CHAPTER 50—AGRICULTURAL CREDIT

        

SUBCHAPTER I—REAL ESTATE LOANS

        

SUBCHAPTER II—OPERATING LOANS

        

SUBCHAPTER III—EMERGENCY LOANS

        

SUBCHAPTER IV—ADMINISTRATIVE PROVISIONS

        

Chapter Referred to in Other Sections

This chapter is referred to in sections 940, 2279, 2279a of this title; title 12 sections 2219d, 2279aa; title 15 section 636; title 16 sections 590h, 3811, 3821; title 21 section 889; title 38 section 3711; title 40 App. sections 204, 214; title 42 sections 8813, 9817.

§1921. Congressional findings

The Congress finds that the statutory authority of the Secretary of Agriculture, hereinafter referred to in this chapter as the "Secretary," for making and insuring loans to farmers and ranchers should be revised and consolidated to provide for more effective credit services to farmers.

(Pub. L. 87 128, title III, §301(b), Aug. 8, 1961, 75 Stat. 307.)

References in Text

This chapter, referred to in text, was in the original "this title", meaning title III of Pub. L. 87 128, Aug. 8, 1961, 75 Stat. 307, as amended, known as the Consolidated Farm and Rural Development Act. For complete classification of title III to the Code, see Short Title note set out below and Tables.

Codification

Section is comprised of subsec. (b) of section 301 of Pub. L. 87 128. Subsec. (a) of such section 301 is set out as a Short Title note below.

Effective Date

Former section 300.1 of Title 6, Code of Federal Regulations, promulgated on Oct. 15, 1961, by the Administrator of the Farmers Home Administration, published in 26 F.R. 10031, provided: "The Consolidated Farmers Home Administration Act of 1961 (7 U.S.C. 1921) [this chapter], is hereby made effective on October 15, 1961, except (a) as to its authorizations to make and sell insured loans with 4½ percent yield to the lender and a three-year repurchase agreement which was made effective by regulations issued on September 13, 1961 (26 F.R. 9307), pursuant to assignment of functions contained in 26 F.R. 7888, and (b) that the provisions of Title IV of the Bankhead-Jones Farm Tenant Act which requires mineral reservations in lands disposed of under Title III of that Act [sections 1010 to 1012 and 1013a of this title] shall not become effective until December 7, 1961." See section 341(a) of Pub. L. 87 128, set out as a note under this section.

Short Title of 1994 Amendment

Pub. L. 103 248, §1, May 11, 1994, 108 Stat. 619, provided that: "This Act [amending section 1981 of this title] may be cited as the 'Farmers Home Administration Improvement Act of 1994'."

Short Title of 1992 Amendment

Pub. L. 102 554, §1(a), Oct. 28, 1992, 106 Stat. 4142, provided that: "This Act [enacting sections 1935, 1936, 1948, 1949, and 2008d of this title, amending sections 1925, 1926c, 1929, 1932, 1981d, 1982, 1983, 1983a, 1985, 1989, 1991, 1994, 2003, and 5102 of this title, and enacting provisions set out as notes under sections 1929 and 1989 of this title] may be cited as the 'Agricultural Credit Improvement Act of 1992'."

Short Title of 1990 Amendment

Pub. L. 101 624, title XXIII, §2301, Nov. 28, 1990, 104 Stat. 3979, provided that: "This title [see Tables for classification] may be cited as the 'Rural Economic Development Act of 1990'."

Short Title of 1986 Amendment

Pub. L. 99 409, §1, Aug. 28, 1986, 100 Stat. 923, provided: "That this Act [amending section 1932 of this title and enacting provisions set out as a note under section 1932 of this title] may be cited as the 'Rural Industrial Assistance Act of 1986'."

Short Title of 1984 Amendment

Pub. L. 98 258, title VI, §601, Apr. 10, 1984, 98 Stat. 138, provided that: "This title [enacting section 1981b of this title, amending sections 1943, 1946, 1961, 1964, 1986, and 1994 of this title, enacting provisions set out as notes under sections 1961 and 1981 of this title, and amending provisions set out as a note preceding section 1961 of this title] may be cited as the 'Emergency Agricultural Credit Act of 1984'."

Short Title of 1978 Amendment

Pub. L. 95 334, §1, Aug. 4, 1978, 92 Stat. 420, provided: "That this Act [enacting sections 1929b, 1934, 1981a, 1994, and 1995 of this title and sections 2201 to 2205 of Title 16, Conservation, amending sections 1309, 1922, 1924 to 1927, 1929, 1929a, 1932, 1941 to 1943, 1946, 1961, 1964, 1968, 1981, 1983, 1991, and 2908 of this title, repealing section 1965 of this title, and enacting provisions set out as notes under this section and sections 1309, 1926, preceding 1961, and 1964 of this title and section 2201 of Title 16] may be cited as the 'Agricultural Credit Act of 1978'."

Short Title of 1972 Amendment

Section 1 of Pub. L. 92 419 provided: "That this Act [enacting sections 1010a, 1929a, 1931 to 1933, 1947, 1992, 2204a, 2212a, 2651 to 2654, and 2661 to 2668 of this title, amending sections 1006a, 1011, 1924 to 1927, 1929, 1941 to 1943, 1981, 1983, 1985, 1991, 2201, and 2204 of this title, section 5315 of Title 5, Government Organization and Employees, sections 590g, 590h, 590o, and 1001 to 1005 of Title 16, Conservation, and section 3122 of Title 42, The Public Health and Welfare, and amending provisions set out as a note under this section] may be cited as the 'Rural Development Act of 1972'."

Short Title

Section 301(a) of title III of Pub. L. 87 128, as amended by Pub. L. 92 419, title I, §101, Aug. 30, 1972, 86 Stat. 657, provided that: "This title [enacting this section and sections 1013a, 1922 to 1933, 1941 to 1947, 1961 to 1968, 1969, 1970, 1971, and 1981 to 1993 of this title, amending sections 1924 to 1927, 1929, 1941 to 1943, 1981, 1983, 1985, and 1991 of this title, repealing sections 1001 to 1005d, 1006c to 1006e, 1007, 1008, 1009, 1014 to 1025, 1027 to 1029 of this title, sections 1148a 1 to 1148a 3 of Title 12, Banks and Banking, and sections 590r to 590x 4 of Title 16, Conservation, and enacting provisions set out as a note under this section] may be cited as the 'Consolidated Farm and Rural Development Act'."

Use of Qualified Personnel by the Department of Agriculture

Pub. L. 95 334, title I, §126, Aug. 4, 1978, 92 Stat. 429, provided that: "It is the sense of Congress that, in carrying out the provisions of the Consolidated Farm and Rural Development Act [see Short Title note set out above], 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."

References in Other Laws to Bankhead-Jones Farm Tenant Act or Water Facilities Act; Repeals; Savings and Separability Provisions

Section 341 of Pub. L. 87 128 provided that:

"(a) Reference to any provisions of the Bankhead-Jones Farm Tenant Act [see section 1000 of this title] or the Act of August 28, 1937 (50 Stat. 869), as amended, superseded by any provision of this title [this chapter] shall be construed as referring to the appropriate provision of this title [this chapter]. Titles I, II, and IV of the Bankhead-Jones Farm Tenant Act, as amended, and the Act of August 28, 1937 (50 Stat. 869), as amended, the Act of April 6, 1949 (63 Stat. 43), as amended, and the Act of August 31, 1954 (68 Stat. 999), as amended, are hereby repealed effective one hundred and twenty days after enactment hereof [Aug. 8, 1961], or such earlier date as the provisions of this title [this chapter] are made effective by the Secretary's regulations except that the repeal of section 2(c) of the Act of April 6, 1949, shall not be effective prior to January 1, 1962. The foregoing provisions shall not have the effect of repealing the amendments to section 24, chapter 6 of the Federal Reserve Act [section 371 of Title 12], as amended, section 5200 of the Revised Statutes [section 84 of Title 12], section 35 of chapter III of the Act approved June 19, 1934 (D.C. Code, title 35, section 535), enacted by section 15 of the Bankhead-Jones Farm Tenant Act, as amended, and by section 10(f) of the Act of August 28, 1937 (50 Stat. 869), as amended.

"(b) The repeal of any provision of law by this title [this chapter] shall not—

"(1) affect the validity of any action taken or obligation entered into pursuant to the authority of any of said Acts, or

"(2) prejudice the application of any person with respect to receiving assistance under the provisions of this title [this chapter], solely because such person is obligated to the Secretary under authorization contained in any such repealed provision.

"(c) If any provision of this title [this chapter] or the application thereof to any person or circumstances is held invalid, the remainder of the title [this chapter] and the application of such provision to other persons or circumstances shall not be affected thereby."

SUBCHAPTER I—REAL ESTATE LOANS

Subchapter Referred to in Other Sections

This subchapter is referred to in sections 1961, 1963, 1964, 1981b, 1983, 1983a, 1985, 1988, 1994, 2000, 2003 of this title.

§1922. Persons eligible for loans

(a) The Secretary is authorized to make and insure loans under this subchapter to farmers and ranchers in the United States, and to farm cooperatives and private domestic corporations, partnerships, and joint operations that are controlled by farmers and ranchers and engaged primarily and directly in farming or ranching in the United States, subject to the conditions specified in this section. To be eligible for such loans, applicants who are individuals, or, in the case of cooperatives, corporations, partnerships, and joint operations, individuals holding a majority interest in such entity, must (1) be citizens of the United States, (2) have either training or farming experience that the Secretary determines is sufficient to assure reasonable prospects of success in the proposed farming operations, (3) be or will become owner-operators of not larger than family farms (or in the case of cooperatives, corporations, partnerships, and joint operations in which a majority interest is held by individuals who are related by blood or marriage, as defined by the Secretary, such individuals must be or will become either owners or operators of not larger than a family farm and at least one such individual must be or will become an operator of not larger than a family farm or, in the case of holders of the entire interest who are related by blood or marriage and all of whom are or will become farm operators, the ownership interest of each such holder separately constitutes not larger than a family farm, even if their interests collectively constitute larger than a family farm, as defined by the Secretary), and (4) be unable to obtain sufficient credit elsewhere to finance their actual needs at reasonable rates and terms, taking into consideration prevailing private and cooperative rates and terms in the community in or near which the applicant resides for loans for similar purposes and periods of time. In addition to the foregoing requirements of this section, in the case of corporations, partnerships, and joint operations, the family farm requirement of clause (3) of the preceding sentence shall apply as well to the farm or farms in which the entity has an ownership and operator interest and the requirement of clause (4) of the preceding sentence shall apply as well to the entity in the case of cooperatives, corporations, partnerships, and joint operations.

(b) The Secretary may not restrict eligibility for loans made or insured under this subchapter for purposes set forth in section 1923 of this title solely to borrowers of loans that are outstanding on December 23, 1985.

(Pub. L. 87 128, title III, §302, Aug. 8, 1961, 75 Stat. 307; Pub. L. 91 620, §2, Dec. 31, 1970, 84 Stat. 1862; Pub. L. 95 334, title I, §101, Aug. 4, 1978, 92 Stat. 420; Pub. L. 97 98, title XVI, §1601(a), Dec. 22, 1981, 95 Stat. 1346; Pub. L. 99 198, title XIII, §§1301(a), 1302(a), 1303, Dec. 23, 1985, 99 Stat. 1518, 1519.)

Amendments

1985—Subsec. (a). Pub. L. 99 198, §§1301(a), 1302(a)(1), designated existing provisions as subsec. (a) and substituted—

(1) ", partnerships, and joint operations" for "and partnerships" wherever appearing after "corporations";

(2) ", partnerships, and joint operations" for ", and partnerships" wherever appearing after "corporations"; and

(3) "individuals" for "members, stockholders, or partners, as applicable," wherever appearing.

Pub. L. 99 198, §1303, in cl. (3) parenthetical, inserted provision treating blood or marriage related owner-operators of the entire farm interest as separate interest holders of not larger than family farms though collective ownership constitutes a larger than a family farm.

Subsec. (b). Pub. L. 99 198, §1302(a)(2), added subsec. (b).

1981—Pub. L. 97 98 substituted "corporations and partnerships, the family farm" for "cooperatives, corporations, and partnerships, the family farm", and inserted "in the case of cooperatives, corporations, and partnerships" at end.

1978—Pub. L. 95 334 substituted provisions setting forth eligibility criteria for loans to farmers and ranchers in the United States, and to farm cooperatives and private domestic corporations and partnerships controlled by farmers and ranchers and engaged primarily and directly in farming or ranching in the United States, for provisions setting forth eligibility criteria for loans to farmers and ranchers in the United States, Puerto Rico, and the Virgin Islands.

1970—Pub. L. 91 620 provided that with respect to veterans as defined in section 1983(e) of this title, a farm background shall not be required as a condition precedent to obtaining any loan.

Effective Date of 1981 Amendment

Amendment by Pub. L. 97 98 effective Dec. 22, 1981, see section 1801 of Pub. L. 97 98, set out as an Effective Date note under section 4301 of this title.

Section Referred to in Other Sections

This section is referred to in sections 1924, 1925, 1934, 1983, 2006a of this title.

§1923. Purposes of loans

(a) Preferences

Loans may be made or insured under this subchapter 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. In making or insuring loans for farm purchase, the Secretary shall give preference to persons who have dependent families and, wherever practicable, to persons who are able to make initial downpayments, or who are owners of livestock and farm implements necessary successfully to carry on farming operations.

(b) Definitions

For purposes of this subchapter—

(1) the term "improving farms" includes, but is not limited to, the acquisition, installation, and modification of any qualified nonfossil energy system located on a family farm; and

(2) the term "qualified non-fossil energy system" means any system that utilizes technologies to generate fuel, energy, or energy intensive products from products other than fossil fuels as included in the Federal Non-Nuclear¹ Energy Research and Development Act of 1974, as amended [42 U.S.C. 5901 et seq.], which meets such standards as may be prescribed by the Secretary, taking into consideration appropriate and available standards prescribed by the Secretary of Housing and Urban Development.

(Pub. L. 87 128, title III, §303, Aug. 8, 1961, 75 Stat. 307; Pub. L. 87 703, title IV, §401(1), Sept. 27, 1962, 76 Stat. 631; Pub. L. 90 488, §1, Aug. 15, 1968, 82 Stat. 770; Pub. L. 95 113, title XIV, §1448(a), Sept. 29, 1977, 91 Stat. 1011; Pub. L. 96 438, §1(1), Oct. 13, 1980, 94 Stat. 1871; Pub. L. 97 98, title XVI, §1602, Dec. 22, 1981, 95 Stat. 1346.)

References in Text

The Federal Nonnuclear Research and Development Act of 1974, as amended, referred to in subsec. (b)(2), is Pub. L. 93 577, Dec. 31, 1974, 88 Stat. 1878, as amended, which is classified generally to chapter 74 (§5901 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 5901 of Title 42 and Tables.

Amendments

1981—Subsec. (a). Pub. L. 97 98 substituted "who have dependent families" for "who are married or have dependent families".

1980—Subsec. (b)(1). Pub. L. 96 438 substituted "the acquisition, installation, and modification" for "the acquisition and installation" and struck out "in any residential structure" after "energy system".

1977—Pub. L. 95 113 designated existing provisions as subsec. (a) and added subsec. (b).

1968—Pub. L. 90 488 designated existing provisions as cls. (1), (2), (4), (5), and added cl. (3).

1962—Pub. L. 87 703 authorized loans to be made or insured for recreational uses and facilities.

Effective Date of 1981 Amendment

Amendment by Pub. L. 97 98 effective Dec. 22, 1981, see section 1801 of Pub. L. 97 98, set out as an Effective Date note under section 4301 of this title.

Effective Date of 1977 Amendment

Amendment by Pub. L. 95 113 effective Oct. 1, 1977, see section 1901 of Pub. L. 95 113, set out as a note under section 1307 of this title.

Transfer of Functions

Powers, duties, and assets of agencies, offices, and other entities within Department of Agriculture relating to rural development functions transferred to Rural Development Administration by section 2302(b) of Pub. L. 101 624.

Section Referred to in Other Sections

This section is referred to in sections 1922, 1925, 1927, 1934, 1985, 1991, 2008f of this title.

¹So in original. Probably should be "Nonnuclear".

§1924. Additional purposes of loans

(a) Soil and water conservation and protection

(1) Loans may also be made or insured under this subchapter for soil and water conservation and protection. Such loans may be made to farm owners or tenants who are eligible borrowers under this subchapter for—

(A) the installation of conservation structures, including terraces, sod waterways, permanently vegetated stream borders and filter strips, windbreaks (tree or grass), shelterbelts, and living snow fences;

(B) the establishment of forest cover for sustained yield timber management, erosion control, or shelterbelt purposes;

(C) the establishment or improvement of permanent pasture;

(D) the conversion to and maintenance of sustainable agricultural production systems, as described by Department technical guides and handbooks;

(E) the payment of costs of complying with section 3812 of title 16; and

(F) other purposes consistent with plans for soil and water conservation, integrated farm management, water quality protection and enhancement, and wildlife habitat improvement.

(2) In making or insuring loans under this subsection, the Secretary shall give priority to producers who use such loans to build conservation structures or establish conservation practices to comply with section 3812 of title 16.

(3) The Secretary shall not make or insure a loan under this section that exceeds the lesser of—

(A) the value of the farm or other security for such loan; or

(B) $50,000.

(b) Rural enterprise financing

Loans may also be made or insured under this subchapter to residents of rural areas without regard to the requirements of clauses (2) and (3) of section 1922 of this title to acquire or establish in rural areas small business enterprises to provide such residents with essential income.

(c) Waste pollution abatement facilities financing

Loans may also be made or insured under this subchapter to any farm owners or tenants without regard to the requirements of clauses (1), (2), and (3) of section 1922 of this title for the purposes of meeting Federal, State, or local requirements for agricultural, animal, or poultry waste pollution abatement and control facilities, including the construction, modification, or relocation of farm or other structures necessary to comply with such pollution abatement requirements.

(Pub. L. 87 128, title III, §304, Aug. 8, 1961, 75 Stat. 308; Pub. L. 90 488, §2, Aug. 15, 1968, 82 Stat. 770; Pub. L. 92 419, title I, §102, Aug. 30, 1972, 86 Stat. 657; Pub. L. 95 334, title I, §102, Aug. 4, 1978, 92 Stat. 421; Pub. L. 101 624, title XVIII, §1802(a), Nov. 28, 1990, 104 Stat. 3817; Pub. L. 102 237, title V, §501(a), Dec. 13, 1991, 105 Stat. 1865.)

Amendments

1991—Subsecs. (a), (d). Pub. L. 102 237 redesignated subsec. (d) as (a) and moved it to appear before subsec. (b) and struck out former subsec. (a) which read as follows: "Loans may also be made or insured under this subchapter to any farmowners or tenants without regard to the requirements of section 1922(1), (2), and (3) of this title for the purposes only of land and water development, use and conservation, not including recreational uses and facilities, and without regard to the requirements of section 1922(2) and (3) of this title, to farmowners or tenants to finance outdoor recreational enterprises or to convert to recreational uses their farming or ranching operations, including those heretofore financed under this chapter."

1990—Subsec. (d). Pub. L. 101 624 added subsec. (d).

1978—Subsec. (a). Pub. L. 95 334, §102(1), struck out "individual" after "title, to".

Subsec. (c). Pub. L. 95 334, §102(2), added subsec. (c).

1972—Pub. L. 92 419 designated existing provisions as subsec. (a) and struck out item (a) and (b) designations appearing before "to any farmowner" and "without regard to", respectively, and added subsec. (b).

1968—Pub. L. 90 488 designated existing provisions as cl. (a), excluded recreational uses and facilities, and added cl. (b).

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(3) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Transfer of Functions

Powers, duties, and assets of agencies, offices, and other entities within Department of Agriculture relating to rural development functions transferred to Rural Development Administration by section 2302(b) of Pub. L. 101 624.

Section Referred to in Other Sections

This section is referred to in sections 1925, 1926, 1927, 1929a, 1932, 1934, 1991, 1992, 2008 of this title.

§1925. Limitation on amount of loan

The Secretary shall make or insure no loan under sections 1922, 1923, 1924, 1934, and 1935 of this title that would cause the unpaid indebtedness under such sections of any one borrower to exceed the smaller of (1) the value of the farm or other security, or (2) in the case of a loan other than a loan guaranteed by the Secretary, $200,000, or, in the case of a loan guaranteed by the Secretary, $300,000. In determining the value of the farm, the Secretary shall consider appraisals made by competent appraisers under rules established by the Secretary.

(Pub. L. 87 128, title III, §305, Aug. 8, 1961, 75 Stat. 308; Pub. L. 91 620, §1, Dec. 31, 1970, 84 Stat. 1862; Pub. L. 92 419, title I, §103, Aug. 30, 1972, 86 Stat. 658; Pub. L. 91 524, title VIII, §807, as added Pub. L. 93 86, §1(27)(B), Aug. 10, 1973, 87 Stat. 237; Pub. L. 95 334, title I, §103, Aug. 4, 1978, 92 Stat. 421; Pub. L. 102 554, §3, Oct. 28, 1992, 106 Stat. 4142.)

Amendments

1992—Pub. L. 102 554 inserted reference to section 1935 of this title.

1978—Pub. L. 95 334 substituted provisions setting forth requirements for loans under sections 1922, 1923, 1924, and 1934 of this title for provisions setting forth requirements for loans under sections 1922, 1923, and 1924 of this title.

1973—Pub. L. 91 524, §807, as added by Pub. L. 93 86, substituted "$225,000" for "$100,000" in cl. (a), added cl. (b), and redesignated former cl. (b) as (c).

1972—Pub. L. 92 419 struck out "normal" before "value" in first and second sentences and before "market value" in last sentence.

1970—Pub. L. 91 620 substituted "$100,000" for "$60,000".

Section Referred to in Other Sections

This section is referred to in section 1985 of this title.

