existing authority are sufficient to implement § 1981a. Thus, through § 1981a Congress is directing the FmHA to use this new deferral authority and go out and help those farmers who are unable to continue payments (without lowering their standard of living) due to circumstances beyond their control. Second, it is noted that the discretion referred to by Senator Allen goes to the length of the deferral period, not to the fact of the deferral. Third, Senator Eagleton’s opening remarks indicate that Congress was dissatisfied with FmHA’s position on deferral and, as a result of that dissatisfaction, § 1981a was born. This strongly implies that Congress intended § 1981a to be implemented by regulations of its own which would closely parallel its own provisions. Thus, the use of “other” regulations is inconsistent with the mandates of the statute. In summary, the above discussion of the legislative history and the various tools of statutory construction strongly supports the plaintiffs’ position that § 1981a imposes a mandatory duty on the FmHA to implement a deferral program similar to that used pursuant to § 1475 of the Rural Housing Act, and that the present practices and policies of the FmHA are inconsistent with that statutory duty. Before concluding the discussion of this issue, however, one final statutory tool of construction needs to be mentioned. 3. Agency “Expertise” The FmHA, through its practices and through the briefs filed in this case, has taken the position that the proper interpretation of § 1981a is that the section is permissive and that already existing regulations appropriately implement its provisions. The plaintiffs, of course, take the contrary position. It is a rule of statutory constructions that “Courts must give great weight to the statutory constructions developed by administrative bodies with an expertise in the area of law.” Oilfield Safety and Machine Specialties, Inc. v. Harman Unlimited, 625 F.2d 1248, 1257 (5th Cir. 1980). Counteracting this rule in this case, however, is the fact that the agency had previously promulgated regulations pursuant to 42 U.S.C. § 1475— an act containing comparable language to that in § 1981a — inconsistent with its present position on § 1981a: “In Skidmore v. Swift & Co., 323 U.S. 134, 140 ... (1944), the Supreme Court discussed the value of agency pronouncements which did not have the dignity of official regulations of the agency. There the Court states: We consider the rulings, interpretations, and opinions of the Administrator under this Act, while not controlling upon the courts by reasons of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance. The weight of such judgments in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade if lacking power to control.” Thomas v. County Office Committee of Cameron County, 327 F.Supp. 1244, 1253 (S.D.Tex.1971) (emphasis added). Since the regulations promulgated pursuant to § 1475 differ materially from the regulations used by the agency pursuant to § 1981a, the agency’s “authoritative interpretation” of the section is cast into doubt. Thus, the expertise argument carries little weight in persuading this Court to follow the FmHA’s rule of practice in interpreting the nature of the duties imposed by § 1981a. 4. Conclusion It is the opinion of this Court, based on the foregoing discussion of the plain language of § 1981a and the legislative history behind its enactment (as well as the use of standard rules of statutory construction), that Congress intended § 1981a to impose a mandatory duty upon the FmHA to implement a deferral program similar in nature to that already in use under the Rural Housing Act, 42 U.S.C. § 1475. See 7 C.F.R. § 1951.17(b)(2), Appendix C. It is also the opinion of this Court that the FmHA did not comply with this Congressional mandate when it chose to implement § 1981a through the use of already existing regulations on deferral. See C.F.R. §§ 1951.33, .40, Appendix A and Appendix B. Accordingly, the FmHA is hereby enjoined from failing to implement § 1981a through regulations consistent with those in use pursuant to § 1475. The FmHA is further enjoined from foreclosing on farm program mortgages in Georgia created pursuant to 7 U.S.C. § 1921 et seq. until such time as those regulations are in full force and effect. B. Must the FmHA Provide Borrowers with Personal Notice of the Substantive Provisions of § 1981a? The plaintiffs want this Court to issue an Order requiring the FmHA to give borrowers under the farmers loan program personal notice of their right to apply for deferral relief under § 1981a, and an opportunity to be heard upon such an application. The government asserts that no notice is required by the section (since it is permissive in nature); and that even if notice is required, publication in the Code of Federal Regulations of the availability of deferral relief and the proposed notice regulations for § 1981a provide sufficient notice of that section’s provisions. 