A provision of the Nebraska Farm Mediation Act (the “Act”) merits particular attention for all bankers. Neb.Rev.Stat. § 2-4807 of the Act (§ 7, LB 664, 1988) states as follows:
(1) At least thirty days prior to the initiation of a proceeding on an agricultural debt in excess of forty thousand dollars, a creditor, except as provided in subsection (2) or (3) of this section, shall provide written notice directly to the borrower of the availability of mediation and the address and telephone number of the farm mediation service in the service area of the borrower.
(2) Subsection (1) of this section shall not apply to creditors subject to the federal Agricultural Credit Act of 1987 if such act and the rules and regulations adopted and promulgated thereunder require otherwise.
(3) Subsection (1) of this section shall not apply if a court of competent jurisdiction determines that the time delay required would cause the creditor to suffer irreparable harm because there are reasonable grounds to believe the borrower may dissipate or divert collateral.
Subsection (1) requires creditors intending to proceed on an agricultural debt over $40,000 to provide written notice directly to the borrower that mediation services are available. A “borrower” is defined in the Act as “an individual, corporation, trust, cooperative, joint venture, or other entity entitled to contact who is engaged in farming or ranching, who derives more than fifty percent of his or her gross income from farming or ranching, and who holds an agricultural loan.” “Farm mediation service” is also defined in the Act as “an entity which the administrator (the Nebraska Department of Agriculture) contracts to conduct mediation and related services.”
The Nebraska Department of Agriculture has contracted with the Nebraska Farm Mediation Service for the purposes of scheduling voluntary mediation meetings and arranging financial consulting services for debtors. The financial consulting services provided to debtors is coordinated by contract with the University of Nebraska Extension Service.
Individuals performing the actual mediation services contract individually with the Department of Agriculture. The contract with the Nebraska Farm Mediation Service requires the creditor to refer the borrower to the address set forth below in order to comply with the § 2-4807 notice requirements:
NEBRASKA FARM MEDIATION SERVICE
P.O. Box 94947
Lincoln, Nebraska 68509
1-800-446-4071
Note that there are two exceptions to the provisions which prescribe a required notice. Subsection (2) refers to Farm Credit system creditors who, by federal law, are required to mediate in those states which have a voluntary mediation program. Subsection (3) refers to an ex parte court proceeding that may be utilized by a creditor with a set of facts indicating that a time delay granted by the notice would cause irreparable harm to the creditor. Reliance on this latter exception should be given only after the review and advice of bank counsel.