§1926. Water and waste facility loans and grants

(a) Criteria; definitions; limitation on allowable uses of Federal funds; inclusion of interest or other income in gross income on sale of insured loan

(1) The Secretary is also authorized to make or insure loans to associations, including corporations not operated for profit, Indian tribes on Federal and State reservations and other federally recognized Indian tribes, and public and quasi-public agencies to provide for the application or establishment of soil conservation practices, shifts in land use, the conservation, development, use, and control of water, and the installation or improvement of drainage or waste disposal facilities, recreational developments, and essential community facilities including necessary related equipment, all primarily serving farmers, ranchers, farm tenants, farm laborers, rural businesses, and other rural residents, and to furnish financial assistance or other aid in planning projects for such purposes. The Secretary may also make loans to any borrower to whom a loan has been made under the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.), for the conservation, development, use, and control of water, and the installation of drainage or waste disposal facilities, primarily serving farmers, ranchers, farm tenants, farm laborers, rural businesses, and other rural residents. When any loan made for a purpose specified in this paragraph is sold out of the Agricultural Credit Insurance Fund as an insured loan, the interest or other income thereon paid to an insured holder shall be included in gross income for purposes of chapter 1 of title 26. With respect to loans of less than $500,000 made or insured under this paragraph that are evidenced by notes and mortgages, as distinguished from bond issues, borrowers shall not be required to appoint bond counsel to review the legal validity of the loan whenever the Secretary has available legal counsel to perform such review.

(2) The Secretary is authorized to make grants aggregating not to exceed $500,000,000 in any fiscal year to such associations to finance specific projects for works for the development, storage, treatment, purification, or distribution of water or the collection, treatment, or disposal of waste in rural areas. The amount of any grant made under the authority of this paragraph shall not exceed 75 per centum of the development cost of the project to serve the area which the association determines can be feasibly served by the facility and to adequately serve the reasonably foreseeable growth needs of the area. The Secretary shall fix the grant rate for each project in conformity with regulations issued by the Secretary that shall provide for a graduated scale of grant rates establishing higher rates for projects in communities that have lower community population and income levels.

(3) No grant shall be made under paragraph (2) of this subsection in connection with any project unless the Secretary determines that the project (i) will serve a rural area which, if such project is carried out, is not likely to decline in population below that for which the project was designed, (ii) is designed and constructed so that adequate capacity will or can be made available to serve the present population of the area to the extent feasible and to serve the reasonably foreseeable growth needs of the area, and (iii) is necessary for an orderly community development consistent with a comprehensive community water, waste disposal, or other development plan of the rural area.

(4)(A) The term "development cost" means the cost of construction of a facility and the land, easements, and rights-of-way, and water rights necessary to the construction and operation of the facility.

(B) The term "project" shall include facilities providing central service or facilities serving individual properties, or both.

(5) Repealed. Pub. L. 92 419, title I, §110, Aug. 30, 1972, 86 Stat. 659.

(6) The Secretary may make grants aggregating not to exceed $30,000,000 in any fiscal year to public bodies or such other agencies as the Secretary may determine having authority to prepare comprehensive plans for the development of water or waste disposal systems in rural areas which do not have funds available for immediate undertaking of the preparation of such plan.

(7) As used in this chapter, the terms "rural" and "rural area" shall not include any area in any city or town which has a population in excess of ten thousand inhabitants, except that (A) for the purpose of loans for essential community facilities under subsection (a)(1) of this section, the terms "rural" and "rural area" may include any area in any city or town that has a population not in excess of twenty thousand inhabitants; and (B) for purposes of loans and grants for private business enterprises under sections 1924(b), 1932 and 1942(b), (c), and (d) of this title the terms "rural" and "rural area" may include all territory of a State that is not within the outer boundary of any city having a population of fifty thousand or more and its immediately adjacent urbanized and urbanizing areas with a population density of more than one hundred persons per square mile, as determined by the Secretary of Agriculture according to the latest decennial census of the United States: Provided, That special consideration for such loans and grants shall be given to areas other than cities having a population of more than twenty-five thousand.

(8) In each instance where the Secretary receives two or more applications for financial assistance for projects that would serve substantially the same group of residents within a single rural area, and one such application is submitted by a city, town, county or other unit of general local government, he shall, in the absence of substantial reasons to the contrary, provide such assistance to such city, town, county or other unit of general local government.

(9) No Federal funds shall be authorized for use unless it be certified by the appropriate State water pollution control agency that the water supply system authorized will not result in pollution of waters of the State in excess of standards established by that agency.

(10) In the case of sewers and waste disposal systems, no Federal funds shall be advanced hereunder unless the appropriate State water pollution control agency shall certify that the effluent therefrom shall conform with appropriate State and Federal water pollution control standards when and where established.

(11)(A)(i) The Secretary may make grants, not to exceed $15,000,000 annually, to public bodies, private nonprofit community development corporations or entities, or such other agencies as the Secretary may select to enable such recipients—

(I) to identify and analyze business opportunities, including opportunities in export markets, that will use local rural economic and human resources;

(II) to identify, train, and provide technical assistance to existing or prospective rural entrepreneurs and managers;

(III) to establish business support centers and otherwise assist in the creation of new rural businesses, the development of methods of financing local businesses, and enhancing the capacity of local individuals and entities to engage in sound economic activities; and

(IV) to conduct regional, community, and local economic development planning and coordination, and leadership development.

(ii) In awarding such grants, the Secretary shall consider, among other criteria to be established by the Secretary—

(I) the extent to which the applicant provides development services in its rural service area; and

(II) the capability of the applicant to carry out the purposes of this section.

(iii) The Secretary shall ensure, to the extent practicable, that assistance provided under this subsection is coordinated with and delivered in cooperation with similar services or assistance provided to rural residents by the Extension Service or other Federal agencies.

(iv) For grants under this subparagraph, there are authorized to be appropriated to the Secretary $7,500,000 in each fiscal year.

(B)(i) The Secretary shall establish and implement a program to make loans for the benefit of any town or city that—

(I) has a population of less than 20,000 individuals; and

(II) is financially unable to obtain funds as quickly as needed to correct emergency conditions or situations needing urgent attention.

(ii) The Secretary shall promulgate regulations—

(I) targeting the program established under this subparagraph toward needy communities in rural areas; and

(II) defining the term "emergency conditions or situations needing urgent attention".

(iii) The Secretary shall approve or reject applications for loans under this subparagraph within 30 days after receipt.

(iv) The Secretary shall not loan more than $50,000 to a single borrower under this subparagraph, and all loans under this subparagraph shall be for not more than 2 years.

(v) The Secretary may respond to the credit needs of rural towns or cities eligible to participate in the program authorized under this subparagraph by making loans that are eligible for refinancing after the expiration of the 2-year period described in clause (iv), and payments under such loans may be set at a level that is sufficiently low during such 2-year period so that the financially troubled town or city can participate in the program established under this subparagraph. The Secretary shall assist such borrowers in obtaining financing through existing Farmers Home Administration programs so that such borrowers are able to pay the balance due on each loan at the end of such 2-year period.

(vi) To carry out the emergency lending program authorized by the program established under this subparagraph, there are authorized to be appropriated $2,500,000 for fiscal year 1991, and $5,000,000 for fiscal year 1992 and for each subsequent fiscal year.

(12)(A) The Secretary shall, in cooperation with institutions eligible to receive funds under the Act of July 2, 1862 (12 Stat. 503 505, as amended; 7 U.S.C. 301 305, 307 and 308), or the Act of August 30, 1890 (26 Stat. 417 419, as amended; 7 U.S.C. 321 326 and 328), including the Tuskegee Institute and State, substate, and regional planning bodies, establish a system for the dissemination of information and technical assistance on federally sponsored or funded programs. The system shall be for the use of institutions eligible to receive funds under the Act of July 2, 1862 (12 Stat. 503 505, as amended; 7 U.S.C. 301 305, 307, and 308), or the Act of August 30, 1890 (26 Stat. 417 419, as amended; 7 U.S.C. 321 326 and 328), including the Tuskegee Institute and State, substate, and regional planning bodies, and other persons concerned with rural development.

(B) The informational system developed under this paragraph shall contain all pertinent information, including, but not limited to, information contained in the Federal Procurement Data System, Federal Assistance Program Retrieval System, Catalogue of Federal Domestic Assistance, Geographic Distribution of Federal Funds, United States Census, and Code of Federal Regulations.

(C) The Secretary shall obtain from all other Federal departments and agencies comprehensive, relevant, and applicable information on programs under their jurisdiction that are operated in rural areas.

(D) Of the sums authorized to be appropriated to carry out the provisions of this chapter, not more than $1,000,000 per year may be expended to carry out the provisions of this paragraph.

(13) In the making of loans and grants for community waste disposal and water facilities under paragraphs (1) and (2) of this subsection the Secretary shall accord highest priority to the application of any municipality or other public agency (including an Indian tribe on a Federal or State reservation or other federally recognized Indian tribal group) in a rural community having a population not in excess of five thousand five hundred and which, in the case of water facility loans, has a community water supply system, where the Secretary determines that due to unanticipated diminution or deterioration of its water supply, immediate action is needed, or in the case of waste disposal, has a community waste disposal system, where the Secretary determines that due to unanticipated occurrences the system is not adequate to the needs of the community. The Secretary shall utilize the Soil Conservation Service in rendering technical assistance to applicants under this paragraph to the extent he deems appropriate.

(14)(A) The Secretary, under such reasonable rules and conditions as he shall establish, shall make grants to eligible volunteer fire departments for up to 50 per centum of the cost of firefighting equipment needed by such departments but which such departments are unable to purchase through the resources otherwise available to them, and for the cost of the training necessary to enable such departments to use such equipment efficiently.

(B) For the purposes of this subsection, the term "eligible volunteer fire department" means any established volunteer fire department in a rural town, village, or unincorporated area where the population is less than two thousand but greater than two hundred, as reasonably determined by the Secretary.

(15)(A) The Secretary may make or insure loans in the full amount thereof, but not to exceed $1,000,000 for any such loan, to associations, including corporations not operated for profit, Indian tribes on Federal and State reservations and other federally recognized Indian tribes, and public and quasi-public agencies, for the purpose of financing the construction, acquisition, and operation of transmission facilities for any electric system that is owned and operated by a public body located in a rural area and as of October 1, 1976, was receiving bulk power from any of the following agencies of the Department of the Interior:

(i) the Southwestern Power Administration,

(ii) the Southeastern Power Administration,

(iii) the Bonneville Power Administration,

(iv) the Bureau of Reclamation, or

(v) the Alaska Power Administration.

A loan may not be made or insured under this paragraph unless the Secretary determines that the applicant for the loan cannot obtain sufficient credit elsewhere from reliable sources at reasonable rates and terms for financing the construction, acquisition, and operation of such facilities.

(B) Interest or other income from obligations evidencing loans guaranteed under this paragraph shall be included in gross income for the purposes of chapter 1 of title 26.

(C) The authority provided to the Secretary by subparagraph (A) of this paragraph shall terminate September 30, 2006.

(16)(A) The Secretary may make grants to private nonprofit organizations for the purpose of enabling them to provide to associations described in paragraph (1) of this subsection technical assistance and training to—

(i) identify, and evaluate alternative solutions to, problems relating to the obtaining, storage, treatment, purification, or distribution of water or the collection, treatment, or disposal of waste in rural areas;

(ii) prepare applications to receive financial assistance for any purpose specified in paragraph (2) of this subsection from any public or private source; and

(iii) improve the operation and maintenance practices at any existing works for the storage, treatment, purification, or distribution of water or the collection, treatment, or disposal of waste in rural areas.

(B) In selecting recipients of grants to be made under subparagraph (A), the Secretary shall give priority to private nonprofit organizations that have experience in providing the technical assistance and training described in subparagraph (A) to associations serving rural areas in which residents have low income and in which water supply systems or waste facilities are unhealthful.

(C) Not less than 1 nor more than 2 per centum of any funds provided in Appropriations Acts to carry out paragraph (2) of this subsection for any fiscal year shall be reserved for grants under subparagraph (A) unless the applications, qualifying for grants, received by the Secretary from eligible nonprofit organizations for the fiscal year total less than 1 per centum of those funds.

(17) In the case of water and waste disposal facility projects serving more than one separate rural community, the Secretary shall use the median population level and the community income level of all the separate communities to be served in applying the standards specified in paragraph (2) of this subsection and section 1927(a)(3)(A) of this title.

(18) Grants under paragraph (2) of this subsection may be used to pay the local share requirements of another Federal grant-in-aid program to the extent permitted under the law providing for such grant-in-aid program.

(19)(A) In the approval and administration of a loan made under paragraph (1) for a water or waste disposal facility, the Secretary shall consider fully any recommendation made by the loan applicant or borrower concerning the technical design and choice of materials to be used for such facility.

(B) If the Secretary determines that a design or materials, other than those that were recommended, should be used in the water or waste disposal facility, the Secretary shall provide such applicant or borrower with a comprehensive justification for such determination.

(20) In making or insuring loans or making grants under this subsection, the Secretary may not condition approval of such loans or grants upon any requirement, condition or certification other than those specified under this chapter.

(b) Curtailment or limitation of service prohibited

The service provided or made available through any such association shall not be curtailed or limited by inclusion of the area served by such association within the boundaries of any municipal corporation or other public body, or by the granting of any private franchise for similar service within such area during the term of such loan; nor shall the happening of any such event be the basis of requiring such association to secure any franchise, license, or permit as a condition to continuing to serve the area served by the association at the time of the occurrence of such event.

(c) Repealed. Pub. L. 91 606, title III, §302(2), Dec. 31, 1970, 84 Stat. 1759

(d) Carryover of unused authorizations for appropriations

Any amounts appropriated under this section shall remain available until expended, and any amounts authorized for any fiscal year under this section but not appropriated may be appropriated for any succeeding fiscal year.

(Pub. L. 87 128, title III, §306, Aug. 8, 1961, 75 Stat. 308; Pub. L. 87 703, title IV, §401(2), Sept. 27, 1962, 76 Stat. 632; Pub. L. 89 240, §1, Oct. 7, 1965, 79 Stat. 931; Pub. L. 89 769, §6(b), Nov. 6, 1966, 80 Stat. 1318; Pub. L. 90 488, §§3 5, Aug. 15, 1968, 82 Stat. 770; Pub. L. 91 524, title VIII, §806(a), Nov. 30, 1970, 84 Stat. 1383; Pub. L. 91 606, title III, §302(2), Dec. 31, 1970, 84 Stat. 1759; Pub. L. 91 617, §1(a), Dec. 31, 1970, 84 Stat. 1855; Pub. L. 92 419, title I, §§104 112, Aug. 30, 1972, 86 Stat. 658, 659; Pub. L. 91 524, title VIII, §816(c), as added Pub. L. 93 86, §1(27)(B), Aug. 10, 1973, 87 Stat. 240; Pub. L. 95 334, title I, §§104 107(a), Aug. 4, 1978, 92 Stat. 421, 422; Pub. L. 96 355, §7, Sept. 24, 1980, 94 Stat. 1174; Pub. L. 96 438, §2(1), Oct. 13, 1980, 94 Stat. 1871; Pub. L. 97 35, title I, §121, Aug. 13, 1981, 95 Stat. 368; Pub. L. 99 198, title XIII, §1304(a), Dec. 23, 1985, 99 Stat. 1519; Pub. L. 99 514, §2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 101 624, title XXIII, §§2316(b), 2321, 2328, 2329, 2341, 2342, 2393, Nov. 28, 1990, 104 Stat. 4008, 4010, 4017, 4026, 4027, 4057; Pub. L. 102 237, title VII, §701(a), (h)(1)(A), (B), Dec. 13, 1991, 105 Stat. 1879, 1880; Pub. L. 103 129, §3, Nov. 1, 1993, 107 Stat. 1366; Pub. L. 103 354, title II, §235(b)(5), Oct. 13, 1994, 108 Stat. 3222.)

References in Text

The Rural Electrification Act of 1936, referred to in subsec. (a)(1), is act May 20, 1936, ch. 432, 49 Stat. 1363, as amended, which is classified generally to chapter 31 (§901 et seq.) of this title. For complete classification of this Act to the Code, see section 901 of this title and Tables.

For definition of "this chapter", referred to in subsec. (a)(7), (12)(D), (20), see note set out under section 1921 of this title.

Act of July 2, 1862 (12 Stat. 503 505, as amended; 7 U.S.C. 301 305, 307 and 308), referred to in subsec. (a)(12)(A), is act July 2, 1862, ch. 130, 12 Stat. 503, as amended, popularly known as the Morrill Act and also as the First Morrill Act, which is classified generally to subchapter I (§301 et seq.) of chapter 13 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 301 of this title and Tables.

Act of August 30, 1890 (26 Stat. 417 419, as amended; 7 U.S.C. 321 326 and 328), referred to in subsec. (a)(12)(A), is act Aug. 30, 1890, ch. 841, 26 Stat. 417, as amended, popularly known as the Agricultural College Act of 1890 and also as the Second Morrill Act, which is classified generally to subchapter II (§321 et seq.) of chapter 13 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 321 of this title and Tables.

Amendments

1994—Subsec. (a)(15)(C), (D). Pub. L. 103 354 redesignated subpar. (D) as (C) and struck out former subpar. (C) which read as follows: "The Administrator of the Rural Electrification Administration shall administer loans made or insured under this paragraph."

1993—Subsec. (a)(1). Pub. L. 103 129 inserted after first sentence "The Secretary may also make loans to any borrower to whom a loan has been made under the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.), for the conservation, development, use, and control of water, and the installation of drainage or waste disposal facilities, primarily serving farmers, ranchers, farm tenants, farm laborers, rural businesses, and other rural residents."

1991—Subsec. (a)(11)(B)(ii). Pub. L. 102 237, §701(a)(1), in subcl. (I) inserted "and" after semicolon and in subcl. (II) substituted a period for "; and".

Subsec. (a)(12)(D), (20). Pub. L. 102 237, §701(h)(1)(A), (B), substituted "this chapter" for "this Act".

Subsec. (a)(21). Pub. L. 102 237, §701(a)(2), struck out par. (21) which was identical to par. (20).

1990—Subsec. (a)(1). Pub. L. 101 624, §2328, inserted "rural businesses," after "farm laborers,".

Subsec. (a)(2). Pub. L. 101 624, §2321, struck out ": Provided, That for fiscal years commencing after September 30, 1981, such grants may not exceed $154,900,000 in any fiscal year" after "in rural areas".

Subsec. (a)(3). Pub. L. 101 624, §2316(b), struck out "and not inconsistent with any planned development provided in any State, multijurisdictional, county, or municipal plan approved by competent authority for the area in which the rural community is located, and the Secretary shall require the submission of all applications for financial assistance under this section to the multijurisdictional substate areawide general purpose planning and development agency that has been officially designated as a clearinghouse agency under Office of Management and Budget Circular A 95 and to the county or municipal government having jurisdiction over the area in which the proposed project is to be located for review and comment within a designated period of time not to exceed 30 days concerning among other considerations, the effect of the project upon the areawide goals and plans of such agency or government. No loan under this section shall be made that is inconsistent with any multijurisdictional planning and development district areawide plan of such agency. The Secretary is authorized to reimburse such agency or government for the cost of making the required review. Until October 1, 1973, the Secretary may make grants prior to the completion of the comprehensive plan, if the preparation of such plan has been undertaken for the area" after "of the rural area".

Subsec. (a)(11). Pub. L. 101 624, §§2341, 2342, amended par. (11) generally. Prior to amendment, par. (11) read as follows: "The Secretary may make grants, not to exceed $15,000,000 annually, to public bodies or such other agencies as the Secretary may select to provide rural development technical assistance, rural community leadership development, and community and areawide rural development planning."

Subsec. (a)(20). Pub. L. 101 624, §2329, added par. (20).

Subsec. (a)(21). Pub. L. 101 624, §2393, added par. (21).

1986—Subsec. (a)(1), (15)(B). Pub. L. 99 514 substituted "Internal Revenue Code of 1986" for "Internal Revenue Code of 1954", which for purposes of codification was translated as "title 26" thus requiring no change in text.

1985—Subsec. (a)(2). Pub. L. 99 198 provided for graduated scale of grant rates for each project and higher rates in communities having lower community population and income levels.

Subsec. (a)(16) to (19). Pub. L. 99 198 added pars. (16) to (19).

1981—Subsec. (a)(2). Pub. L. 97 35 inserted provisions limiting grants for fiscal years after Sept. 30, 1981.

1980—Subsec. (a)(7). Pub. L. 96 438 provided that for the purpose of loans for essential community facilities under subsection (a)(1) of this section, terms "rural" and "rural area" may include any area in any city or town with a population not in excess of twenty thousand.

Subsec. (a)(11) to (15). Pub. L. 96 355 in par. (11) substituted provisions authorizing annual grants not to exceed $15,000,000 for rural development technical assistance, rural community leadership development, etc., for provisions authorizing annual grants not to exceed $10,000,000 for preparation of comprehensive plans for rural development or designated aspects of such rural development, added par. (12), and redesignated former pars. (12) to (14) as (13) to (15), respectively.

1978—Subsec. (a)(1). Pub. L. 95 334, §104, inserted provisions respecting bond counsel requirements for loans under $500,000.

Subsec. (a)(2). Pub. L. 95 334, §105, substituted "$500,000,000" for "$300,000,000" and "75" for "50".

Subsec. (a)(7). Pub. L. 95 334, §106, struck out references to the Commonwealth of Puerto Rico and the Virgin Islands.

Subsec. (a)(14). Pub. L. 95 334, §107(a), added par. (14).

1973—Subsec. (a)(13). Pub. L. 91 524, title VIII, §816(c), as added by Pub. L. 93 86 added par. (13).

1972—Subsec. (a)(1). Pub. L. 92 419, §104(1), (2), authorized loans to Indian tribes on Federal and State reservations and other federally recognized Indian tribes and included as an allowable use provision for essential community facilities including necessary related equipment, respectively.

Subsec. (a)(2). Pub. L. 92 419, §105, substituted "$300,000,000" for "$100,000,000".