1. Notice is Required Due process considerations aside, it is the opinion of this Court that the plain meaning of the statute coupled with the effect of the Williams v. Butz, (No. 176-153, S.D.Ga., October 7,1977) consent order, mandates a finding that personal notice of the § 1981a deferral mechanism is required. The language of the statute expressly provides that the deferral mechanism is triggered “at the request of the borrower.” Further, no deferral relief will be forthcoming absent “a showing by the borrower that due to circumstances beyond the borrower’s control, the borrower is temporarily unable to continue making payments of such principal and interest when due without unduly impairing the standard of living of the borrower.” 7 U.S.C. § 1981a (emphasis added). Logically, the borrower is unable to request the deferral relief and show his eligibility to receive the same unless he has notice of the contents of § 1981a and an opportunity to be heard. As mentioned, Williams v. Butz is also relevant in deciding whether personal notice of § 1981a is required. In that case, the plaintiffs brought suit for declaratory and injunctive relief to declare unconstitutional all nonjudicial foreclosures of mortgages financed under the Rural Housing Act, and to enjoin all foreclosures where the mortgagee has not had personal notice of the availability of moratorium relief under 42 U.S.C. § 1475 and an opportunity to be heard. Pursuant to the consent decree entered therein, the parties — the defendants are the same in the case at bar— agreed that under the language of § 1475, FmHA borrowers had the right to personal notice of the availability of the moratorium relief. This notice was to consist of “a letter at loan closing explaining moratorium and interest credit and strongly recommending that the borrowers make an appointment with the county supervisor to discuss these matters so that they will understand these provisions,” Williams v. Butz, supra at 4, and the inclusion of the following paragraph in a letter sent to borrowers guilty of missed payments or other breaches of the loan covenants: “If you are behind because of something beyond your control, like having less income or unexpected bills, we may be able to help. You may qualify for “Moratorium Relief” which would make it possible for you to miss some payments and still keep your home. Or you may qualify for “Interest Credit” which should make your payments smaller for a while. YOU CANNOT GET “MORATORIUM RELIEF” OR “INTEREST CREDIT” UNLESS YOU APPLY FOR IT. Please contact me immediately and let us see if you qualify or if there is something else we can do to help you keep your home.” Id. The FmHA also agreed to inform applicants during pre-loan approval interviews of the availability of moratorium relief through county office personnel. Id. The Williams v. Butz consent order is important to a resolution of this case for two reasons. First and foremost, the FmHA agreed that the language of § 1475, found by this Court to be comparable to the provisions of § 1981a, required the agency to give FmHA borrowers personal notice of the loan servicing mechanism contained therein. This is contrary to the present position of the FmHA that the language does not mandate giving personal notice. Second, since legislators are “presumed to act with knowledge of existing law on the subject,” Finberg v. Sullivan, 461 F.Supp. 253, 258 (E.D.Pa.1978), vacated on other grounds, 634 F.2d 50 (3d Cir. 1980), and since Congress knew that in enacting § 1981a it was using “comparable language” to that found in the Rural Housing Act, H.R.Rep.No.986,95th Cong., 2d Sess. at 27 (1978), it can reasonably be concluded that Congress intended § 1981a also to require that the FmHA provide its farmer program borrowers with personal notice of the provisions of § 1981a. 2. What Notice is Required The FmHA has, independent of this case, proposed two sets of regulations dealing with personal notice to the borrower. One set would “provide a guide letter to be used as a means of notifying delinquent and potential problem case borrowers at the beginning of the production season of conditions that must be met for them to continue receiving FmHA assistance.” 