Subsec. (a)(3). Pub. L. 92 419, §§106, 107, substituted "project" for "facility" where first appearing; in item (i), substituted "project" for "facility" and inserted in such text ", if such project is carried out,"; in item (ii), substituted "will or can be" for "will be or can be"; substituted "and (iii)" for "or (iii)" and in such item (iii), substituted "an orderly community development consistent with a comprehensive community water, waste disposal, or other development plan" and "development provided in any State, multijurisdictional, county, or municipal plan approved by competent authority" for "orderly community development consistent with a comprehensive community water or sewer development plan" and "development under State, county, or municipal plans approved as official plans by competent authority", substituted "Secretary shall require the submission of all applications for financial assistance under this section to the multijurisdictional substate areawide general purpose planning and development agency that has been officially designated as a clearinghouse agency under Office of Management and Budget Circular A 95 and to the county or municipal government having jurisdiction over the area in which the proposed project is to be located for review and comment within a designated period of time not to exceed 30 days concerning among other considerations, the effect of the project upon the areawide goals and plans of such agency or government" for "Secretary shall establish regulations requiring the submission of all applications for financial assistance under this chapter to the county or municipal government in which the proposed project is to be located for review and comment by such agency within a designated period of time"; prohibited loans inconsistent with multijurisdictional planning and development district areawide plan of the agency; authorized agency or government reimbursement for cost of making the review; and extended authority for making grants prior to completion of the comprehensive plan from Oct. 1, 1971 to Oct. 1, 1973.

Subsec. (a)(5). Pub. L. 92 419, §110, struck out provisions of former par. (5) which prohibited any loan or grant under subsec. (a) of this section which would cause the unpaid principal indebtedness of any association under this chapter and Act Aug. 28, 1937, as amended (superseded by this chapter), together with amount of any assistance in the form of a grant to exceed $4,000,000 at any one time.

Subsec. (a)(6). Pub. L. 92 419, §108, substituted "$30,000,000" for "$15,000,000", struck out "official" before "comprehensive plans", and substituted "waste disposal systems" for "sewer systems".

Subsec. (a)(7). Pub. L. 92 419, §109, substituted definition of "rural" and "rural area" as excluding an area in a city or town with a population in excess of ten thousand inhabitants for prior provision for rural areas for purposes of water and waste disposal projects excluding an area in a city or town with a population in excess of 5,500 inhabitants, provided exception provision and special consideration for loans and grants to areas other than cities having a population of more than twenty-five thousand.

Subsec. (a)(11), (12). Pub. L. 92 419, §§111, 112, added pars. (11) and (12).

1970—Subsec. (a)(1). Pub. L. 91 617 required inclusion in gross income of the interest or other income paid to an insured holder when any loan made for a purpose specified in subsec. (a)(1) is sold out of the Agricultural Credit Insurance Fund as an insured loan.

Subsec. (c). Pub. L. 91 606 repealed subsec. (c), added by Pub. L. 89 769, §6(b), Nov. 6, 1966, 80 Stat. 1318, which related to loans to associations in areas suffering major disasters. See section 4401 et seq. of Title 42, The Public Health and Welfare.

Subsec. (d). Pub. L. 91 524 added subsec. (d).

1968—Subsec. (a). Pub. L. 90 488 substituted "$100,000,000" for "$50,000,000" in par. (2), "1971" for "1968" in par. (3), and "$15,000,000" for "$5,000,000" in par. (6), respectively.

1966—Subsec. (c). Pub. L. 89 769 added subsec. (c).

1965—Subsec. (a). Pub. L. 89 240 designated existing provisions as par. (1), struck out "including the development of recreational facilities" after "shifts in land use", substituted "drainage or waste disposal facilities" for "drainage facilities", inserted "and recreational developments", deleted provisions which prohibited loans which would cause an association's unpaid principal indebtedness to exceed $500,000, in the case of direct loans and $1,000,000 in the case of insured loans at any one time, and added pars. (2) to (10).

1962—Subsec. (a). Pub. L. 87 703 authorized loans to be made or insured to provide for the application or establishment of shifts in land use including the development of recreational facilities.

Effective Date of 1991 Amendment

Amendment by section 701(a) of Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, and amendment by section 701(h)(1)(A), (B) of Pub. L. 102 237 to any provision specified therein effective as if included in act that added provision so specified at the time such act became law, see section 1101(b)(6), (c) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective Date of 1980 Amendment

Amendment by Pub. L. 96 355 effective Oct. 1, 1980, see section 10 of Pub. L. 96 355, set out as an Effective Date note under section 2204b of this title.

Effective Date of 1978 Amendment

Section 105 of Pub. L. 95 334 provided that the amendment made by that section is effective Oct. 1, 1978.

Effective Date of 1970 Amendments

Section 1(b) of Pub. L. 91 617 provided that: "The amendment made by subsection (a) [amending this section] shall apply to the insured loans sold out of the Agricultural Credit Insurance Fund after the date of the enactment of this Act [Dec. 31, 1970]."

Amendment by Pub. L. 91 606 effective Dec. 31, 1970, see section 304 of Pub. L. 91 606, set out as a note under section 165 of Title 26, Internal Revenue Code.

Effective Date of 1966 Amendment

Amendment by Pub. L. 89 769 applicable with respect to any major disaster occurring after Oct. 3, 1964, see section 14 of Pub. L. 89 769.

Transfer of Functions

Powers, duties, and assets of agencies, offices, and other entities within Department of Agriculture relating to rural development functions transferred to Rural Development Administration by section 2302(b) of Pub. L. 101 624.

Functions of Secretary of the Interior with respect to Southwestern Power Administration, Southeastern Power Administration, Bonneville Power Administration, Alaska Power Administration, and power marketing functions of Bureau of Reclamation transferred to Secretary of Energy by section 7152(a) of Title 42, The Public Health and Welfare, with each Administration to be preserved as a distinct organizational entity within Department of Energy and headed by an Administrator and functions of Bureau of Reclamation transferred to be exercised by Secretary through a separate Administration within Department of Energy.

Temporary Expanded Eligibility of Certain Timber-Dependent Communities in Pacific Northwest for Loans and Grants From Rural Development Administration

Pub. L. 103 427, Oct. 31, 1994, 108 Stat. 4373, provided that:

"(a) Findings.—Congress finds the following:

"(1) Timber-dependent communities in the Pacific Northwest have contributed significantly to the economic needs of the United States and have helped ensure an adequate national supply of timber and timber products.

"(2) A significant portion of the timber traditionally harvested in the Pacific Northwest is derived from Federal forest lands, and these forests have played an important role in sustaining local economies.

"(b) Expanded Eligibility.—During the period beginning on the date of the enactment of this Act [Oct. 31, 1994] and ending on September 30, 1998, the terms 'rural' and 'rural area', as used in the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.), shall include any town, city, or municipality—

"(1) part or all of which lies within 100 miles of the boundary of a national forest covered by the Federal document entitled 'Forest Plan for a Sustainable Economy and a Sustainable Environment', dated July 1, 1993;

"(2) that is located in a county in which at least 15 percent of the total primary and secondary labor and proprietor income is derived from forestry, wood products, or forest-related industries such as recreation and tourism; and

"(3) that has a population of not more than 25,000 inhabitants.

"(c) Effect on State Allotments of Funds.—This section shall not be taken into consideration in allotting funds to the various States for purposes of the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.), or otherwise affect or alter the manner under which such funds were allotted to States before the date of the enactment of this Act [Oct. 31, 1994]."

Rural Wastewater Treatment Circuit Rider Program

Section 2324 of Pub. L. 101 624 provided that:

"(a) Establishment.—The Secretary shall establish a national rural wastewater circuit rider grant program that shall be modeled after the existing National Rural Water Association Rural Water Circuit Rider Program that receives funding from the Farmers Home Administration.

"(b) Limitation on Authorization of Appropriations.—There are authorized to be appropriated $4,000,000 for each fiscal year to carry out the program established under subsection (a)."

Interest Rate Restructuring for Certain Borrowers

Pub. L. 100 233, title VI, §615(b)(2), Jan. 6, 1988, 101 Stat. 1682, provided that: "Effective July 29, 1987, the interest rate charged on any loan of $2,000,000 or more made on such date under section 306 [7 U.S.C. 1926] to any nonprofit corporation shall be the interest rate quoted to such nonprofit corporation by the Farmers Home Administration on June 22, 1987, in the request for obligation of funds made with respect to the loan."

Lease of Certain Acquired Property

Pub. L. 100 233, title VI, §620, Jan. 6, 1988, 101 Stat. 1684, provided that: "Notwithstanding any other provision of law, the Secretary of Agriculture may lease to public or private nonprofit organizations, for a nominal rent, any facilities acquired in connection with the disposition of a loan made by the Secretary under section 306 [7 U.S.C. 1926]. Any such lease shall be for such reasonable period of time as the Secretary determines is appropriate."

Section Referred to in Other Sections

This section is referred to in sections 1926 1, 1927, 1929, 1929a, 1931, 1932, 1983a, 1992, 2001a, 2008, 2008b, 2008c, 2204b, 6942, 6944 of this title; title 16 section 2106; title 42 sections 3122, 5153.

§1926 1. Water and waste facility financing

(a) Authority

The Secretary of Agriculture shall make loans to individuals or entities who are borrowers under title III of the Rural Electrification Act of 1936 (7 U.S.C. 930 et seq.) (in this section referred to as the "borrower"), to the extent of qualifying applications therefor, to enable such borrowers to provide water and waste facility services in areas served by such borrowers.

(b) Limitation

Loans made under subsection (a) of this section shall not, unless otherwise specified by law, exceed an amount equal to 10 percent of the total amount of insured loans under the Rural Electrification Act of 1936 [7 U.S.C. 901 et seq.] authorized during the fiscal year in which such loan is made for rural electrification and telephone purposes, or $40,000,000, whichever is less. Such limitations shall be in addition to the total amount of insured loans authorized for electrification and telephone purposes.

(c) Priority

In reviewing applications for loans under this section, the Secretary shall consider—

(1) whether the loan is necessary to enable the communities to be served to comply with applicable Federal or State environmental laws;

(2) whether the individuals residing in the area for which service is proposed, and any local government entities, are in favor of the borrower providing such services in the area;

(3) the income, unemployment, and other characteristics of the area to be served;

(4) the degree of deprivation faced by residents of the area to be served as a result of the lack of safe drinking water, adequate water supplies, sewage treatment and other waste disposal facilities;

(5) the impact that the availability of safe water supplies, waste disposal and similar services would be likely to have on enhancing the prospects for economic growth within the area to be served;

(6) the degree to which a loan that may be provided under this subsection is necessary to ensure that water and waste disposal services are available in the area to be served by such loan at costs that do not exceed those charged in other nearby areas;

(7) the impact of the proposed loan on the retention of the property and service territory of the borrower, or in protecting the security given on outstanding loans provided to the borrower; and

(8) whether the water and waste facility projects described in the application will duplicate any existing facilities, and whether the borrower will coordinate its water and waste facility operations with similar operations in the area, including efforts to achieve economies of scale through joint billing, collection, or other operations with nearby systems in order to reduce the costs, improve the operations, or otherwise assist such systems.

(d) Coordination

(1) Other programs and requirements

(A) Other programs

The Secretary shall ensure that the program established under this section is coordinated with the programs authorized and established under section 1926 of this title, and will attempt to coordinate the lending activities under this section with similar activities conducted by other entities.

(B) Requirements

Loans made under this section shall be subject, in the same manner as loans made under section 1926 of this title, to the provisions of paragraphs (9) and (10) of section 1926(a) of this title (which require approvals by State water pollution control agencies), subparagraphs (A) and (B) of section 1926(a)(19) of this title (which include certain requirements in connection with the technical design and choice of materials for water and waste systems), and section 1926(b) of this title (which concerns the curtailment or limitation of service).

(2) Prohibition on limiting access

The Secretary shall establish rules and procedures that prohibit borrowers from conditioning or limiting access to, or the use of, any water and waste facility services that are financed under this section. Such rules and procedures shall be based on whether individuals or entities in the area for which such facility is proposed receive, or will accept, electric service from such borrower.

(e) Terms

(1) In general

Loans made under this section shall be for the same repayment period as insured loans made by the Administrator of the Rural Electrification Administration to such borrowers under title III of the Rural Electrification Act of 1936 (7 U.S.C. 930 et seq.) and interest rates on loans made under this section shall not exceed 5 percent.

(2) Interest rate

The Secretary shall determine the interest rate to be charged on loans made under this section on the basis of—

(A) ensuring that the cost to consumers for water and waste disposal services financed with loans provided under this section does not, to the extent possible, exceed rates charged in areas that are near the area served by the borrower;

(B) the income and other characteristics of the individuals to be served through the provision of such loans; and

(C) encouraging borrowers to obtain private sector capital, as provided for in subsection (f) of this section, to supplement loans made under this section.

(f) Private sector capital

(1) Matching funds required

The Secretary shall not provide assistance to a borrower under this section unless the borrower has made a commitment to the Secretary, and demonstrates to the Secretary that the borrower is able, to invest from its own funds an amount equal to the amount of assistance to be so provided.

(2) Interest rate reduction authorized

In order to facilitate the obtaining of private sector capital, the Secretary may, on a case-by-case basis, reduce the interest rate on loans provided under this section when such reduction is appropriate and will enable the borrower to obtain such private capital.

(g) Appropriations

The Secretary may make loans under this section to the extent provided for in appropriations Acts, except that during any fiscal year the amount of such loans, unless otherwise provided by law, shall not exceed 10 percent of the amount authorized for all insured loans under title III of the Rural Electrification Act of 1936 (7 U.S.C. 930 et seq.), or $40,000,000, whichever amount is less. Funds appropriated under this subsection shall remain available until expended.

(h) Repayment

Appropriations made for purposes of this section shall be placed in a separate account. Advances on loans made under this section shall be made from such account, and payments on such loans shall be returned to the account for use by the account in making advances on future loans.

(i) Full use

(1) In general

Subject to paragraph (2) and any other limitations that may be imposed by law, during each fiscal year the Secretary shall undertake all reasonable efforts to make full use of any funds held by the account established under subsection (h) of this section.

(2) Ceiling on loans

During any particular fiscal year the aggregate amount of the loans the Secretary may make under this section, from amounts in the account established under subsection (h) of this section that are not attributable to repayments, shall be the lesser of—

(A) 10 percent of the amount of loans made under title III of the Rural Electrification Act of 1936 (7 U.S.C. 930 et seq.) during the fiscal year; or

(B) $40,000,000.

(j) Replenishment of water and waste facility fund

(1) Calculation of total amount of loans

At the end of each fiscal year the Secretary shall calculate—

(A) the total amount of loans made under this section during such fiscal year; and

(B) the amount of water or waste facility loans made under section 1926 of this title to borrowers described in subsection (a) of this section.

(2) Transfer of amounts

Notwithstanding subsections (g) and (i) of this section, if any amount appropriated under subsection (g) of this section remains available at the end of any fiscal year—

(A) the Secretary shall transfer such available amount to the fund used to make water or waste facility loans under section 1926 of this title, to the extent not exceeding the amount of any loans made under such section 1926 of this title to borrowers under the Rural Electrification Act of 1936 [7 U.S.C. 901 et seq.]; and

(B) any such loan to such borrower made under such section 1926 of this title shall be—

(i) subject to the terms, conditions and other requirements of section 1926a of this title; and

(ii) repaid to the account established by subsection (h) of this section.

(Pub. L. 101 624, title XXIII, §2322, Nov. 28, 1990, 104 Stat. 4010; Pub. L. 102 237, title VII, §702(f), Dec. 13, 1991, 105 Stat. 1880; Pub. L. 103 354, title II, §235(b)(6), Oct. 13, 1994, 108 Stat. 3222.)

References in Text

The Rural Electrification Act of 1936, referred to in subsecs. (a), (b), (e)(1), (g), (i)(2)(A), and (j)(2)(A), is act May 20, 1936, ch. 432, 49 Stat. 1363, as amended, which is classified generally to chapter 31 (§901 et seq.) of this title. Title III of the Act is classified generally to subchapter III (§930 et seq.) of chapter 31 of this title. For complete classification of this Act to the Code, see section 901 of this title and Tables.

Codification

Section was enacted as part of the Rural Economic Development Act of 1990, and also as part of the Food, Agriculture, Conservation, and Trade Act of 1990, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.

Amendments

1994—Subsec. (d)(2), (3). Pub. L. 103 354 redesignated par. (3) as (2) and struck out heading and text of former par. (2). Text read as follows: "The Secretary shall determine whether the Rural Electrification Administration possesses greater expertise, as compared with the Farmers Home Administration, in the areas of utility accounting, utility management and financial analysis, advice and assistance, and other aspects of utility operations and engineering. If the Secretary determines that the Rural Electrification Administration possesses greater expertise in such areas, the Secretary shall require the Rural Electrification Administration to provide technical assistance, and assist in the processing of applications under this section."

1991—Subsec. (d)(1)(B). Pub. L. 102 237, §702(f)(1), substituted "paragraphs (9) and (10) of section 1926(a) of this title" for "section 1926(a)(9) and 1926(a)(10) of this title" and "subparagraphs (A) and (B) of section 1926(a)(19) of this title" for "sections 1926(a)(19)(A) and (B) of this title".

Subsec. (i)(1). Pub. L. 102 237, §702(f)(2), struck out "and (3)" after "(2)".

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(7) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Section Referred to in Other Sections

This section is referred to in section 6942 of this title.

§1926a. Emergency community water assistance grant program

(a) In general

The Secretary shall provide grants in accordance with this section to assist the residents of rural areas and small communities to secure adequate quantities of safe water—

(1) after a significant decline in the quantity or quality of water available from the water supplies of such rural areas and small communities; or

(2) when repairs, partial replacement, or significant maintenance efforts on established water systems would remedy—

(A) an acute shortage of quality water; or

(B) a significant decline in the quantity or quality of water that is available.

(b) Priority

In carrying out subsection (a) of this section, the Secretary shall—

(1) give priority to projects described in subsection (a)(1) of this section; and

(2) provide at least 70 percent of all such grants to such projects.

(c) Eligibility

To be eligible to obtain a grant under this section, an applicant shall—

(1) be a public or private nonprofit entity; and

(2) in the case of a grant made under subsection (a)(1) of this section, demonstrate to the Secretary that the decline referred to in such subsection occurred within 2 years of the date the application was filed for such grant.

(d) Uses

(1) In general

Grants made under this section may be used for waterline extensions from existing systems, laying of new waterlines, repairs, significant maintenance, digging of new wells, equipment replacement, hook and tap fees, and any other appropriate purpose associated with developing sources of, or treating, storing, or distributing water, and to assist communities in complying with the requirements of the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.) or the Safe Drinking Water Act (42 U.S.C. 300f et seq.).

(2) Joint proposals

Nothing in this section shall preclude rural communities from submitting joint proposals for emergency water assistance, subject to the restrictions contained in subsection (e) of this section. Such restrictions should be considered in the aggregate, depending on the number of communities involved.

(e) Restrictions

(1) Maximum population and income

No grant provided under this section shall be used to assist any rural area or community that—

(A) includes any area in any city or town with a population in excess of 15,000 inhabitants according to the most recent decennial census of the United States; or

(B) has a median household income in excess of the State nonmetropolitan median household income according to the most recent decennial census of the United States.

(2) Set-aside for smaller communities

Not less than 50 percent of the funds allocated under this section shall be allocated to rural communities with populations that do not exceed 5,000 inhabitants.

(f) Maximum grants

Grants made under this section may not exceed—

(1) in the case of each grant made under subsection (a)(1) of this section, $500,000; and

(2) in the case of each grant made under subsection (a)(2) of this section, $75,000.

(g) Full funding

Subject to subsection (e) of this section, grants under this section shall be made in an amount equal to 100 percent of the costs of the projects conducted under this section.

(h) Application

(1) Nationally competitive application process

The Secretary shall develop a nationally competitive application process to award grants under this section. The process shall include criteria for evaluating applications, including population, median household income, and the severity of the decline in quantity or quality of water.

(2) Timing

The Secretary shall make every effort to review and act on applications within 60 days of the date that such applications are submitted.

(i) Authorization of appropriations

There are authorized to be appropriated to carry out this section, $35,000,000 for each of the fiscal years 1990 and 1991, such sums to remain authorized until fully appropriated.

(Pub. L. 87 128, title III, §306A, as added Pub. L. 101 82, title V, §501(a), Aug. 14, 1989, 103 Stat. 584.)

References in Text

The Federal Water Pollution Control Act, referred to in subsec. (d)(1), is act June 30, 1948, ch. 758, as amended generally by Pub. L. 92 500, §2, Oct. 18, 1972, 86 Stat. 816, which is classified generally to chapter 26 (§1251 et seq.) of Title 33, Navigation and Navigable Waters. For complete classification of this Act to the Code, see Short Title note set out under section 1251 of Title 33 and Tables.

The Safe Drinking Water Act, referred to in subsec. (d)(1), is Pub. L. 93 523, Dec. 16, 1974, 88 Stat. 1660, as amended, which is classified principally to subchapter XII (§300f et seq.) of chapter 6A of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title of 1974 Amendments note set out under section 201 of Title 42 and Tables.

Implementation

Section 501(b) of Pub. L. 101 82 provided that:

"(1) Regulations.—The Secretary of Agriculture shall publish—

"(A) interim final regulations to carry out section 306A of the Consolidated Farm and Rural Development Act [7 U.S.C. 1926a] (as added by subsection (a) of this section) not later than 45 days after the date of enactment of this Act [Aug. 14, 1989]; and

"(B) final regulations to carry out section 306A of such Act not later than 90 days after the date of enactment of this Act.

"(2) Funds.—

"(A) Obligation.—The Secretary shall designate 70 percent of the funds made available for the first fiscal year for which appropriations are made under section 306A(i) of the Consolidated Farm and Rural Development Act not later than 5 months after the date such funds are appropriated.

"(B) Release.—The Secretary may release funds prior to the issuance of final regulations under paragraph (1)(B) for grants under section 306A(a)(1) of the Consolidated Farm and Rural Development Act."

Section Referred to in Other Sections

This section is referred to in sections 1926 1, 6942 of this title.

§1926b. Emergency community water assistance grant program

(a) In general

The Secretary shall make grants in accordance with this section to assist the residents of rural areas and small communities to secure adequate quantities of safe water—

(1) after a significant decline in the quantity or quality of water available from the water supplies of such rural areas and small communities; or

(2) when repairs, partial replacement, or significant maintenance efforts on established water systems would remedy an acute shortage of quality water or would remedy a significant decline in the quantity or quality of water that is available.

(b) Priority

In carrying out subsection (a) of this section, the Secretary shall give priority to projects described in subsection (a)(1) of this section, and provide at least 70 percent of all such grants to such projects.

(c) Eligibility

To be eligible to obtain a grant under this section, an applicant shall—

(1) be a public or private nonprofit entity; and

(2) in the case of a grant made under subsection (a)(1) of this section, demonstrate to the Secretary that the decline referred to in such subsection occurred within 2 years of the date the application for such grant was made.

(d) Uses

(1) In general

Grants made under this section may be used for waterline extensions from existing systems, laying of new waterlines, repairs, significant maintenance, digging of new wells, equipment replacement, hook and tap fees, and any other appropriate purpose associated with developing sources of, or treating, storing, or distributing water, and to assist communities in complying with the requirements of the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.) or the Safe Drinking Water Act (42 U.S.C. 300f et seq.).

(2) Joint proposals

This section shall not preclude rural communities from submitting joint proposals for emergency water assistance, subject to the restrictions of subsection (e) of this section. Such restrictions should be considered in the aggregate, depending on the number of communities involved.

(e) Restrictions

Grants made under this section shall not be used to assist any rural area or community that—

(1) includes any area in any city or town with a population in excess of 5,000 inhabitants according to the most recent decennial census of the United States; or

(2) has a median household income in excess of the State nonmetropolitan median household income according to the most recent decennial census of the United States.

Not less than 75 percent of the funds allocated under this section shall be allocated to rural communities with populations that do not exceed 3,000 inhabitants.

(f) Maximum grants

Grants made under this section may not exceed—

(1) in the case of each grant made under subsection (a)(1) of this section, $500,000; and

(2) in the case of each grant made under subsection (a)(2) of this section, $75,000.

(g) Full funding

Subject to subsection (e) of this section, each grant under this section shall be made in an amount equal to 100 percent of the costs of the projects with respect to which the grant is made.

(h) Application

The Secretary shall develop a nationally competitive application process to award grants under this section. Such process shall include criteria for evaluating applications, including population, median household income, and the severity of the decline in quantity or quality of water. The Secretary shall make every effort to review and act on applications within 60 days of the date that such applications are submitted.

(i) Limitations on authorization of appropriations

To carry out this section, there are authorized to be appropriated $25,000,000 for fiscal year 1991, and $10,000,000 for fiscal year 1992. To the extent the amount authorized to be appropriated for a fiscal year under this subsection exceeds the amount so appropriated, such excess amount shall remain authorized to be appropriated for succeeding fiscal years until fully appropriated.

(Pub. L. 87 128, title III, §306B, as added Pub. L. 101 624, title XXIII, §2326(a), Nov. 28, 1990, 104 Stat. 4014.)

References in Text

The Federal Water Pollution Control Act, referred to in subsec. (d)(1), is act June 30, 1948, ch. 758, as amended generally by Pub. L. 92 500, §2, Oct. 18, 1972, 86 Stat. 816, which is classified generally to chapter 26 (§1251 et seq.) of Title 33, Navigation and Navigable Waters. For complete classification of this Act to the Code, see Short Title note set out under section 1251 of Title 33 and Tables.

The Safe Drinking Water Act, referred to in subsec. (d)(1), is Pub. L. 93 523, Dec. 16, 1974, 88 Stat. 1660, as amended, which is classified principally to subchapter XII (§300f et seq.) of chapter 6A of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title of 1974 Amendments note set out under section 201 of Title 42 and Tables.

Transfer of Functions

Powers, duties, and assets of agencies, offices, and other entities within Department of Agriculture relating to rural development functions transferred to Rural Development Administration by section 2302(b) of Pub. L. 101 624.

Rules and Regulations for Implementing Section

Section 2326(b) of Pub. L. 101 624 provided that:

"(1) Regulations.—The Secretary shall publish—

"(A) interim final regulations to carry out section 306B of the Consolidated Farm and Rural Development Act [7 U.S.C. 1926b] not later than 45 days after the date of enactment of this Act [Nov. 28, 1990]; and

"(B) final regulations to carry out section 306B not later than 90 days after such date of enactment.

"(2) Funds.—

"(A) Obligation.—The Secretary shall obligate 70 percent of the funds made available for the first fiscal year for which appropriations are made under section 306B(i) of the Consolidated Farm and Rural Development Act not later than 5 months after the date such funds are appropriated.

"(B) Release.—The Secretary may make grants under section 306B(a)(1) of Consolidated Farm and Rural Development Act before final regulations are issued under paragraph (1)(B) of this subsection."

Section Referred to in Other Sections

This section is referred to in section 6942 of this title.

§1926c. Water and waste facility loans and grants to alleviate health risks

(a) Loans and grants to persons other than individuals

(1) In general

The Secretary shall make or insure loans and make grants to rural water supply corporations, cooperatives, or similar entities, Indian tribes on Federal and State reservations and other federally recognized Indian tribes, and public agencies, to provide for the conservation, development, use, and control of water (including the extension or improvement of existing water supply systems), and the installation or improvement of drainage or waste disposal facilities and essential community facilities including necessary related equipment. Such loans and grants shall be available only to provide such water and waste facilities and services to communities whose residents face significant health risks, as determined by the Secretary, due to the fact that a significant proportion of the community's residents do not have access to, or are not served by, adequate affordable—

(A) water supply systems; or

(B) waste disposal facilities.

(2) Certain areas targeted

(A) In general

Loans and grants under paragraph (1) shall be made only if the loan or grant funds will be used primarily to provide water or waste services, or both, to residents of a county—

(i) the per capita income of the residents of which is not more than 70 percent of the national average per capita income, as determined by the Department of Commerce; and

(ii) the unemployment rate of the residents of which is not less than 125 percent of the national average unemployment rate, as determined by the Bureau of Labor Statistics.

(B) Exception

Notwithstanding subparagraph (A), loans and grants under paragraph (1) may also be made if the loan or grant funds will be used primarily to provide water or waste services, or both, to residents of a rural area that was recognized as a colonia as of October 1, 1989.

(b) Loans and grants to individuals

(1) In general

The Secretary shall make or insure loans and make grants to individuals who reside in a community described in subsection (a)(1) of this section for the purpose of extending water supply and waste disposal systems, connecting the systems to the residences of the individuals, or installing plumbing and fixtures within the residences of the individuals to facilitate the use of the water supply and waste disposal systems. Such loans shall be at a rate of interest no greater than the Federal Financing Bank rate on loans of a similar term at the time such loans are made. The repayment of such loans shall be amortized over the expected life of the water supply or waste disposal system to which the residence of the borrower will be connected.

(2) Manner in which loans and grants are to be made

Loans and grants to individuals under paragraph (1) shall be made—

(A) directly to such individuals by the Secretary; or

(B) to such individuals through the rural water supply corporation, cooperative, or similar entity, or public agency, providing such water supply or waste disposal services, pursuant to regulations issued by the Secretary.

(c) Preference

The Secretary shall give preference in the awarding of loans and grants—

(1) under subsection (a) of this section to rural water supply corporations, cooperatives, or similar entities, or public agencies, that propose to provide water supply or waste disposal services to the residents of those rural subdivisions commonly referred to as colonias, that are characterized by substandard housing, inadequate roads and drainage, and a lack of adequate water or waste facilities; and

(2) under subsection (b) of this section to individuals who reside in a rural subdivision commonly referred to as a colonia, that is characterized by substandard housing, inadequate roads and drainage, and a lack of adequate water or waste facilities.

(d) "Cooperative" defined

For purposes of this section, the term "cooperative" means a cooperative formed specifically for the purpose of the installation, expansion, improvement, or operation of water supply or waste disposal facilities or systems.

(e) Limitations on authorization of appropriations

There are authorized to be appropriated—

(1) for grants under this section, $30,000,000 for each fiscal year; and

(2) for loans under this section, $30,000,000 for each fiscal year.

(f) Regulations

Not later than 30 days after October 28, 1992, the Secretary shall issue interim final regulations, with a request for public comments, implementing this section.

(Pub. L. 87 128, title III, §306C, as added Pub. L. 101 624, title XXIII, §2327, Nov. 28, 1990, 104 Stat. 4015; amended Pub. L. 102 237, title VII, §701(b), Dec. 13, 1991, 105 Stat. 1879; Pub. L. 102 552, title V, §516(l), (m), Oct. 28, 1992, 106 Stat. 4139; Pub. L. 102 554, §24, Oct. 28, 1992, 106 Stat. 4161.)

Amendments

1992—Subsec. (a)(2). Pub. L. 102 554 amended par. (2) generally. Prior to amendment, par. (2) read as follows: "(2) Certain counties targeted.—Loans and grants under paragraph (1) shall be made only if the loan or grant funds will be used primarily to provide water or waste services, or both, to residents of a county—

"(A) the per capita income of the residents of which is not more than 70 percent of the national average per capita income, as determined by the Department of Commerce; and

"(B) the unemployment rate of the residents of which is not less than 125 percent of the national average unemployment rate, as determined by the Bureau of Labor Statistics."

Subsec. (b)(1). Pub. L. 102 552, §516(l), substituted ", connecting the systems to the residences of the individuals, or installing plumbing and fixtures within the residences of the individuals to facilitate the use of the water supply and waste disposal systems" for "or connecting such systems to the residences of such individuals".

Subsec. (f). Pub. L. 102 552, §516(m), added subsec. (f).

1991—Subsec. (a)(2). Pub. L. 102 237 realigned margins of subpars. (A) and (B).

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(6) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Section Referred to in Other Sections

This section is referred to in section 6942 of this title.

§1927. Repayment requirements

(a) Period of repayment; interest rates

(1) The period for repayment of loans under this subchapter shall not exceed forty years.

(2) Except as otherwise provided in paragraphs (3), (4), (5), and (6) of this subsection, the interest rates on loans under this subchapter shall be as determined by the Secretary, but not in excess of the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, plus not to exceed 1 per centum, as determined by the Secretary, and adjusted to the nearest one-eighth of 1 per centum.

(3)(A) Notwithstanding the provisions of the constitution or laws of any State limiting the rate or amount of interest that may be charged, taken, received, or reserved, except as provided in paragraph (6), the interest rates on loans (other than guaranteed loans), to public bodies or nonprofit associations (including Indian tribes on Federal and State reservations and other federally recognized Indian tribal groups) for water and waste disposal facilities and essential community facilities shall be set by the Secretary at rates not to exceed the current market yield for outstanding municipal obligations with remaining periods to maturity comparable to the average maturity for such loans, and adjusted to the nearest one-eighth of 1 per centum; and not in excess of 5 per centum per annum for any such loans which are for the upgrading of existing facilities or construction of new facilities as required to meet applicable health or sanitary standards in areas where the median household income of the persons to be served by such facility is below the higher of 80 per centum of the statewide nonmetropolitan median household income or the poverty line established by the Office of Management and Budget, as revised under section 9902(2) of title 42 and in other areas as the Secretary may designate where a significant percentage of the persons to be served by such facilities are of low income, as determined by the Secretary; and not in excess of 7 per centum per annum on loans for such facilities that do not qualify for the 5 per centum per annum interest rate but are located in areas where the median household income of the persons to be served by the facility does not exceed 100 per centum of the statewide nonmetropolitan median household income.

(B) Except as provided in paragraph (6), the interest rate on loans (other than guaranteed loans) under section 1934 of this title shall not be—

(i) greater than the sum of—

(I) an amount that does not exceed one-half of the current average market yield on outstanding marketable obligations of the United States with maturities of 5 years; and

(II) an amount not exceeding 1 percent per year, as the Secretary determines is appropriate; or

(ii) less than 5 percent per year.

(C) Notwithstanding subparagraph (A), the Secretary shall establish loan rates for health care and related facilities based solely on the income of the area to be served, and such rates shall be otherwise consistent with such subparagraph.

(4) Except as provided in paragraph (6), the interest rates on loans under sections 1924(b), 1926(a)(1), and 1932 of this title (other than guaranteed loans and loans as described in paragraph (3) of this subsection) shall be as determined by the Secretary, but not less than such rates as determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, adjusted in the judgment of the Secretary of the Treasury to provide for rates comparable to the rates prevailing in the private market for similar loans and considering the Secretary's insurance of the loans, plus an additional charge, prescribed by the Secretary, to cover the Secretary's losses and cost of administration, which charge shall be deposited in the Rural Development Insurance Fund, and further adjusted to the nearest one-eighth of 1 per centum.

(5)(A) Except as provided in subparagraph (B), the interest rate on any loan made under this subchapter as a guaranteed loan shall be such rate as may be agreed upon by the borrower and the lender, but not in excess of a rate as may be determined by the Secretary.

(B) In the case of a loan made under section 1932 of this title as a guaranteed loan, subparagraph (A) shall apply notwithstanding the provisions of the constitution or laws of any State limiting the rate or amount of interest that may be charged, taken, received, or reserved.

(6)(A) Notwithstanding any other provision of this section, in the case of loans (other than guaranteed loans) made or insured under the authorities of this chapter specified in subparagraph (B) for activities that involve the use of prime farmland as defined in subparagraph (C), the interest rates shall be the interest rates otherwise applicable under this section increased by 2 per centum per annum. Wherever practicable, construction by a State, municipality, or other political subdivision of local government that is supported by loans described in the preceding sentence shall be placed on land that is not prime farmland, in order to preserve the maximum practicable amount of prime farmlands for production of food and fiber. Where other options exist for the siting of such construction and where the governmental authority still desires to carry out such construction on prime farmland, the 2 per centum interest rate increase provided by this clause shall apply, but such increased interest rate shall not apply where such other options do not exist.

(B) The authorities referred to in subparagraph (A) are—

(i) clauses (2) and (3) of section 1923(a) of this title,

(ii) section 1924(b) of this title,

(iii) the provisions of section 1926(a)(1) of this title relating to loans for recreational developments and essential community facilities,

(iv) section 1926(a)(15) of this title,

(v) clause (1) of section 1932(a) of this title,

(vi) subsections (d) and (e) of section 1932 of this title, and

(vii) section 1934(a) of this title as it relates to the making or insuring of loans under clauses (2) and (3) of section 1923(a) of this title.

(C) For purposes of this paragraph, the term "prime farmland" means prime farmlands and unique farmland as those terms are defined in sections 657.5(a) and (b) of title 7, Code of Federal Regulations (1980).

(b) Payment of charges; prepayment of taxes and insurance

The borrower shall pay such fees and other charges as the Secretary may require, and borrowers under this chapter shall prepay to the Secretary such taxes and insurance as the Secretary may require, on such terms and conditions as the Secretary may prescribe.

(c) Mortgages, liens, and other security

The Secretary shall take as security for the obligations entered into in connection with loans, mortgages on farms with respect to which such loans are made or such other security as the Secretary may require, and for obligations in connection with loans to associations under section 1926 of this title, shall take liens on the facility or such other security as he may determine to be necessary. Such security instruments may constitute liens running to the United States notwithstanding the fact that the notes may be held by lenders other than the United States. A borrower may use the same collateral to secure two or more loans made, insured, or guaranteed under this subchapter, except that the outstanding amount of such loans may not exceed the total value of the collateral so used.

(d) Mineral rights as collateral

With respect to a farm ownership loan made after December 23, 1985, unless appraised values of the rights to oil, gas, or other minerals are specifically included as part of the appraised value of collateral securing the loan, the rights to oil, gas, or other minerals located under the property shall not be considered part of the collateral securing the loan. Nothing in this subsection shall prevent the inclusion of, as part of the collateral securing the loan, any payment or other compensation the borrower may receive for damages to the surface of the collateral real estate resulting from the exploration for or recovery of minerals.

(e) Additional collateral

The Secretary may not—

(1) require any borrower to provide additional collateral to secure a farmer program loan made or insured under this chapter, if the borrower is current in the payment of principal and interest on the loan; or

(2) bring any action to foreclose, or otherwise liquidate, any such loan as a result of the failure of a borrower to provide additional collateral to secure a loan, if the borrower was current in the payment of principal and interest on the loan at the time the additional collateral was requested.

(Pub. L. 87 128, title III, §307, Aug. 8, 1961, 75 Stat. 308; Pub. L. 92 419, title I, §§113, 114, 128(b), Aug. 30, 1972, 86 Stat. 660, 666; Pub. L. 95 334, title I, §108, Aug. 4, 1978, 92 Stat. 422; Pub. L. 97 35, title I, §160(a), Aug. 13, 1981, 95 Stat. 376; Pub. L. 99 198, title XIII, §§1304A, 1305, Dec. 23, 1985, 99 Stat. 1521; Pub. L. 100 233, title VI, §§603, 604, Jan. 6, 1988, 101 Stat. 1665, 1666; Pub. L. 101 624, title XVIII, §1803(a), title XXIII, §2383, Nov. 28, 1990, 104 Stat. 3818, 4050; Pub. L. 102 552, title V, §516(c)(1), Oct. 28, 1992, 106 Stat. 4137; Pub. L. 103 328, title I, §113(a), Sept. 29, 1994, 108 Stat. 2366.)

References in Text

For definition of "this chapter", referred to in subsecs. (a)(6)(A) and (e)(1), see note set out under section 1921 of this title.

Amendments

1994—Subsec. (a)(3)(A). Pub. L. 103 328, §113(a)(1), substituted "Notwithstanding the provisions of the constitution or laws of any State limiting the rate or amount of interest that may be charged, taken, received, or reserved, except" for "Except".

Subsec. (a)(5). Pub. L. 103 328, §113(a)(2), substituted "(5)(A) Except as provided in subparagraph (B), the" for "(5) The" and added subpar. (B).

1992—Subsec. (a)(6)(B)(ii) to (viii). Pub. L. 102 552 redesignated cls. (iii) to (viii) as (ii) to (vii) and struck out former cl. (ii) which read as follows: "the provisions of section 1924(a) of this title, relating to the financing of outdoor recreational enterprises or the conversion of farming or ranching operations to recreational uses,".

1990—Subsec. (a)(3)(A). Pub. L. 101 624, §2383(1), substituted "guaranteed" for "guranteed".

Subsec. (a)(3)(B). Pub. L. 101 624, §1803(a), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: "Except as provided in paragraph (6), the interest rates on loans (other than guaranteed loans) under section 1934 of this title shall be as determined by the Secretary, but not in excess of one-half of the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, nor less than 5 per centum per annum."

Subsec. (a)(3)(C). Pub. L. 101 624, §2383(2), added subpar. (C).

1988—Subsec. (c). Pub. L. 100 233, §603, inserted provisions at end relating to use of same collateral to secure two or more loans made, insured, or guaranteed under this subchapter.

Subsec. (e). Pub. L. 100 233, §604, added subsec. (e).

1985—Subsec. (a)(3)(A). Pub. L. 99 198, §1304A, substituted "where the median household income of the persons to be served by such facility is below the higher of 80 per centum of the statewide nonmetropolitan median household income or the poverty line established by the Office of Management and Budget, as revised under section 9902(2) of title 42" for "where the median family income of the persons to be served by such facility is below the poverty line prescribed by the Office of Management and Budget as adjusted under section 2971d of title 42" and prescribed a 7 per centum per annum ceiling on loans for facilities that do not qualify for the 5 per centum per annum interest rate but are located in areas where the median household income of the persons to be served by the facility does not exceed 100 per centum of the statewide nonmetropolitan median household income.

Subsec. (d). Pub. L. 99 198, §1305, added subsec. (d).

1981—Subsec. (a). Pub. L. 97 35 in par. (2) inserted reference to par. (6), in par. (3) designated existing provisions as subpar. (A), expanded provisions to take into account provisions of par. (6) and revised criteria for determination of applicable interest rates, and added subpar. (B), in par. (4) inserted exception for par. (6), and added par. (6).

1978—Subsec. (a). Pub. L. 95 334, §108(1), substituted provisions relating to determination of interest rates on loans, except as provided in pars. (3) to (5), as not in excess of the current average market yield on outstanding marketable obligations of the United States, with comparable remaining periods of maturity to the average maturities of such loans plus additional adjusted amounts, for provisions relating to establishment of interest rates on loans, except as specifically provided, but not in excess of 5 per centum per annum.

Subsecs. (b), (c). Pub. L. 95 334, §108(2), (3), added subsec. (b) and redesignated former subsec. (b) as (c).

1972—Subsec. (a). Pub. L. 92 419, §§113, 114, prescribed interest rates on rural development other than guaranteed and guaranteed loans and escrow payment of taxes and insurance, respectively.

Subsec. (b). Pub. L. 92 419, §128(b), substituted "may" for "shall" in second sentence.

Effective Date of 1994 Amendment

Section 113(b) of Pub. L. 103 328 provided that:

"(1) In general.—Except as provided in paragraphs (2) and (3), the amendments made by subsection (a) [amending this section] shall apply to a loan made, insured, or guaranteed under the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) in a State on or after the date of enactment of this Act [Sept. 29, 1994].

"(2) State option.—Except as provided in paragraph (3), the amendments made by subsection (a) shall not apply to a loan made, insured, or guaranteed under the Consolidated Farm and Rural Development Act in a State after the date (that occurs during the 3-year period beginning on the date of enactment of this Act) on which the State adopts a law or certifies that the voters of the State have voted in favor of a provision of the constitution or law of the State that states that the State does not want the amendments made by subsection (a) to apply with respect to loans made, insured, or guaranteed under such Act in the State.

"(3) Transitional period.—In any case in which a State takes an action described in paragraph (2), the amendments made by subsection (a) shall continue to apply to a loan made, insured, or guaranteed under the Consolidated Farm and Rural Development Act in the State after the date the action was taken pursuant to a commitment for the loan that was entered into during the period beginning on the date of enactment of this Act, and ending on the date on which the State takes the action."

Effective Date of 1992 Amendment

Section 516(c)(2) of Pub. L. 102 552 provided that: "The amendments made by paragraph (1) of this subsection [amending this section] shall take effect at the same time as the amendments made by section 501(a) of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Public Law 102 237; 105 Stat. 1865) [amending section 1924 of this title] took effect.

Effective Date of 1981 Amendment

Section 160(c) of Pub. L. 97 35 provided that: "The amendments made by this section [amending this section and section 1946 of this title] shall apply to loans approved after September 30, 1981."

Section Referred to in Other Sections

This section is referred to in sections 935, 1926, 1929, 1931, 1946, 1947, 1968, 1991 of this title; title 25 section 492.