46 Fed.Reg. 49908 (1981). The letter would inform borrowers that servicing options such as deferral are available to assist delinquent borrowers. The second set of proposed regulations would “develop a document that explains borrower responsibilities and alternatives available if the borrower is unable to pay in accordance with security instruments and other agreements with FmHA.” 46 Fed.Reg. 54751, 54752 (1981). This document “will be given to all applicants/borrowers during the process of loan making.” Id. at 54751. The plaintiffs argue that these proposed regulations are deficient for three reasons. First, they contend that the borrower is receiving notice either too early or too late to provide the borrower with timely information as to the availability of deferral as a loan servicing device. Second, the plaintiffs contend that the content of the notice itself is insufficient. Finally, they contend that the placement of the notice on the respective documents is flawed in that such a placement will not properly bring this notice to the borrower’s attention. It is the opinion of this Court that whereas the timing of the giving of notice is sufficient to comply with the mandates of § 1981a, the wording and placement of the notice on the respective documents is fatally deficient. With respect to timing, the receipt of proper notice of the opportunity to apply for deferral during the process of loan making and at the beginning of the production season (the latter for delinquent or problem borrowers) is sufficient to inform FmHA borrowers of their deferral rights. In addition, however, while performing their “management assistance” obligation, the FmHA should also notify borrowers of their deferral rights when evaluating and reviewing the farmer’s past production year — if it should appear that there is a potential problem. With respect to the content and placement of the notice provision, it is the opinion of this Court that the proposed documents are fatally flawed. An examination of these proposed notices of deferral rights (attached to the proposed regulations) reveals the deficiencies contained therein: “Borrowers who are in default according to the terms of their note(s), mortgage(s) or security agreements) may have their accounts liquidated; however, borrowers may inquire about the following service options: ****** 4) Defer: Postpone the payment of part of a loan installment.” This paragraph has three shortcomings. First, contrary to the language of § 1981a, the borrower is not informed that he can defer both the principal and the interest payments on the loan; thus, deferral can be had for more than “part of a loan installment.” Second, the sentence does not inform the borrower that he must apply for the deferral and that he must show that due to circumstances beyond his control he cannot continue making payments without unduly impairing his standard of living. A notice provision fashioned after that used pursuant to the Rural Housing loan program provision on moratoriums, 42 U.S.C. § 1475, would satisfy this deficiency. See 7 C.F.R. § 1951.17(l)(ii)(B), Appendix C. Third, the proposed documents bury the notification of loan servicing devices behind rather threatening language concerning past deficiencies and borrower responsibilities. Thus, while it is unnecessary to create a separate letter solely for the purpose of notifying borrowers of the § 1981a deferral mechanism, to assure effective notice, the FmHA should use separate headings within these documents so as to clearly designate the appropriate paragraphs discussing the loan servicing devices or the borrower’s rights. In that way the borrower will have notice of the provisions of § 1981a and will not be intimidated into declining to take advantage of that section’s benefits. 3. Conclusion It is the conclusion of this Court that § 1981a imposes a duty on the FmHA to provide borrowers with personal notice of its provisions. This notice will be given through a properly drafted paragraph, fashioned after that in use by the FmHA in implementing the moratorium provision of the Rural Housing Act, placed under a separate heading in a document to be given or sent to the borrower during the process of the loan making, and in a document to be given or sent to delinquent or problem borrowers at the beginning of the production season. Accordingly, the FmHA is enjoined from failing to implement the above notice requirement through appropriately drafted regulations. Further, the FmHA is enjoined from foreclosing on any farmer program loans in Georgia created under 7 U.S.C. §§ 1921 et seq. until the beneficiary of that loan has received the appropriate notice. C. Consolidated Rural Housing and Farm Program Loans The plaintiffs contend that the defendant improperly services consolidated rural housing and farm program loans under regulations issued pursuant to the farm loan program as opposed to regulations issued pursuant to the rural housing loan program. Thus, borrowers with these consolidated loans lose their rights accorded under the Williams v. Butz consent order. The plaintiffs cite the actions taken on the Inez and Remer Curry loans as an example of this improper action. The Currys, it seems, were recipients of both a Farm Program loan and a Rural Housing loan consolidated into one loan. Nevertheless, contrary to the directives of the Williams v. Butz consent order, they were not personally informed of nor given an opportunity to apply for de