§1927a. Loan interest rates charged by Farmers Home Administration; grant funds associated with loans

Effective October 1, 1981, and thereafter, in the case of water and waste disposal and community facility borrowers, and effective November 12, 1983, and thereafter, in the case of housing and farm borrowers, upon request of the borrower, the interest rate charged by the Farmers Home Administration to such borrowers shall be the lower of the rates in effect at either the time of loan approval or loan closing and any Farmers Home Administration grant funds associated with such loans shall be set in amount based on the interest rate in effect at the time of loan approval.

(Pub. L. 99 88, title I, §100, Aug. 15, 1985, 99 Stat. 296; Pub. L. 100 233, title VI, §615(b)(1)(A), Jan. 6, 1988, 101 Stat. 1681.)

Codification

Section was enacted as part of the Supplemental Appropriations Act, 1985, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.

Amendments

1988—Pub. L. 100 233 substituted "Effective October 1, 1981, and thereafter, in the case of water and waste disposal and community facility borrowers, and effective November 12, 1983, and thereafter, in the case of housing and farm borrowers" for "Effective November 12, 1983, and thereafter" and "to such borrowers" for "to housing, farm, water and waste disposal, and community facility borrowers".

Applicability of 1988 Amendment

Section 615(b)(1)(B) of Pub. L. 100 233 provided that: "The amendment made by subparagraph (A) [amending this section] shall not apply to any note or other obligation sold under section 1001 of the Omnibus [Budget] Reconciliation Act of 1986 [Pub. L. 99 509, 7 U.S.C. 1929a note] on or before the date of the enactment of this paragraph [Jan. 6, 1988]."

§1928. Insurance of loans; servicing and purchase of loans; retention of charges out of payments; full faith and credit of United States; incontestability

Loans under this subchapter may be insured by the Secretary whenever funds are advanced or a loan is purchased by a lender other than the United States. In connection with insurance of loans, the Secretary—

(1) is authorized to make agreements with respect to the servicing of loans insured hereunder and to purchase such loans on such terms and conditions as he may prescribe; and

(2) may retain out of payments by the borrower a charge at a rate specified in the insurance agreement applicable to the loan.

Any contract of insurance executed by the Secretary under this subchapter shall be an obligation supported by the full faith and credit of the United States and incontestable except for fraud or misrepresentation of which the holder has actual knowledge.

(Pub. L. 87 128, title III, §308, Aug. 8, 1961, 75 Stat. 308; Pub. L. 87 798, Oct. 11, 1962, 76 Stat. 908; Pub. L. 89 240, §2(a), Oct. 7, 1965, 79 Stat. 932; Pub. L. 90 488, §6, Aug. 15, 1968, 82 Stat. 770; Pub. L. 92 133, Oct. 5, 1971, 85 Stat. 364; Pub. L. 101 624, title XXIII, §2388(a), Nov. 28, 1990, 104 Stat. 4052.)

Amendments

1990—Pub. L. 101 624 redesignated pars. (a) and (b) as pars. (1) and (2), respectively, and in par. (1), substituted "prescribe;" for "prescribe,;".

1971—Pub. L. 92 133 eliminated October 1, 1971, as time limitation for insurance of loans.

1968—Pub. L. 90 488 authorized insurance of loans until Oct. 1, 1971, without the $450,000,000 limitation on aggregate amount in any one year.

1965—Pub. L. 89 240 substituted "$450,000,000" for "$200,000,000", "may retain" for "shall retain", and "specified in the insurance agreement applicable to the loan" for "determined by the Secretary from time to time equivalent to not less than one-half of 1 per centum per annum on the principal unpaid balance of the loan", and struck out "except that no agreement shall provide for purchase by the Secretary at a date sooner than three years from the date of the note" after "he may prescribe".

1962—Pub. L. 87 798 increased aggregate amount of loans that may be insured in any one year from $150,000,000 to $200,000,000.

Loans to Indians

Authority of Secretary of Agriculture to make loans to Indian tribes and tribal corporations to acquire land within reservations, see sections 488 to 492 of Title 25, Indians.

Section Referred to in Other Sections

This section is referred to in sections 1929, 1929a, 1931, 1947, 1968 of this title; title 25 section 488; title 42 section 1485.

§1929. Agricultural Credit Insurance Fund

(a) Revolving fund

The fund established pursuant to section 11(a) of the Bankhead-Jones Farm Tenant Act, as amended, shall hereafter be called the Agricultural Credit Insurance Fund and is hereinafter in this subchapter referred to as the "fund". The fund shall remain available as a revolving fund for the discharge of the obligations of the Secretary under agreements insuring loans under this subchapter and loans and mortgages insured under prior authority.

(b) Deposits of funds; investments; purchase of notes

Moneys in the fund not needed for current operations shall be deposited in the Treasury of the United States to the credit of the fund or invested in direct obligations of the United States or obligations guaranteed by the United States. The Secretary may purchase with money in the fund any notes issued by the Secretary to the Secretary of the Treasury for the purpose of obtaining money for the fund.

(c) Notes; form and denominations; maturities; terms and conditions; interest rate; purchase by Treasury; public debt transaction

The Secretary is authorized to make and issue notes to the Secretary of the Treasury for the purpose of obtaining funds necessary for discharging obligations under this section and for authorized expenditures out of the fund. Such notes shall be in such form and denominations and have such maturities and be subject to such terms and conditions as may be prescribed by the Secretary with the approval of the Secretary of the Treasury. Such notes shall bear interest at a rate fixed by the Secretary of the Treasury, taking into consideration the current average market yield of outstanding marketable obligations of the United States having maturities comparable to the notes issued by the Secretary under this subchapter. The Secretary of the Treasury is authorized and directed to purchase any notes of the Secretary issued hereunder, and, for that purpose, the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, and the purposes for which such securities may be issued under such chapter are extended to include the purchase of notes issued by the Secretary. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes shall be treated as public debt transactions of the United States.

(d) Notes and security as part of fund; collection or sale of notes; deposit of net proceeds in fund

Notes and security acquired by the Secretary in connection with loans insured under this subchapter and under prior authority shall become a part of the fund. Notes may be held in the fund and collected in accordance with their terms or may be sold by the Secretary with or without agreements for insurance thereof at the balance due thereon, or on such other basis as the Secretary may determine from time to time. All net proceeds from such collections, including sales of notes or property, shall be deposited in and become a part of the fund.

(e) Deposit in fund of portion of charge on outstanding principal obligations; availability of remainder of charge, and merger with appropriations, for administrative expenses

The Secretary shall deposit in the fund all or a portion, not to exceed one-half of 1 per centum of the unpaid principal balance of the loan, of any charge collected in connection with the insurance of loans; and any remainder of any such charge shall be available for administrative expenses of the Farmers Home Administration and the Rural Development Administration, in proportion to such charges collected in connection with the insurance of loans by such agency, to be transferred annually and become merged with any appropriation for administrative expenses for such agency.

(f) Utilization of fund

The Secretary may utilize the fund—

(1) to make loans which could be insured under this subchapter whenever the Secretary has reasonable assurance that they can be sold without undue delay, and may sell and insure such loans;

(2) to pay amounts to which the holder of the note is entitled on loans heretofore or hereafter insured accruing between the date of any payments made by the borrower and the date of transmittal of any such payments to the lender. In the discretion of the Secretary, payments other than final payments need not be remitted to the holder until due or until the next agreed annual or semiannual remittance date;

(3) to pay to the holder of the notes any deferred or defaulted installment or, upon assignment of the note to the Secretary at the Secretary's request, the entire balance due on the loan;

(4) to purchase notes in accordance with agreements previously entered into;

(5) to pay for contract services, taxes, insurance, prior liens, expenses necessary to make fiscal adjustments in connection with the application and transmittal of collections and other expenses and advances authorized in connection with insured loans, including the difference between interest payable by borrowers and interest to which insured lenders or insured holders are entitled under agreements with the Secretary included in contracts of insurance;

(6) to pay the Secretary's costs of administration necessary to insure, make grants, service, and otherwise carry out the programs under this chapter not specifically covered by the Rural Development Insurance Fund of section 1929a of this title, including costs of the Secretary incidental to guaranteeing loans under this chapter, either directly from the Fund or by transfers from the Fund to, and merger with, any appropriations for administrative expenses.

(g) Transfer of funds from Farmers Home Administration direct loan account and Emergency Credit Revolving Fund; abolition of such account and fund; payments from Agricultural Credit Insurance Fund; interest

(1) The assets and liabilities of, and authorizations applicable to, the Farmers Home Administration direct loan account created by section 1988(c) of this title and the Emergency Credit Revolving Fund referred to in section 1966 of this title are hereby transferred to the fund, and such account and such revolving fund are hereby abolished. Such assets and their proceeds, including loans made out of the fund pursuant to this section, shall be subject to the provisions of this section, section 1928, the last sentence of section 1926(a)(1), and the last sentence of section 1927 of this title.

(2) From time to time, and at least at the close of each fiscal year, the Secretary shall pay from the fund into the Treasury as miscellaneous receipts interest on the value as determined by the Secretary, with the approval of the Comptroller General, of the Government's equity transferred to the fund pursuant to the first sentence of this subsection plus the cumulative amount of appropriations made available after enactment of this provision as capital and for administration of the programs financed from the fund, less the average undisbursed cash balance in the fund during the year. The rate of such interest shall be determined by the Secretary of the Treasury, taking into consideration the current average yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of loans made or insured from the fund, adjusted to the nearest one-eighth of 1 per centum. Interest payments may be deferred with the approval of the Secretary of the Treasury, but any interest payments so deferred shall themselves bear interest. If at any time the Secretary determines that moneys in the fund exceed present and any reasonably prospective future requirements of the fund, such excess may be transferred to the general fund of the Treasury.

(h) Guaranteed loans; interest rate for loans sold into secondary market; loan fees

(1) The Secretary may provide financial assistance to borrowers for purposes provided in this chapter by guaranteeing loans made by any Federal or State chartered bank, savings and loan association, cooperative lending agency, or other legally organized lending agency.

(2) The interest rate payable by a borrower on the portion of a guaranteed loan that is sold by a lender to the secondary market under this chapter may be lower than the interest rate charged on the portion retained by the lender, but shall not exceed the average interest rate charged by the lender on loans made to farm and ranch borrowers.

(3) With regard to any loan guarantee on a loan made by a commercial or cooperative lender related to a loan made by the Secretary under section 1935 of this title—

(A) the Secretary shall not charge a fee to any person (including a lender); and

(B) a lender may charge a loan origination and servicing fee in an amount not to exceed 1 percent of the amount of the loan.

(i) Coordination of assistance for qualified beginning farmers and ranchers

(1) Not later than 60 days after any State expresses to the Secretary, in writing, a desire to coordinate the provision of financial assistance to qualified beginning farmers and ranchers in the State, the Secretary and the State shall conclude a joint memorandum of understanding that shall govern the coordination of the provision of the financial assistance by the State and the Secretary.

(2) The memorandum of understanding shall provide that if a State beginning farmer program makes a commitment to provide a qualified beginning farmer or rancher with financing to establish or maintain a viable farming or ranching operation, the Secretary shall, subject to applicable law, normal loan approval criteria, and the availability of funds provide the farmer or rancher with a down payment loan under section 1935 of this title or a guarantee of the financing provided by the State program, or both.

(3) The Secretary shall not charge any person (including a lender) any fee with respect to the provision of any guarantee under this subsection.

(4) The Secretary shall notify each State of the provisions of this subsection.

(5) As used in paragraph (1), the term "State beginning farmer program" means any program that is—

(A) carried out by, or under contract with, a State; and

(B) designed to assist persons in obtaining the financial assistance necessary to enter agriculture and establish viable farming or ranching operations.

(Pub. L. 87 128, title III, §309, Aug. 8, 1961, 75 Stat. 309; Pub. L. 87 703, title IV, §401(3), Sept. 27, 1962, 76 Stat. 632; Pub. L. 89 240, §2(b), (c), Oct. 7, 1965, 79 Stat. 932; Pub. L. 89 633, Oct. 8, 1966, 80 Stat. 879; Pub. L. 90 488, §7, Aug. 15, 1968, 82 Stat. 771; Pub. L. 92 419, title I, §115, Aug. 30, 1972, 86 Stat. 660; Pub. L. 95 113, title XV, §1510(a), Sept. 29, 1977, 91 Stat. 1022; Pub. L. 95 334, title I, §109(a), Aug. 4, 1978, 92 Stat. 423; Pub. L. 101 624, title XXIII, §2302(a)(2), Nov. 28, 1990, 104 Stat. 3980; Pub. L. 102 554, §§4, 5(a), Oct. 28, 1992, 106 Stat. 4143.)

References in Text

Section 11(a) of the Bankhead-Jones Farm Tenant Act, as amended, referred to in subsec. (a), refers to section 11(a) of act July 22, 1937, ch. 517, title I, as added Aug. 14, 1946, ch. 964, §5, 60 Stat. 1072, which was classified to section 1005a of this title and was repealed by section 341(a) of Pub. L. 87 128.

For definition of "this chapter", referred to in subsec. (h)(1), (2), see note set out under section 1921 of this title.

Codification

In subsec. (c), "chapter 31 of title 31" and "such chapter" substituted for "the Second Liberty Bond Act, as amended" and "such Act, as amended," respectively, on authority of Pub. L. 97 258, §4(b), Sept. 13, 1982, 96 Stat. 1067, the first section of which enacted Title 31, Money and Finance.

Amendments

1992—Subsec. (h). Pub. L. 102 554, §4, designated existing provisions as par. (1) and added pars. (2) and (3).

Subsec. (i). Pub. L. 102 554, §5(a), added subsec. (i).

1990—Subsec. (e). Pub. L. 101 624 inserted "and the Rural Development Administration, in proportion to such charges collected in connection with the insurance of loans by such agency" and substituted "expenses for such agency" for "expenses".

1978—Subsec. (f)(1), (6). Pub. L. 95 334 in par. (1) struck out provisions limiting amount of loans outstanding at any one time, and added par. (6).

1977—Subsec. (f)(3). Pub. L. 95 113 substituted "any deferred or defaulted installment" for "any defaulted installment".

1972—Subsec. (f)(1). Pub. L. 92 419, §115(a)(1), substituted "$500,000,000" for "$100,000,000".

Subsec. (f)(2). Pub. L. 92 419, §115(a)(2), substituted "amounts" for "the interest" and "payments" for "prepayments" in three places and inserted "or until the next agreed annual or semi-annual remittance date" after "until due".

Subsec. (f)(5). Pub. L. 92 419, §115(a)(3), (4), substituted "connection with insured loans, including the difference between interest payable to borrowers and interest to which insured lenders or insured holders are entitled under agreements with the Secretary included in contracts of insurance" for "section 1985(a) of this title in connection with insured loans," and provided payment for contract services.

Subsecs. (g), (h). Pub. L. 92 419, §115(b), added subsecs. (g) and (h).

1968—Subsec. (f)(1). Pub. L. 90 488 increased from $50,000,000 to $100,000,000 the aggregate amount of loans to be sold and insured and undisposed of at any one time.

1966—Subsec. (f)(2). Pub. L. 89 633 substituted "until due" for "until the due date of the annual installment".

1965—Subsec. (e). Pub. L. 89 240, §2(b), substituted "all or a portion, not to exceed one-half of 1 per centum of the unpaid principal balance of the loan of any charge collected in connection with the insurance of loans; and any remainder of any such charge" for "such portion of the charge collected in connection with the insurance of loans at least equal to a rate of one-half of 1 per centum per annum on the outstanding principal obligations and the remainder of such charge".

Subsec. (f)(1). Pub. L. 89 240, §2(c), substituted "$50,000,000" for "$25,000,000".

1962—Subsec. (f)(1). Pub. L. 87 703 increased from $10,000,000 to $25,000,000 the aggregate amount of loans to be sold and insured and undisposed of at any one time.

Effective Date of 1977 Amendment

Amendment by Pub. L. 95 113 effective Oct. 1, 1977, see section 1901 of Pub. L. 95 113, set out as a note under section 1307 of this title.

Advisory Committee on Beginning Farmers and Ranchers

Section 5(b) of Pub. L. 102 554 provided that:

"(1) Establishment; purpose.—Not later than 18 months after the date of enactment of this Act [Oct. 28, 1992], the Secretary of Agriculture shall establish an advisory committee, to be known as the 'Advisory Committee on Beginning Farmers and Ranchers', which shall provide advice to the Secretary on—

"(A) the development of the program of coordinated assistance to qualified beginning farmers and ranchers under section 309(i) of the Consolidated Farm and Rural Development Act [7 U.S.C. 1929(i)] (as added by subsection (a) of this section);

"(B) methods of maximizing the number of new farming and ranching opportunities created through the program;

"(C) methods of encouraging States to participate in the program;

"(D) the administration of the program; and

"(E) other methods of creating new farming or ranching opportunities.

"(2) Membership.—The Secretary shall appoint the members of the Advisory Committee. The Advisory Committee shall include representatives from the following:

"(A) The Farmers Home Administration.

"(B) State beginning farmer programs (as defined in section 309(i)(5) of the Consolidated Farm and Rural Development Act (as added by subsection (a) of this section)).

"(C) Commercial lenders.

"(D) Private nonprofit organizations with active beginning farmer or rancher programs.

"(E) The Cooperative Extension Service.

"(F) Community colleges or other educational institutions with demonstrated experience in training beginning farmers or ranchers.

"(G) Other entities or persons providing lending or technical assistance for qualified beginning farmers or ranchers."

Limitation on Sales From Agricultural Credit Insurance Fund

Pub. L. 99 509, title I, §1002, Oct. 21, 1986, 100 Stat. 1875, provided that: "During fiscal years 1987 through 1989, no note shall be sold out of the Agricultural Credit Insurance Fund, except in connection with transactions with the Secretary of the Treasury, without prior approval by Congress."

Loans to Indians

Authority of the Secretary of Agriculture to make loans to Indian tribes and tribal corporations to acquire land within reservations, see sections 488 to 492 of Title 25, Indians.

Section Referred to in Other Sections

This section is referred to in sections 1929a, 1931, 1936, 1947, 1948, 1968, 1983a, 1991, 1994, 1999, 6942 of this title; title 25 section 488; title 42 sections 1485, 1487, 8813.

§1929 1. Level of loan programs under Agricultural Credit Insurance Fund

On and after October 28, 1991, no funds in this Act or any other Act shall be available to carry out loan programs under the Agricultural Credit Insurance Fund at levels other than those provided for in advance in appropriations Acts.

(Pub. L. 102 142, title III, Oct. 28, 1991, 105 Stat. 899.)

Codification

Section was enacted as part of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1992, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.

§1929a. Rural Development Insurance Fund

(a) Creation; revolving fund; rural development loans

There is hereby created the Rural Development Insurance Fund (hereinafter in this section referred to as the "Insurance Fund") which shall be used by the Secretary as a revolving fund for the discharge of the obligations of the Secretary under contracts guaranteeing or insuring rural development loans. For the purpose of this section "rural development loans" shall be those provided for by sections 1924(b), 1926(a)(1), 1926(a)(14), 1932, and 1942(b) of this title, except loans (other than for water systems and waste disposal facilities) of a type authorized by section 1926(a)(1) of this title prior to its amendment by the Rural Development Act of 1972.

(b) Transfer of assets and liabilities

The assets and liabilities of the Agricultural Credit Insurance Fund referred to in section 1929(a) of this title applicable to loans for water systems and waste disposal facilities under section 1926(a)(1) of this title are hereby transferred to the Insurance Fund. Such assets (including the proceeds thereof) and liabilities and rural development loans guaranteed or insured pursuant to this chapter shall be subject to the provisions of this section and section 1928 of this title.

(c) Credits in the Treasury; investments; notes, purchasing authority of the Secretary

Moneys in the Insurance Fund not needed for current operations shall be deposited in the Treasury of the United States to the credit of the Insurance Fund or invested in direct obligations of the United States or obligations guaranteed by the United States. The Secretary may purchase with money in the Insurance Fund any notes issued by the Secretary to the Secretary of the Treasury for the purpose of obtaining money for the Insurance Fund.

(d) Notes, issuing authority of the Secretary; use of funds; terms and conditions, form, denominations, maturities, and interest rate of notes; notes, purchasing authority of the Secretary of the Treasury; public debt transactions

The Secretary is authorized to make and issue notes to the Secretary of the Treasury for the purpose of obtaining funds necessary for discharging obligations under this section and for making loans, advances, and authorized expenditures out of the Insurance Fund. Such notes shall be in such form and denominations and have such maturities and be subject to such terms and conditions as may be prescribed by the Secretary with the approval of the Secretary of the Treasury. Such notes shall bear interest at a rate fixed by the Secretary of the Treasury, taking into consideration the current average market yield of outstanding marketable obligations of the United States having maturities comparable to the average maturities of rural development loans made, guaranteed, or insured under this chapter. The Secretary of the Treasury is authorized and directed to purchase any notes of the Secretary issued hereunder, and, for that purpose, the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, and the purposes for which such securities may be issued under such chapter are extended to include the purchase of notes issued by the Secretary hereunder. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes shall be treated as public debt transactions of the United States.

(e) Notes and security as part of Insurance Fund; collection and sale of notes and other obligations; deposit of net proceeds in Insurance Fund

Notes and security acquired by the Secretary in connection with rural development loans made, guaranteed, or insured under this chapter or transferred by subsection (b) of this section shall become a part of the Insurance Fund. Notes and other obligations may be held in the Insurance Fund and collected in accordance with their terms or may be sold by the Secretary with or without agreements for insurance thereof at the balance due thereon, or on such other basis as the Secretary may determine from time to time, including sale on a nonrecourse basis. The Secretary and any subsequent purchaser of such notes and other obligations sold by the Secretary on a nonrecourse basis shall be relieved of any responsibilities that might have been imposed had the borrower remained indebted to the Secretary. All net proceeds from such collections, including sales of notes or property, shall be deposited in and become a part of the Insurance Fund.

(f) Deposit of loan service charges in Insurance Fund

The Secretary shall deposit in the Insurance Fund any charges collected for loan services provided by the Secretary as well as charges assessed for losses and costs of administration in connection with making, guaranteeing, or insuring rural development loans under this chapter.

(g) Use of Insurance Fund

The Secretary may utilize the Insurance Fund—

(1) to make rural development loans which could be insured under this chapter whenever he has a reasonable assurance that they can be sold without undue delay, and he may sell and insure such loans;

(2) to pay amounts to which the holder of insured notes is entitled on loans heretofore or hereafter insured accruing between the date of any payments by the borrower and the date of transmittal of any such payments to the holder. In the discretion of the Secretary, payments other than final payments need not be remitted to the holder until due or until the next agreed annual or semiannual remittance date;

(3) to pay to the holder of insured notes any deferred or defaulted installment, or upon assignment of the note to the Secretary at the Secretary's request, the entire balance due on the loan;

(4) to purchase notes in accordance with contracts of insurance heretofore or hereafter entered into by the Secretary;

(5) to make payments in compliance with the Secretary's obligations under contracts of guarantee entered into by him;

(6) to pay taxes, insurance, prior liens, expenses necessary to make fiscal adjustments in connection with the application and transmittal of collections or necessary to obtain credit reports on applicants or borrowers, expenses for necessary services, including construction inspections, commercial appraisals, loan servicing, consulting business advisory or other commercial and technical services, and other program services, and other expenses and advances authorized in section 1985(a) of this title in connection with insured loans. Such items may be paid in connection with guaranteed loans after or in connection with acquisition by the Secretary of such loans or security therefor after default, to an extent determined by the Secretary to be necessary to protect the interest of the Government, or in connection with grants and any other activity authorized in this chapter;

(7) to pay the difference between interest payments by borrowers and interest to which holders of insured notes are entitled under contracts of insurance heretofore or hereafter entered into by the Secretary; and

(8) to pay the Secretary's costs of administration necessary to insure loans under the programs referred to in subsection (a) of this section, make grants under sections 1926(a) and 1932 of this title, service, and otherwise carry out such programs, including costs of the Secretary incidental to guaranteeing rural development loans under this chapter, either directly from the Insurance Fund or by transfers from the Fund to, and merger with, any appropriations for administrative expenses.

(h) Gross income; interest or other income on insured loans

When any loan is sold out of the Insurance Fund as an insured loan, the interest or other income thereon paid to an insured holder shall be included in gross income for purposes of chapter 1 of title 26.

(Pub. L. 87 128, title III, §309A, as added Pub. L. 92 419, title I, §116, Aug. 30, 1972, 86 Stat. 661; amended Pub. L. 95 113, title XV, §1510(b), Sept. 29, 1977, 91 Stat. 1022; Pub. L. 95 334, title I, §§107(b), 110, Aug. 4, 1978, 92 Stat. 422, 424; Pub. L. 99 509, title I, §1001(b), Oct. 21, 1986, 100 Stat. 1874; Pub. L. 99 514, §2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 99 500, title III, §381(b), Oct. 18, 1986, 100 Stat. 1783 369, and Pub. L. 99 591, title III, §381(b), Oct. 30, 1986, 100 Stat. 3341 372.)

References in Text

For statutory changes to section 1926(a)(1) of this title by the Rural Development Act of 1972, referred to in subsec. (a), see 1972 Amendment note for section 104 of Pub. L. 92 419, set out under section 1926 of this title. For complete classification of the Rural Development Act of 1972 to the Code, see Short Title of 1972 Amendment note set out under section 1921 of this title and Tables.

Section 1926(a)(14) of this title, referred to in subsec. (a), was redesignated 1926(a)(15) of this title by Pub. L. 96 355.

For definition of "this chapter", referred to in subsecs. (b), (d), (e), (f), (g)(1), (6), and (8), see note set out under section 1921 of this title.

Codification

Pub. L. 99 591 is a corrected version of Pub. L. 99 500.

In subsec. (d), "chapter 31 of title 31" and "such chapter" substituted for "the Second Liberty Bond Act, as amended" and "such Act, as amended," respectively, on authority of Pub. L. 97 258, §4(b), Sept. 13, 1982, 96 Stat. 1067, the first section of which enacted Title 31, Money and Finance.

Amendments

1986—Subsec. (e). Pub. L. 99 500, Pub. L. 99 509, and Pub. L. 99 591 amended second sentence of subsec. (e) identically, substituting "Notes and other obligations" for "Notes" and substituting ", including sale on a nonrecourse basis. The Secretary and any subsequent purchaser of such notes or other obligations sold by the Secretary on a nonrecourse basis shall be relieved of any responsibilities that might have been imposed had the borrower remained indebted to the Secretary." for period at end.

Subsec. (h). Pub. L. 99 514 substituted "Internal Revenue Code of 1986" for "Internal Revenue Code of 1954", which for purposes of codification was translated as "title 26" thus requiring no change in text.

1978—Subsec. (a). Pub. L. 95 334, §107(b), inserted reference to section 1926(a)(14) of this title.

Subsec. (g)(8). Pub. L. 95 334, §110, substituted provisions relating to payment of costs of administration necessary to insure loans under subsec. (a) of this section, make grants under sections 1926(a) and 1932 of this title, and otherwise carry out such programs for provisions relating to payment of costs of administration of the rural loan development program.

1977—Subsec. (g)(3). Pub. L. 95 113 substituted "any deferred or defaulted installment" for "any defaulted installment".

Effective Date of 1977 Amendment

Amendment by Pub. L. 95 113 effective Oct. 1, 1977, see section 1901 of Pub. L. 95 113, set out as a note under section 1307 of this title.

Disaster Assistance for Rural Business Enterprises

Pub. L. 101 82, title IV, §401, Aug. 14, 1989, 103 Stat. 583, as amended by Pub. L. 101 220, §9(d), Dec. 12, 1989, 103 Stat. 1882, provided that:

"(a) Loan Guarantees.—The Secretary of Agriculture shall guarantee loans made in rural areas to—

"(1) public, private, or cooperative organizations, to Indian tribes on Federal and State reservations or other federally recognized Indian tribal groups, or to any other business entities to assist such organizations, tribes, or entities in alleviating the distress caused to such organizations, tribes, or entities, directly or indirectly, by the drought, freeze, storm, excessive moisture, earthquake, or related condition in 1988 or 1989; and

"(2) such organizations, tribes, or entities that refinance or restructure debt as a result of losses incurred, directly or indirectly, because of such natural disasters in 1988 or 1989.

"(b) Eligible Loans.—

"(1) In general.—Loans guaranteed under this section shall be loans made by any Federal or State chartered bank, savings and loan association, cooperative lending agency, insurance company, or other legally organized lending agency.

"(2) Production agriculture.—No application for a loan guarantee under this section shall be denied on the basis that such organization, tribe, or entity engages in whole or in part in production agriculture.

"(c) Loan Guarantee Limits.—

"(1) Percentage of principal and interest.—No guarantee under this section shall exceed 90 percent of the principal and interest amount of the loan or $2,500,000, whichever is the lesser amount.

"(2) Total amount.—The total amount of loan guarantee under this section shall not exceed $300,000,000.

"(d) Use of the Rural Development Insurance Fund.—The Secretary shall use the Rural Development Insurance Fund established under section 309A of the Consolidated Farm and Rural Development Act (7 U.S.C. 1929a) for the purposes of discharging the obligations of the Secretary under this section."

Similar provisions were contained in the following prior act:

Pub. L. 100 387, title III, §331, Aug. 11, 1988, 102 Stat. 951.

Sale of Rural Development Notes and Other Obligations

Section 1001 of Pub. L. 99 509, as amended by Pub. L. 100 233, title VIII, §803, Jan. 6, 1988, 101 Stat. 1714; Pub. L. 101 220, §12, Dec. 12, 1989, 103 Stat. 1883, provided that:

"(a) Sales Required.—The Secretary of Agriculture, under such terms as the Secretary may prescribe, shall sell notes and other obligations held in the Rural Development Insurance Fund established under section 309A of the Consolidated Farm and Rural Development Act [7 U.S.C. 1929a] in such amounts as to realize net proceeds to the Government of not less than—

"(1) $1,000,000,000 from such sales during fiscal year 1987,

"(2) $552,000,000 from such sales during fiscal year 1988, and

"(3) $547,000,000 from such sales during fiscal year 1989.

"(b) [Amended subsec. (e) of this section]

"(c) Contract Provisions.—Consistent with section 309A(e) of the Consolidated Farm and Rural Development Act [7 U.S.C. 1929a(e)], as amended by subsection (b), any sale of notes or other obligations, as described in subsection (a), shall not alter the terms specified in the note or other obligation, except that, on sale, a note or other obligation shall not be subject to the provisions of section 333(c) of the Consolidated Farm and Rural Development Act [7 U.S.C. 1983(c)].

"(d) Eligibility to Purchase Notes.—Notwithstanding any other provision of law, each institution of the Farm Credit System shall be eligible to purchase notes and other obligations held in the Rural Development Insurance Fund and to service (including the extension of additional credit and all other actions necessary to preserve, conserve, or protect the institution's interest in the purchased notes or other obligations), collect, and dispose of such notes and other obligations, subject only to such terms and conditions as may be agreed to by the Secretary of Agriculture and the purchasing institution and as may be approved by the Farm Credit Administration.

"(e) Loan Servicing.—Prior to selling any note or other obligation, as described in subsection (a), the Secretary of Agriculture shall require persons offering to purchase the note or other obligation to demonstrate—

"(1) an ability or resources to provide such servicing, with respect to the loans represented by the note or other obligation, that the Secretary deems necessary to ensure the continued performance on the loan; and

"(2) the ability to generate capital to provide the borrowers of the loans such additional credit as may be necessary in proper servicing of the loans.

"(f) Right of First Refusal.—

"(1) In general.—Before conducting a sale of a portfolio of notes or other obligations under this section, the Secretary of Agriculture shall—

"(A) determine whether the issuer of any unsold note or other obligation desires to purchase the note or other obligation; and

"(B) if so, hold open for 30 days, an offer to sell the note or other obligation to the issuer at a price to be determined under paragraph (2).

"(2) Determination of offering price.—

"(A) Authority.—The Secretary of Agriculture shall determine, in accordance with subparagraph (B), the price at which a note or other obligation shall be offered for sale under this subsection.

"(B) Price.—Such price shall be determined by discounting the payment stream of such note or other obligation at the yield on the then most recent sale of the portfolio, adjusted for changes in market interest rates, servicing and sales expenses, and the maturity and interest rate of such note.

"(3) Prohibitions.—

"(A) Purchase of obligation not tied to purchase of other obligations.—The Secretary of Agriculture shall not require the issuer of any unsold note or other obligation to be offered for sale under this subsection to purchase any other such note or other obligation as a condition of the sale of any such note or other obligation to the issuer.

"(B) Offer to be made without regard to financing.—The Secretary shall offer notes or other obligations for sale to the issuers thereof under this subsection without regard to the manner in which such issuers intend to finance the purchase of such notes or other obligations. However, the price of sale to any issuer using tax exempt financing shall be determined using a yield reflective of the Schedule of Certified Interest Rates as published monthly by the Secretary of the Treasury.

"(g) Applicability of Prohibition on Curtailment or Limitation of Service.—Section 306(b) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1926(b)) shall be applicable to all notes or other obligations sold or intended to be sold under this section.

"(h)(1) Notwithstanding the provisions of section 633 of the Rural Development, Agriculture, and Related Agencies Appropriations Act, 1989 (Public Law 100 460) [title VI, Oct. 1, 1988, 102 Stat. 2263], the Secretary of Agriculture shall offer to the issuer of any unsold note or other obligation described in paragraph (2)(A) for which such issuer made the good faith deposit described in paragraph (2)(A) the opportunity to purchase such note or other obligation consistent with the provisions of this subsection and subsections (f)(2) and (f)(3).

"(2) The provisions of this subsection shall apply only to those issuers who:

"(A) on or before March 9, 1989, made a good faith deposit under this section for fiscal year 1989 with the Secretary to purchase a note or other obligation held in the Rural Development Insurance Fund; and

"(B) otherwise meet all eligibility criteria, as such criteria existed immediately prior to May 9, 1989, at the time the purchase occurs under this subsection.

"(3) The opportunity to purchase any such note or other obligation shall be held open, under the policies and procedures in effect under subsections (f)(2) and (f)(3) immediately prior to May 9, 1989, for 150 days after the date of enactment of this subsection [Dec. 12, 1989]. The Secretary shall not require any further good faith deposit from issuers who qualify under this subsection. The Secretary shall notify eligible issuers of the opportunity afforded under this subsection within 30 days after the date of enactment of this subsection and may require such issuers to express an intention to purchase their note or other obligation by a date certain."

Section 381 of Pub. L. 99 500 and Pub. L. 99 591 provided that:

"(a) In General.—The Secretary of Agriculture shall, under such terms as the Secretary may prescribe, sell notes and other obligations held in the Rural Development Insurance Fund established under section 309A of the Consolidated Farm and Rural Development Act (7 U.S.C. 1929a) in such amounts as to realize net proceeds of not less than—

"(1) $25,000,000 from such sales during fiscal year 1987;

"(2) $36,000,000 from such sales during fiscal year 1988; and

"(3) $37,000,000 from such sales during fiscal year 1989.

"(b) [Amended subsec. (e) of this section]

"(c) Farm Credit System Institutions.—Notwithstanding any other provision of law, institutions of the Farm Credit System operating under the Farm Credit Act of 1971 (12 U.S.C. 2001) shall be eligible to purchase notes and other obligations held in the Rural Development Insurance Fund and to service (including the extension of additional credit and all other actions necessary to preserve, conserve, or protect the institutions' interests in such notes and other obligations), collect, and dispose of such notes and other obligations, subject only to such terms and conditions as may be agreed to by the Secretary of Agriculture and such purchasing institutions and as are approved by the Farm Credit Administration."

Section Referred to in Other Sections

This section is referred to in sections 1929, 1929b, 6942 of this title; title 42 section 8813.

§1929b. Purchase of guaranteed portions of loans; terms and conditions; exercise of authorities

The Secretary may purchase, on such terms and conditions as the Secretary deems appropriate, the guaranteed portion of any loan guaranteed under this chapter: Provided, That the Secretary may not pay for any such guaranteed portion of a loan in excess of an amount equal to the unpaid principal balance and accrued interest on the guaranteed portion of the loan. The Secretary may use for such purchases funds from the Rural Development Insurance Fund with respect to rural development loans as defined in section 1929a(a) of this title and funds from the Agricultural Credit Insurance Fund with respect to all other loans under this chapter. This authority may be exercised only if the Secretary determines that an adequate secondary market is not available in the private sector.

(Pub. L. 87 128, title III, §309B, as added Pub. L. 95 334, title I, §111, Aug. 4, 1978, 92 Stat. 424.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

Section Referred to in Other Sections

This section is referred to in section 2001 of this title.

§1930. Continued availability of appropriated funds for direct real estate loans to farmers and ranchers

Funds appropriated for the purpose of making direct real estate loans to farmers and ranchers under this subchapter shall remain available until expended.

(Pub. L. 87 128, title III, §310, as added Pub. L. 91 524, title VIII, §806(b), Nov. 30, 1970, 84 Stat. 1383.)

§1931. Insured watershed and resource conservation and development loans

Loans meeting the requirements of the Watershed Protection and Flood Prevention Act [16 U.S.C. 1001 et seq.] or title III of the Bankhead-Jones Farm Tenant Act [7 U.S.C. 1010 et seq.] may be insured, or made to be sold and insured, in accordance with and subject to sections 1928 and 1929, the last sentence of section 1926(a)(1), and the last sentence of section 1927 of this title.

(Pub. L. 87 128, title III, §310A, as added Pub. L. 92 419, title I, §117, Aug. 30, 1972, 86 Stat. 663.)

References in Text

The Watershed Protection and Flood Prevention Act, referred to in text, is act Aug. 4, 1954, ch. 656, 68 Stat. 666, as amended, which is classified generally to chapter 18 (§1001 et seq.) of Title 16, Conservation. For complete classification of this Act of the Code, see Short Title note set out under section 1001 of Title 16 and Tables.

The Bankhead-Jones Farm Tenant Act, referred to in text, is act July 22, 1937, ch. 517, 50 Stat. 522, as amended. Title III of the Act is classified generally to subchapter III (§1010 et seq.) of chapter 33 of this title. For complete classification of this Act to the Code, see section 1000 of this title and Tables.

Transfer of Functions

Powers, duties, and assets of agencies, offices, and other entities within Department of Agriculture relating to rural development functions transferred to Rural Development Administration by section 2302(b) of Pub. L. 101 624.

§1932. Rural industrialization assistance

(a) Loans for private business enterprises; pollution abatement and control; aquaculture; solar energy; loan guarantees

The Secretary may also make and insure loans to public, private, or cooperative organizations organized for profit or nonprofit, to Indian tribes on Federal and State reservations or other federally recognized Indian tribal groups, or to individuals for the purposes of (1) improving, developing, or financing business, industry, and employment and improving the economic and environmental climate in rural communities, including pollution abatement and control, (2) the conservation, development, and use of water for aquaculture purposes in rural areas, and (3) reducing the reliance on nonrenewable energy resources by encouraging the development and construction of solar energy systems, including the modification of existing systems, in rural areas. For the purposes of this subsection, the term "solar energy" means energy derived from sources (other than fossil fuels) and technologies included in the Federal Nonnuclear Energy Research and Development Act of 1974, as amended [42 U.S.C. 5901 et seq.]. Such loans, when originated, held, and serviced by other lenders, may be guaranteed by the Secretary under this section without regard to paragraphs (1) and (3) of section 1983 of this title. As used in this subsection, the term "aquaculture" means the culture or husbandry of aquatic animals or plants by private industry for commercial purposes including the culture and growing of fish by private industry for the purpose of creating or augmenting publicly owned and regulated stocks of fish. No loan may be made, insured, or guaranteed under this subsection that exceeds $25,000,000 in principal amount.

(b) Grants for pollution abatement and control projects; limitations

(1) The Secretary may make grants, not to exceed $50,000,000 annually, to eligible applicants under this section for pollution abatement and control projects in rural areas. No such grant shall exceed 50 per centum of the development cost of such a project.

(2) The Secretary may make grants to nonprofit organizations for the provision of regional technical assistance to local and regional governments and related agencies for the purpose of reducing or eliminating pollution of water resources and improving the planning and management of solid waste disposal facilities. Grants made under this paragraph for the provision of technical assistance shall be made for 100 percent of the cost of such assistance.

(c) Grants for private business enterprises or other organizations which provide job training or technical assistance; limitation

(1) The Secretary may also make grants, not to exceed $50,000,000 annually, to public bodies and private nonprofit corporations for measures designed to finance and facilitate development of small and emerging private business enterprises or the creation, expansion, and operation of rural distance learning networks or rural learning programs that provide educational instruction or job training instruction related to potential employment or job advancement to adult students, including the development, construction or acquisition of land, buildings, plants, equipment, access streets and roads, parking areas, utility extensions, necessary water supply and waste disposal facilities, refinancing, services and fees.

(2) The Secretary may make grants to qualified nonprofit organizations for the provision of technical assistance and training to rural communities for the purpose of improving passenger transportation services or facilities. Assistance provided under this paragraph may include on-site technical assistance to local and regional governments, public transit agencies, and related nonprofit and for-profit organizations in rural areas, the development of training materials, and the provision of necessary training assistance to local officials and agencies in rural areas.

(d) Joint loans or grants for private business enterprises; restrictions; system of certification for expeditious processing of requests for assistance; prior approval of grant or loan; equity investment as condition for loan commitment; issuance of certificates of beneficial ownership of notes

(1) The Secretary may participate in joint financing to facilitate development of private business enterprises in rural areas with the Economic Development Administration, the Small Business Administration, and the Department of Housing and Urban Development and other Federal and State agencies and with private and quasi-public financial institutions, through joint loans to applicants eligible under subsection (a) of this section for the purpose of improving, developing, or financing business, industry, and employment and improving the economic and environmental climate in rural areas or through joint grants to applicants eligible under subsection (c) of this section for such purposes, including in the case of loans or grants the development, construction, or acquisition of land, buildings, plants, equipment, access streets and roads, parking areas, utility extensions, necessary water supply and waste disposal facilities, refining, service and fees.

(2) No financial or other assistance shall be extended under any provision of this section and sections 1924(b) and 1942(b) of this title, except for cases in which such assistance does not exceed $1,000,000 or for cases in which direct employment will not be increased by more than fifty employees, that is calculated to or is likely to result in the transfer from one area to another of any employment or business activity provided by operations of the applicant, but this limitation shall not be construed to prohibit assistance for the expansion of an existing business entity through the establishment of a new branch, affiliate, or subsidiary of such entity if the establishment of such branch, affiliate, or subsidiary will not result in an increase in unemployment in the area of original location or in any other area where such entity conducts business operations unless there is reason to believe that such branch, affiliate, or subsidiary is being established with the intention of closing down the operations of the existing business entity in the area of its original location or in any other area where it conducts such operations.

(3) No financial or other assistance shall be extended under any provision of this section and sections 1924(b) and 1942(b) of this title, except for cases in which such assistance does not exceed $1,000,000 or for cases in which direct employment will not be increased by more than fifty employees, which is calculated to or likely to result in an increase in the production of goods, materials, or commodities, or the availability of services or facilities in the area, when there is not sufficient demand for such goods, materials, commodities, services or facilities, to employ the efficient capacity of existing competitive commercial or industrial enterprises, unless such financial or other assistance will not have an adverse effect upon existing competitive enterprises in the area.

(4) No financial or other assistance shall be extended under any provision of this section and sections 1924(b) and 1942(b) of this title, except for cases in which such assistance does not exceed $1,000,000 or for cases in which direct employment will not be increased by more than fifty employees, if the Secretary of Labor certifies within 30 days after the matter has been submitted to him by the Secretary of Agriculture that the provisions of paragraphs (2) and (3) of this subsection have not been complied with. The Secretary of Labor shall, in cooperation with the Secretary of Agriculture, develop a system of certification which will insure the expeditious processing of requests for assistance under this section.

(5) No grant or loan authorized to be made under this chapter shall require or be subject to the prior approval of any officer, employee, or agency of any State.

(6) No loan commitment issued under this section, section 1924 of this title or section 1942 of this title shall be conditioned upon the applicant investing in excess of 10 per centum in the business or industrial enterprise for which purpose the loan is to be made unless the Secretary determines there are special circumstances which necessitate an equity investment by the applicant greater than 10 per centum.

(7) No provision of law shall prohibit issuance by the Secretary of certificates evidencing beneficial ownership in a block of notes insured or guaranteed under this chapter or Title V of the Housing Act of 1949 [42 U.S.C. 1471 et seq.]; any sale by the Secretary of such certificates shall be treated as a sale of assets for the purposes of chapter 11 of title 31. Any security representing beneficial ownership in a block of notes guaranteed or insured under this chapter or Title V of the Housing Act of 1949 issued by a private entity shall be exempt from laws administered by the Securities and Exchange Commission, except sections 77q, 77v, and 77x of title 15; however, the Secretary shall require (i) that the issuer place such notes in the custody of an institution chartered by a Federal or State agency to act as trustee and (ii) that the issuer provide such periodic reports of sales as the Secretary deems necessary.

(e) Construction or improvement of subterminal facilities

(1) The Secretary may also insure and guarantee loans under this section to public, private, or cooperative organizations organized for profit or nonprofit, or to individuals for the purpose of constructing or improving subterminal facilities if—

(A) the construction or improvement of such facilities is consistent with the appropriate approved State or regional plans and the recommendations of the local plan review commission established pursuant to the Agricultural Subterminal Facilities Act of 1980 [7 U.S.C. 3701 et seq.];

(B) the Secretary determines that the ownership and operation of such subterminal facilities will result in the efficient and competitive movement of bulk agricultural commodities and will return increased benefits to the local producers served by such facilities; and

(C) the Secretary determines that the rail carrier designated to provide service to any such facility will be able to provide adequate service.

Such loans may be made available for purchase of rail rolling stock (including locomotives), motor trucks, barges, and other bulk agricultural commodities transport equipment to be used in conjunction with the operation of subterminal facilities.

(2) The Secretary may only insure or guarantee loans under this subsection if the Secretary finds that applicants are unable to obtain credit from commercial lending institutions (including specialized lending institutions established to provide credit to agricultural producers) on reasonable terms and conditions.

(3) In order to preserve local ownership and control of agricultural transportation facilities, the Secretary shall give preference under this subsection to existing agricultural elevator operators and local producers in areas in which subterminal facilities are proposed to be located.

(4)(A) The total amount of loan authority made available for use for the purpose of this subsection for any fiscal year shall be allocated by the Secretary on the basis of need among those States that have approved State or regional plans as defined in the Agricultural Subterminal Facilities Act of 1980 [7 U.S.C. 3701 et seq.]. Such allocation shall be based on such formula as the Secretary shall prescribe by regulation.

(B) Any loan authority available for use in any State in any fiscal year that is not used by such State shall be reallocated, to the extent practicable, among other States eligible for the assistance provided under this section, in accordance with the same formula developed by the Secretary for the initial allocation of loan authority under this subsection.

(5) As used in this subsection, the term "subterminal facility" has the same meaning as provided in the Agricultural Subterminal Facilities Act of 1980 [7 U.S.C. 3701 et seq.].

(6) Within one hundred and eighty days after October 1, 1980, the Secretary shall establish such rules and regulations as may be necessary to implement the provisions of this subsection.

(f) Grants for centers of rural technology and cooperative development

(1) The Secretary shall make grants under this subsection to nonprofit institutions for the purpose of enabling such institutions to establish and operate centers for rural technology or cooperative development.

(2) Any nonprofit institution seeking a grant under paragraph (1) shall submit to the Secretary an application containing a plan for the establishment and operation by such institution of a center for rural technology or cooperative development. The Secretary may approve such application if such plan contains the following:

(A) A provision that substantiates that such center will effectively serve rural areas in the United States.

(B) A provision that the primary objective of such center will be to improve the economic condition of rural areas by promoting the development (through technological innovation, cooperative development, and adaptation of existing technology) and commercialization of—

(i) new services and products that can be produced or provided in rural areas;

(ii) new processes that can be utilized in the production of products in rural areas; and

(iii) new enterprises that can add value to on-farm production through processing or marketing.

(C) A description of the activities that such center will carry out to accomplish such objective. Such activities may include the following:

(i) Programs for technology research, investigations, and basic feasibility studies in any field or discipline for the purpose of generating principles, facts, technical knowledge, new technology, or other information that may be useful to rural industries, cooperatives, agribusinesses, and other persons or entities in rural areas served by such centers in the development and commercialization of new products, processes, or services.

(ii) Programs for the collection, interpretation, and dissemination of principles, facts, technical knowledge, new technology, or other information that may be useful to rural industries, cooperatives, agribusinesses, and other persons in rural areas served by the center in the development and commercialization of new products, processes, or services.

(iii) Programs providing training and instruction for individuals residing in rural areas served by the center with respect to the development (through technological innovation, cooperative development, and adaptation of existing technology) and commercialization of new products, processes, or services.

(iv) Programs providing loans and grants to individuals, small businesses, and cooperatives in rural areas served by the center for purposes of generating, evaluating, developing, and commercializing new products, processes, or services.

(v) Programs providing technical assistance and advisory services to individuals, small businesses, cooperatives, and industries in rural areas served by the center for purposes of developing and commercializing new products, processes, or services.

(vi) Programs providing research and support to individuals, small businesses, cooperatives, and industries in rural areas served by the center for purposes of developing new agricultural enterprises to add value to on-farm production through processing or marketing.

(D) A description of the contributions that such activities are likely to make to the improvement of the economic conditions of the rural areas for which such center will provide services.

(E) Provisions that such center, in carrying out such activities, will seek, where appropriate, the advice, participation, expertise, and assistance of representatives of business, industry, educational institutions, the Federal Government, and State and local governments.

(F) Provisions that such center—

(i) will consult with any college or university administering any program under title V of the Rural Development Act of 1972 [7 U.S.C. 2661 et seq.] in the State in which such center is located; and

(ii) will cooperate with such college or university in the coordination of such activities and such program.

(G) Provisions that such center will take all practicable steps to develop continuing sources of financial support for such center, particularly from sources in the private sector.

(H) Provisions for—

(i) monitoring and evaluating such activities by the institution operating such center; and

(ii) accounting for money received by such institution under this section.

(I) Provisions that such center will provide for the optimal application of such technology and cooperative development in rural areas, especially those areas adversely affected by adverse agricultural economic conditions, through the establishment of demonstration projects and subcenters for—

(i) rural technology development where the technology can be implemented by communities, community colleges, businesses, cooperatives, and other institutions; or

(ii) cooperative development where such development can be implemented by cooperatives to improve local economic conditions.

(3) Grants made under paragraph (1) shall be made on a competitive basis. In making grants under paragraph (1), the Secretary shall give preference to grant applications providing for the establishment of centers for rural technology or cooperative development that—

(A) can demonstrate the capability to transfer for practical application in rural areas the technology generated at such centers and the ability to commercialize products, processes, services, and enterprises in such rural areas;

(B) will effectively serve in rural areas that have—

(i) few rural industries and agribusinesses;

(ii) high levels of unemployment or underemployment;

(iii) high rates of outmigration of people, businesses, and industries; and

(iv) low levels of per capita income; and

(C) will contribute the most to the improvement of economic conditions of rural areas.

(4) As used in this subsection:

(A) The term "nonprofit institution" means any organization or institution, including an accredited institution of higher education, no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual.

(B) The term "United States" means the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the other territories and possessions of the United States.

(g) Prevention of excessive unemployment or underemployment

In carrying out subsection (f) of this section, the Secretary may provide technical assistance to alleviate or prevent conditions of excessive unemployment or underemployment of persons residing in economically distressed rural areas that the Secretary determines have a substantial need for such assistance. Such assistance shall include planning and feasibility studies, management and operational assistance, and studies evaluating the needs for development potential of projects that increase employment and improve economic growth in such areas.

(h) Grants to defray administrative costs

The Secretary may make grants to defray not to exceed 75 percent of the administrative costs incurred by organizations and public bodies to carry out projects for which grants or loans are made under subsection (f) of this section. For purposes of determining the non-Federal share of such costs, the Secretary shall consider contributions in cash and in kind, fairly evaluated, including but not limited to premises, equipment, and services.

(i) Loans for business telecommunications partnerships

(1) In general

The Secretary may make loans under this subsection at low interest rates and at market rates to 1 or more businesses, local governments, or public agencies in rural areas to fund facilities in which the recipients of such loans share telecommunications terminal equipment, computers, computer software, and computer hardware.

(2) General requirements

(A) Application process

(i) Submission of application

Any entity desiring a loan under this subsection shall submit an application therefor to the Secretary.

(ii) Contents of application

Each application for a loan under this subsection shall include—

(I) a detailed explanation of the proposed rural telecommunications system, including the general telecommunications transmission services and facilities required, and a list of the specific equipment that the applicant proposes to purchase or lease, to implement the system;

(II) a description of the manner in which the proposed project is to be funded;

(III) a copy of a binding commitment entered into between the applicant and each entity which is legally permitted to provide, and from which the applicant is to obtain, the telecommunications services and facilities required for the project, which stipulates that if the applicant receives the loan requested in the application the entity will provide such telecommunications services and facilities in the area served by the entity within a reasonable time and at a charge which is in accordance with State law;

(IV) a description of the manner in which the applicant intends to use the loan requested in the application;

(V) a description of how the proposed project will be evaluated; and

(VI) such other information as the Secretary may reasonably require.

(B) Consideration of applications

(i) Review by Secretary

The Secretary shall—

(I) review each application submitted pursuant to subparagraph (A)(i);

(II) determine whether or not the application meets the requirements of subparagraph (A)(ii);

(III) approve each application which meets such requirements;

(IV) disapprove each application which fails to meet such requirements; and

(V) in the case of an approved application that proposes a project to be implemented in an eligible State (within the meaning of section 2008(b)(3) of this title), transmit the approved application to the review panel of the eligible State.

(ii) Review by certain State review panels

(I) In general

The review panel shall examine each application transmitted to the review panel pursuant to clause (i)(V) to determine the technical and economic adequacy and feasibility of the project described in the application and the likelihood that the project will succeed.

(II) Authority to obtain information from applicants

Each entity which submits an application for a loan under this subsection shall provide the review panel of any eligible State in which the partnership intends to implement the project described in the application such information as the review panel may reasonably request to assist in reviewing the application.

(III) Authority to request applicants to modify projects

The review panel may, before final consideration of an application of an entity for a loan under this subsection, request the entity to modify the project described in the application.

(iii) Ranking of applications

(I) In general

The review panel shall rank, pursuant to a written policy and criteria, the applications that the review panel receives during any fiscal year for a loan under this subsection, in an order which takes into account—

(aa) the results of the review conducted under clause (i);

(bb) the extent to which the projects described in the applications would promote any area plan (as defined in section 2008(b)(1) of this title) developed for the areas in which the projects are to be implemented; and

(cc) in the case of a project which would duplicate existing services, the reasons therefor.

(II) Grouping of applications

The review panel shall separate into 2 groups the applications for a loan under this subsection received by the review panel during a fiscal year. The 1st group shall consist of the applications received during the 1st 6 months of the fiscal year. The 2nd group shall consist of the applications received during the 2nd 6 months of the fiscal year.

(III) Competition among applications

The review panel shall consider each application in a group to be competing only with the other applications in the group.

(IV) Written policy and criteria

(aa) In general

Subject to subdivision (bb), the review panel shall develop the written policy and criteria to be used to rank applications, in the same manner as the review panel develops the written policy and criteria used for purposes of section 2008a(b)(3) of this title.

(bb) Prohibition against development or acquisition of telecommunications transmission facilities

The policy and criteria developed under subdivision (aa) shall require that the project described in an application not include the development or acquisition of telecommunications transmission facilities.

(iv) Transmittal of ranked applications

The review panel shall transmit to the State coordinator appointed pursuant to section 2008(b)(3)(A)(ii) of this title each list of applications ranked pursuant to clause (iii) of this subparagraph, in the same manner in which lists of applications ranked pursuant to section 2008a(b) of this title are transmitted to the State coordinator pursuant to section 2008a of this title. The State coordinator shall transmit to the Secretary each such list received by the State coordinator.

(C) Priority

The Secretary shall establish procedures to target loans under this subsection to the rural areas and applicants that demonstrate the need for such loans, taking into consideration—

(i) the relative needs of all applicants;

(ii) the needs of the affected rural areas;

(iii) the financial ability of the applicants, without such loans, to use telecommunications for the business purposes for which such loans may be made; and

(iv) the recommendations of the review panels for the eligible States (within the meaning of section 2008(b)(3) of this title) in which such areas are located.

(D) Report required if Secretary intends to fund projects other than as recommended by review panel

If the Secretary determines to provide loans under this subsection to projects in an eligible State (within the meaning of section 2008(b)(3) of this title) other than in the manner recommended by the review panel of the State, the Secretary—

(i) within 10 days after making such determination, shall submit to the review panel of the eligible State, the Committee on Agriculture of the House of Representatives, and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report on the reasons for providing loans to projects other than in the manner so recommended; and

(ii) shall not provide such loans before the end of the 7-day period beginning on the date the review panel and such committees have received such report.

(E) Monitoring of use of loans

The Secretary shall take such steps as may be necessary to ensure that loans provided under this subsection are used in accordance with the approved application therefor.

(3) Relationship to State law

This subsection shall not be construed to affect in any manner the applicability of the Communications Act of 1934 [47 U.S.C. 151 et seq.], the regulations and orders prescribed thereunder, or any State or local law relating to the regulation or provision of telecommunications facilities or services.

(4) Regulations

Not later than 120 days after November 28, 1990, the Secretary shall prescribe final regulations governing the loan program established under this subsection other than with respect to agency management and personnel, in accordance with the notice and comment rulemaking requirements described in section 553 of title 5, notwithstanding subsection (a)(2) of such section 553.

(5) Definitions

As used in this subsection:

(A) Review panel

The term "review panel" means, with respect to an eligible State (within the meaning of section 2008(b)(3) of this title), the rural economic development review panel of the State, as established pursuant to section 2008a of this title.

(B) Rural area

The term "rural area" has the meaning given such term in section 1926(a)(7) of this title for purposes of loans for essential community facilities under section 1926(a)(1) of this title.

(C) Telecommunications terminal equipment

The term "telecommunications terminal equipment" means telecommunications equipment (excluding telecommunications transmission facilities) that—

(i) interconnects with telecommunications transmission facilities; and

(ii) modifies, converts, encodes, or otherwise prepares signals to be transmitted through, or modifies, reconverts, or carries signals received from, the facilities.

(D) Telecommunications transmission facilities

The term "telecommunications transmission facilities" means facilities (other than telecommunications terminal equipment) that transmit, receive, or carry signals between the telecommunications terminal equipment at each end of a telecommunications circuit or path.

(6) Treatment of loan program as designated rural development program

For purposes of this chapter, the loan program established under this subsection shall, with respect to eligible States (within the meaning of section 2008(b)(3) of this title), be treated as a designated rural development program (within the meaning of section 2008(b)(2) of this title).

(7) Limitations on authorization of appropriations

(A) In general

For loans under this subsection, there are authorized to be appropriated to the Secretary $15,000,000 for each of fiscal years 1991, 1992, 1993, 1994, and 1995.

(B) Availability

Amounts appropriated pursuant to subparagraph (A) shall remain available until expended.

(j) Grants to broadcasting systems

The Secretary may make grants to statewide private nonprofit public television systems, whose coverage area is predominately rural, for the purpose of demonstrating the effectiveness of such systems in providing information on agriculture and other issues of importance to farmers and other rural residents. Grants available under this paragraph may be used for capital equipment expenditures, start-up and program costs, and other costs necessary to the operation of such demonstrations.

(Pub. L. 87 128, title III, §310B, as added Pub. L. 92 419, title I, §118(a), Aug. 30, 1972, 86 Stat. 663; amended Pub. L. 91 524, title VIII, §817, as added Pub. L. 93 86, §1(27)(B), Aug. 10, 1973, 87 Stat. 241; Pub. L. 95 113, title XV, §1503(b), Sept. 29, 1977, 91 Stat. 1021; Pub. L. 95 334, title I, §112, Aug. 4, 1978, 92 Stat. 424; Pub. L. 96 358, §5, Sept. 25, 1980, 94 Stat. 1187; Pub. L. 96 438, §1(2), Oct. 13, 1980, 94 Stat. 1871; Pub. L. 99 409, §2, Aug. 28, 1986, 100 Stat. 923; Pub. L. 100 203, title I, §1504, Dec. 22, 1987, 101 Stat. 1330 28; Pub. L. 101 624, title XXIII, §§2325, 2337, 2347(a), 2386, 2388(b), (c), Nov. 28, 1990, 104 Stat. 4013, 4022, 4034, 4051, 4052; Pub. L. 102 237, title VII, §701(c), (h)(1)(C), (D), Dec. 13, 1991, 105 Stat. 1879, 1880; Pub. L. 102 552, title V, §516(d), Oct. 28, 1992, 106 Stat. 4137; Pub. L. 102 554, §6, Oct. 28, 1992, 106 Stat. 4144.)

References in Text

The Federal Nonnuclear Energy Research and Development Act of 1974, as amended, referred to in subsec. (a), is Pub. L. 93 577, Dec. 31, 1974, 88 Stat. 1878, as amended, which is classified generally to chapter 74 (§5901 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 5901 of Title 42 and Tables.

For definition of "this chapter", referred to in subsecs. (d)(5), (7) and (i)(6), see note set out under section 1921 of this title.

Title V of the Housing Act of 1949, referred to in subsec. (d)(7), is title V of act July 15, 1949, ch. 338, 63 Stat. 432, as amended, which is classified generally to subchapter III (§1471 et seq.) of chapter 8A of Title 42, The Public Health and Welfare. For complete classification of this Act to the code, see References in Text note set out under section 1441 of Title 42 and Tables.

The Agricultural Subterminal Facilities Act of 1980, referred to in subsec. (e)(1)(A), (4)(A), (5), is Pub. L. 96 358, Sept. 25, 1980, 94 Stat. 1184, which is classified generally to chapter 68 (§3701 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 3701 of this title and Tables.

Title V of the Rural Development Act of 1972, referred to in subsec. (f)(2)(F)(i), is title V of Pub. L. 92 419, as added by Pub. L. 97 98, title XIV, §1444(a), Dec. 22, 1981, 95 Stat. 1322, as amended, which is classified generally to subchapter II (§2661 et seq.) of chapter 59 of this title. For complete classification of this Act to the Code, see Tables.

The Communications Act of 1934, referred to in subsec. (i)(3), is act June 19, 1934, ch. 652, 48 Stat. 1064, as amended, which is classified principally to chapter 5 (§151 et seq.) of Title 47, Telegraphs, Telephones, and Radiotelegraphs. For complete classification of this Act to the Code, see section 609 of Title 47 and Tables.

Codification

In subsec. (d)(7), "chapter 11 of title 31" substituted for "the Budget and Accounting Act of 1921 [31 U.S.C. 1 et seq.]" on authority of Pub. L. 97 258, §4(b), Sept. 13, 1982, 96 Stat. 1067, the first section of which enacted Title 31, Money and Finance.

Amendments

1992—Subsec. (c). Pub. L. 102 554 designated existing provisions as par. (1) and added par. (2).

Pub. L. 102 552, which directed the substitution of "business enterprises or the creation, expansion, and operation of rural distance learning networks or rural learning programs that provide educational instruction or job training instruction related to potential employment or job advancement to adult students," for "business enterprises," in section 310B(c) without specifying the name of the act, was executed to this section, which is section 310B of the Consolidated Farm and Rural Development Act, to reflect the probable intent of Congress.

1991—Subsec. (d)(5), (7). Pub. L. 102 237, §701(h)(1)(C), (D), substituted "this chapter" for "this Act".

Subsec. (f)(4). Pub. L. 102 237, §701(c)(3), (4), redesignated par. (4), relating to grants to statewide private nonprofit public television systems, as subsec. (j), and transferred such provision to follow subsec. (i).

Subsec. (i)(2)(B)(iv). Pub. L. 102 237, §701(c)(1), substituted "(iii) of this subparagraph" for "(ii) of this subsection".

Subsec. (i)(5)(A). Pub. L. 102 237, §701(c)(2), inserted closing parenthesis after "section 2008(b)(3) of this title".

Subsec. (j). Pub. L. 102 237, §701(c)(3) (5), redesignated subsec. (f)(4), relating to grants to statewide private nonprofit public television systems, as subsec. (j), transferred such provision to follow subsec. (i), and inserted heading.

1990—Subsec. (a). Pub. L. 101 624, §2388(b), substituted "paragraphs (1) and (3)" for "subsections (a) and (c)".

Subsec. (b). Pub. L. 101 624, §2325, designated existing provisions as par. (1) and added par. (2).

Subsec. (d). Pub. L. 101 624, §2388(c), designated first par. and and pars. (1) to (6) as (1) to (7), respectively, substituted "paragraphs (2) and (3)" for "paragraph (1) and (2)" in par. (4), and realigned margins of pars. (5) to (7).

Subsec. (f). Pub. L. 101 624, §2386, added par. (4) relating to grants to statewide private nonprofit public television systems.

Pub. L. 101 624, §2347(a), added subsec. (f) and struck out former subsec. (f) which read as follows:

"(1) The Secretary may make grants under this subsection to public and nonprofit private institutions for the purpose of enabling them to establish and operate centers of rural technology development that have, as a primary objective, the improvement of the economic condition of rural areas by promoting the development (through technological innovation and adaptation of existing technology) and commercialization of (A) new products that can be produced in rural areas, and (B) new processes that can be used in such production.

"(2) Grants under this subsection may be made on a competitive basis. In making grants, the Secretary shall give preference to applicants that will establish centers for rural technology in areas that have (A) few industries and agribusinesses, (B) high levels of unemployment, (C) high rates of out-migration of people, business, and industries, and (D) low levels of per capita income.

"(3) If grants are to be made under this subsection, the Secretary shall issue regulations implementing this subsection that shall include provisions for the monitoring and evaluation of the rural technology development activities carried out by institutions that receive grants under this subsection."

Subsecs. (g), (h). Pub. L. 101 624, §2347(a), added subsecs. (g) and (h).

Subsec. (i). Pub. L. 101 624, §2337, added subsec. (i).

1987—Subsec. (c). Pub. L. 100 203 inserted "and private nonprofit corporations" after "to public bodies" and substituted "to finance and facilitate development of small and emerging" for "to facilitate development of".

1986—Subsec. (a). Pub. L. 99 409, §2(1), inserted provision that no loan may be made, insured, or guaranteed under this subsection that exceeds $25,000,000 in principal amount.

Subsec. (f). Pub. L. 99 409, §2(2), added subsec. (f).

1980—Subsec. (a). Pub. L. 96 438 authorized the Secretary to make and insure loans for the purpose of reducing the reliance on nonrenewable energy resources by encouraging the development and construction of solar energy systems, including the modification of existing systems, in rural areas and defined term "solar energy", for purposes of subsection (a) of this section, as meaning energy derived from sources, other than fossil fuels, and technologies included in the Federal Nonnuclear Energy Research and Development Act of 1974, as amended.

Subsec. (e). Pub. L. 96 358 added subsec. (e).

1978—Subsec. (d)(1), (2). Pub. L. 95 334, §112(1), inserted exception for assistance less than $1,000,000, or where direct employment will not be increased by more than 50 employees.

Subsec. (d)(3). Pub. L. 95 334, §112, inserted exception for assistance less than $1,000,000, or where direct employment will not be increased by more than 50 employees and substituted "30" for "60".

1977—Subsec. (a). Pub. L. 95 113 inserted reference to the conservation, development, and utilization of water for aquaculture purposes and inserted definition of "aquaculture".

1973—Subsec. (d)(4) to (6). Pub. L. 91 524, §817, as added by Pub. L. 93 86, added pars. (4) to (6).

Effective Date of 1991 Amendment

Amendment by section 701(c) of Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, and amendment by section 701(h)(1)(C), (D) of Pub. L. 102 237 to any provision specified therein effective as if included in Act that added provision so specified at the time such Act became law, see section 1101(b)(6), (c) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective Date of 1986 Amendment

Section 2(2) of Pub. L. 99 409 provided that the amendment made by that section is effective Oct. 1, 1986.

Effective Date of 1980 Amendment

Amendment by Pub. L. 96 358 effective Oct. 1, 1980, see section 6 of Pub. L. 96 358, set out as an Effective Date note under section 3701 of this title.

Effective Date of 1977 Amendment

Amendment by Pub. L. 95 113 effective Oct. 1, 1977, see section 1901 of Pub. L. 95 113, set out as a note under section 1307 of this title.

Transfer of Functions

Powers, duties, and assets of agencies, offices, and other entities within Department of Agriculture relating to rural development functions under this section and under section 1323 of Pub. L. 99 198, set out as a note below, transferred to Rural Development Administration by section 2302(b) of Pub. L. 101 624.

Business Development

Section 2336 of Pub. L. 101 624 provided that: "The purposes of this chapter [chapter 2 (§§2336, 2337) of subtitle D of title XXIII of Pub. L. 101 624, amending this section] are to—

"(1) provide funds to improve telecommunications service in rural areas; and

"(2) provide access to advanced telecommunications services and computer networks to improve job opportunities and the business environment in rural areas."

Guarantee by Secretary of Agriculture of Loans to Nonprofit National Rural Development and Finance Corporations

Pub. L. 99 198, title XIII, §1323, Dec. 23, 1985, 99 Stat. 1534, as amended by Pub. L. 99 425, title IV, §407(c), Sept. 30, 1986, 100 Stat. 971; Pub. L. 99 500, §101(a) [title VI, §641], Oct. 18, 1986, 100 Stat. 1783, 1783 35, and Pub. L. 99 591, §101(a) [title VI, §641], Oct. 30, 1986, 100 Stat. 3341, 3341 35; Pub. L. 100 202, §101(k) [title VI, §636], Dec. 22, 1987, 101 Stat. 1329 322, 1329 357, provided that:

"(a)(1) Prior to September 30, 1988, the Secretary of Agriculture (hereafter in this section referred to as the 'Secretary') shall guarantee loans made by public agencies or private organizations (including loans made by financial institutions such as insurance companies) to nonprofit national rural development and finance corporations that establish similar and affiliated statewide rural development and finance programs for the purpose of providing loans, guarantees, and other financial assistance to profit or nonprofit local businesses to improve business, industry, and employment opportunities in a rural area (as determined by the Secretary).

"(2) To be eligible to obtain a loan guarantee under this subsection, a corporation must—

"(A) demonstrate to the Secretary the ability of the corporation to administer a national revolving rural development loan program;

"(B) be prepared to commit financial resources under the control of the corporation to the establishment of affiliated statewide rural development and finance programs; and

"(C) have secured commitments of significant financial support from public agencies and private organizations for such affiliated statewide programs.

"(3) A national rural development and finance corporation receiving a loan guarantee under this subsection shall base a determination to establish an affiliated statewide program in large part on the willingness of States and private organizations to sponsor and make funds available to such program.

"(4) Notwithstanding any other provision of law, for the fiscal year ending September 30, 1986, of the amounts available to guarantee loans in accordance with section 310B of the Consolidated Farm and Rural Development Act (7 U.S.C. 1932) from the Rural Development Insurance Fund, $20,000,000 shall be used by the Secretary to guarantee loans under the national rural development and finance program established under this subsection, to remain available until expended.

"(5) Notwithstanding any provision to the contrary of subsection (4) above, the $20,000,000 which was available pursuant to subsection (4) shall continue to be available and shall be used by the Secretary prior to September 30, 1988, to guarantee loans for the national rural development and finance program and shall remain available until expended.

"(b)(1) Prior to September 30, 1988, the Secretary shall make grants, from funds transferred under paragraph (2), to national rural development and finance corporations for the purpose of establishing a rural development program to provide financial and technical assistance to compliment the loan guarantees made or to be made to such corporations under subsection (a).

"(2) All funds in, appropriated to, or repaid to the Rural Development Loan Fund, including those on deposit and available upon date of enactment [Dec. 23, 1985], under sections 623 and 633 [42 U.S.C. 9812, 9822] of the Community Economic Development Act of 1981 (42 U.S.C. 9801 et seq.) shall be transferred to the Secretary provided that—

"(A) all funds on deposit and available on date of enactment shall be used for the purpose of making grants under paragraph (1) and shall remain available until expended;

"(B) notwithstanding any other provision of law, all loans to intermediary borrowers made prior to date of enactment, shall upon date of enactment, for the life of such loan, bear a rate of interest not to exceed that in effect upon the date of issuance of such loans; and

"(C) notwithstanding paragraph (1), all funds other than funds to which subparagraph (A) applies shall be used by the Secretary to make loans—

"(i) to the entities;

"(ii) for the purposes; and

"(iii) subject to the terms and conditions;

specified in the first, second, and last sentences of section 623(a) of the Community Economic Development Act of 1981 (42 U.S.C. 9812(a)). For purposes of this subparagraph, any reference in such sentences to the Secretary shall be deemed to be a reference to the Secretary of Agriculture."

Pub. L. 99 500, §101(a) [title VI, §641], Oct. 18, 1986, 100 Stat. 1783, 1783 35, and Pub. L. 99 591, §101(a) [title VI, §641], Oct. 30, 1986, 100 Stat. 3341, 3341 35, provided in part: "That such grant funds [probably means grant funds under section 1323(b)(1) of Pub. L. 99 198, set out above] may be used by such corporation to provide technical assistance and financial assistance, including capitalizing revolving loan programs, pursuant to the Act."

Limits on Grants for Fiscal Years 1982, 1983, and 1984

Pub. L. 97 35, title I, §120, Aug. 13, 1981, 95 Stat. 367, provided in part that, notwithstanding any other provision of law, there was authorized to be appropriated for grants pursuant to section 310B(c) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1932) not to exceed: $5,007,000 for fiscal year 1982, $5,280,000 for fiscal year 1983, and $5,553,000 for fiscal year 1984.

Section Referred to in Other Sections

This section is referred to in sections 1926, 1927, 1929a, 1983a, 1992, 2008, 2008c, 6942, 6943, 6944 of this title.

§1933. Guaranteed rural housing loans; Hawaiian home lands

(a) Rural Housing Loans which (1) are guaranteed by the Secretary under section 517(a)(2)¹ of the Housing Act of 1949 [42 U.S.C. 1487(a)(2)], (2) are made by other lenders approved by the Secretary to provide dwellings in rural areas for the applicants' own use, and (3) bear interest and other charges at rates not above the maximum rates prescribed by the Secretary of Housing and Urban Development for loans made by private lenders for similar purposes and guaranteed by the Secretary of Housing and Urban Development under the National Housing Act [12 U.S.C. 1701 et seq.] or superseding legislation shall not be subject to sections 501(c) and 502(b)(3) of the Housing Act of 1949 [42 U.S.C. 1471(c) and 1472(b)(3)].

(b) For the purposes of title V of the Housing Act of 1949 [42 U.S.C. 1471 et seq.] or this chapter, a guarantee of payment given under the color of law by the Department of Hawaiian Home Lands (or its successor in function) shall be found by the Secretary reasonably to assure repayment of any indebtedness so guaranteed.

(Pub. L. 87 128, title III, §310C, as added Pub. L. 92 419, title I, §119, Aug. 30, 1972, 86 Stat. 664; amended Pub. L. 101 624, title XVIII, §1804, Nov. 28, 1990, 104 Stat. 3819.)

References in Text

Section 517(a) of the Housing Act of 1949 [42 U.S.C. 1487(a)], referred to in subsec. (a), was amended by Pub. L. 98 181, title V, §514(a)(1), Nov. 30, 1983, 98 Stat. 1247, and, as so amended, does not contain a par. (2).

The National Housing Act, referred to in subsec. (a), is act June 27, 1934, ch. 847, 48 Stat. 1246, as amended, which is classified principally to chapter 13 (§1701 et seq.) of Title 12, Banks and Banking. For complete classification of this Act to the Code, see References in Text note set out under section 1701 of Title 12 and Tables.

Title V of the Housing Act of 1949, referred to in subsec. (b), is title V of act July 15, 1949, ch. 338, 63 Stat. 432, as amended, which is classified generally to subchapter III (§1471 et seq.) of chapter 8A of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see References in Text note set out under section 1441 of Title 42 and Tables.

For definition of "this chapter", referred to in subsec. (b), see note set out under section 1921 of this title.

Amendments

1990—Subsec. (b). Pub. L. 101 624 substituted "or this chapter" for ", as amended".

¹See References in Text note below.

§1934. Low-income farm ownership loan program; eligibility; repayment requirements

(a) The Secretary is authorized to make and insure loans for any of the purposes referred to in paragraphs (1) through (5) of section 1923(a) of this title, or subparagraphs (A) through (E) of section 1924(a)(1) of this title, to farmers and ranchers in the United States who (1) are citizens of the United States, (2) meet the requirements of paragraphs (2) through (4) of section 1922 of this title, (3) are unable to obtain sufficient credit under section 1922 of this title to finance their actual needs, (4) are owners or operators of small or family farms (including new owners or operators), (5) are farmers or ranchers with a low income, and (6) demonstrate a need to maximize their income from farming or ranching operations. The Secretary is also authorized to make such loans to any farm cooperative or private domestic corporation or partnership that is controlled by farmers and ranchers and engaged primarily and directly in farming or ranching in the United States if all of its members, stockholders, or partners, as applicable, are citizens of the United States and the entity and all such members, stockholders, or partners meet the requirements of paragraphs (2) through (6) of the preceding sentence.

(b) Each loan made or insured under this section shall be repayable in such installments as the Secretary determines will provide for reduced payments during the initial repayment period of the loan and larger payments during the remainder of the repayment period of the loan.

(Pub. L. 87 128, title III, §310D, as added Pub. L. 95 334, title I, §113, Aug. 4, 1978, 92 Stat. 424; amended Pub. L. 101 624, title XVIII, §1802(b), Nov. 28, 1990, 104 Stat. 3818; Pub. L. 102 552, title V, §516(e)(1), Oct. 28, 1992, 106 Stat. 4137.)

Amendments

1992—Subsec. (a). Pub. L. 102 552 substituted "1924(a)(1)" for "1924(d)(1)".

1990—Subsec. (a). Pub. L. 101 624 substituted "paragraphs (1) through (5) of section 1923(a) of this title, or subparagraphs (A) through (E) of section 1924(d)(1) of this title," for "clauses (1) through (5) of section 1923(a) of this title", substituted "paragraphs" for "clauses" before "(2) through (4) of section", made technical amendment to reference to section 1922 of this title which required no change in text, and substituted "paragraphs" for "clauses" before "(2) through (6) of the".

Effective Date of 1992 Amendment

Section 516(e)(2) of Pub. L. 102 552 provided that: "The amendment made by paragraph (1) of this subsection [amending this section] shall take effect at the same time as the amendments made by section 501(a) of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Public Law 102 237; 105 Stat. 1865) [amending section 1924 of this title] took effect."

Section Referred to in Other Sections

This section is referred to in sections 1925, 1927, 1942, 1983 of this title.

§1935. Down payment loan program

(a) In general

(1) Establishment

Notwithstanding any other section of this subchapter, the Secretary shall establish, within the farm ownership loan program established under this subchapter, a program under which loans shall be made under this section to qualified beginning farmers and ranchers for down payments on farm ownership loans.

(2) Administration

The Secretary shall be the primary coordinator of credit supervision for the down payment loan program established under this section, in consultation with the commercial or cooperative lender and, if applicable, the contracting credit counseling service selected under section 2006b(c) of this title.

(b) Loan terms

(1) Principal

Each loan made under this section shall be in an amount equal to 30 percent of the purchase price or appraisal value, whichever is lower, of the farm or ranch to be acquired, unless the borrower requests a lesser amount.

(2) Interest rate

The interest rate on any loan made by the Secretary under this section shall be 4 percent.

(3) Duration

Each loan under this section shall be made for a period of 10 years or less, at the option of the borrower.

(4) Repayment

Each borrower of a loan under this section shall repay the loan to the Secretary in equal annual installments.

(5) Nature of retained security interest

The Secretary shall retain an interest in each farm or ranch acquired with a loan made under this section that shall—

(A) be secured by the farm or ranch;

(B) be junior only to such interests in the farm or ranch as may be conveyed at the time of acquisition to the person (including a lender) from whom the borrower obtained a loan used to acquire the farm or ranch; and

(C) require the borrower to obtain the permission of the Secretary before the borrower may grant an additional security interest in the farm or ranch.

(c) Limitations

(1) Borrowers required to make minimum down payment

The Secretary shall not make a loan under this section to any borrower with respect to a farm or ranch if the contribution of the borrower to the down payment on the farm or ranch will be less than 10 percent of the purchase price of the farm or ranch.

(2) Maximum price of property to be acquired

The Secretary shall not make a loan under this section with respect to a farm or ranch for which the purchase price or appraisal value, whichever is lower, exceeds $250,000.

(3) Prohibited types of financing

The Secretary shall not make a loan under this section with respect to a farm or ranch if the farm or ranch is to be acquired with other financing that contains any of the following conditions:

(A) The financing is to be amortized over a period of less than 30 years.

(B) A balloon payment will be due on the financing during the 10-year period beginning on the date the loan is to be made by the Secretary.

(d) Administration

In carrying out this section, the Secretary shall, to the maximum extent practicable—

(1) facilitate the transfer of farms and ranches from retiring farmers and ranchers to persons eligible for insured loans under this subchapter;

(2) make efforts to widely publicize the availability of loans under this section among—

(A) potentially eligible recipients of the loans;

(B) retiring farmers and ranchers; and

(C) applicants for farm ownership loans under this subchapter;

(3) encourage retiring farmers and ranchers to assist in the sale of their farms and ranches to qualified beginning farmers and ranchers by providing seller financing; and

(4) coordinate the loan program established by this section with State programs that provide farm ownership or operating loans for beginning farmers and ranchers.

(Pub. L. 87 128, title III, §310E, as added Pub. L. 102 554, §7(a), Oct. 28, 1992, 106 Stat. 4144.)

Section Referred to in Other Sections

This section is referred to in sections 1925, 1929, 1936, 1994 of this title.

§1936. Availability of farm ownership loans and loan guarantees for certain qualified beginning farmers and ranchers

(a) Assistance prohibited for limited period

Except as otherwise provided in this section, if the Secretary approves the application of a qualified beginning farmer or rancher (referred to in this section as the "applicant") for assistance under section 1948 of this title, the Secretary shall not make a loan under this subchapter to the applicant or provide a guarantee under section 1929(h) of this title with respect to any farm real estate loan made to the applicant.

(b) Availability of down payment loans

After the applicable period, the Secretary may make an insured loan under this subchapter, or a down payment loan under section 1935 of this title, to an applicant if—

(1) throughout the applicable period, the applicant conducted an operation for which assistance is provided under section 1948 of this title in accordance with the plan for special assistance; and

(2) the applicant is otherwise eligible for the loan.

(c) Availability of loan guarantees

After the applicable period, the Secretary may guarantee under section 1929(h) of this title the repayment of a commercial or cooperative loan made to an applicant referred to in subsection (a) of this section if—

(1) throughout the applicable period, the applicant conducted the operation for which assistance is provided under section 1948 of this title in accordance with the plan for special assistance; and

(2) the applicant is otherwise eligible for the loan guarantee.

(d) "Applicable period" defined

As used in this section, the term "applicable period" means the first 5 years for which an applicant has operated a farm or ranch, including the period of time the applicant is provided assistance under section 1948 of this title.

(Pub. L. 87 128, title III, §310F, as added Pub. L. 102 554, §7(b), Oct. 28, 1992, 106 Stat. 4146.)

SUBCHAPTER II—OPERATING LOANS

Subchapter Referred to in Other Sections

This subchapter is referred to in sections 1961, 1963, 1964, 1981b, 1983, 1983a, 1988, 1989, 1994, 2000, 2003, 2006a of this title.

§1941. Persons eligible for loans

(a) Requirements

The Secretary is authorized to make and insure loans under this subchapter to farmers and ranchers in the United States, and to farm cooperatives and private domestic corporations, partnerships, and joint operations that are controlled by farmers and ranchers and engaged primarily and directly in farming or ranching in the United States, subject to the conditions specified in this section. To be eligible for such loans, applicants who are individuals, or, in the case of cooperatives, corporations, partnerships, and joint operations, individuals holding a majority interest in such entity, must (1) be citizens of the United States, (2) have either training or farming experience that the Secretary determines is sufficient to assure reasonable prospects of success in the proposed farming operations, (3) be or will become operators of not larger than family farms (or in the case of cooperatives, corporations, partnerships, and joint operations in which a majority interest is held by individuals who are related by blood or marriage, as defined by the Secretary, such individuals must be or will become either owners or operators of not larger than a family farm and at least one such individual must be or will become an operator of not larger than a family farm or, in the case of holders of the entire interest who are related by blood or marriage and all of whom are or will become farm operators, the ownership interest of each such holder separately constitutes not larger than a family farm, even if their interests collectively constitute larger than a family farm, as defined by the Secretary), and (4) be unable to obtain sufficient credit elsewhere to finance their actual needs at reasonable rates and terms, taking into consideration prevailing private and cooperative rates and terms in the community in or near which the applicant resides for loans for similar purposes and periods of time. In addition to the foregoing requirements of this subsection, in the case of corporations, partnerships, and joint operations, the family farm requirement of clause (3) of the preceding sentence shall apply as well to the farm or farms in which the entity has an operator interest and the requirement of clause (4) of the preceding sentence shall apply as well to the entity in the case of cooperatives, corporations, partnerships, and joint operations.

(b) Rural youths in 4 H Clubs, Future Farmers of America, etc.

(1) Loans may also be made under this subchapter without regard to the requirements of clauses (2) and (3) of subsection (a) of this section to youths who are rural residents to enable them to operate enterprises in connection with their participation in 4 H Clubs, Future Farmers of America, and similar organizations and for the purposes specified in section 1942 of this title.

(2) A person receiving a loan under this subsection who executes a promissory note therefor shall thereby incur full personal liability for the indebtedness evidenced by such note in accordance with its terms free of any disability of minority.

(3) For loans under this subsection the Secretary may accept the personal liability of a cosigner of the promissory note in addition to the borrowers' personal liability.

(c) Restriction on eligibility

The Secretary may not restrict eligibility for loans made or insured under this subchapter for purposes set forth in section 1942 of this title solely to borrowers of loans that are outstanding on December 23, 1985.

(Pub. L. 87 128, title III, §311, Aug. 8, 1961, 75 Stat. 310; Pub. L. 92 419, title I, §120(a), Aug. 30, 1972, 86 Stat. 665; Pub. L. 95 334, title I, §114, Aug. 4, 1978, 92 Stat. 425; Pub. L. 97 98, title XVI, §1601(b), Dec. 22, 1981, 95 Stat. 1346; Pub. L. 99 198, title XIII, §§1301(a), 1302(b), 1303, Dec. 23, 1985, 99 Stat. 1518, 1519.)

Amendments

1985—Subsec. (a). Pub. L. 99 198, §1301(a), substituted—

(1) ", partnerships, and joint operations" for "and partnerships" wherever appearing after "corporations";

(2) ", partnerships, and joint operations" for ", and partnerships" wherever appearing after "corporations"; and

(3) "individuals" for "members, stockholders, or partners, as applicable," wherever appearing.

Pub. L. 99 198, §1303, in cl. (3) parenthetical, inserted provision treating blood or marriage related owner-operators of the entire farm interest as separate interest holders of not larger than family farms though collective ownership constitutes a larger than a family farm.

Subsec. (c). Pub. L. 99 198, §1302(b), added subsec. (c).

1981—Subsec. (a). Pub. L. 97 98 substituted "corporations and partnerships, the family farm" for "cooperatives, corporations, and partnerships, the family farm" and "as well to the entity in the case of cooperatives, corporations, and partnerships" for "as well to the entity".

1978—Pub. L. 95 334 substituted provisions setting forth eligibility criteria for loans to farmers and ranchers in the United States, and to farm cooperatives and private domestic corporations and partnerships controlled by farmers and ranchers and engaged primarily and directly in farming or ranching in the United States, for provisions setting forth eligibility criteria for loans to farmers and ranchers in the United States, Puerto Rico, and the Virgin Islands.

1972—Pub. L. 92 419 designated existing provisions as subsec. (a) and added subsec. (b).

Effective Date of 1981 Amendment

Amendment by Pub. L. 97 98 effective Dec. 22, 1981, see section 1801 of Pub. L. 97 98, set out as an Effective Date note under section 4301 of this title.

1989 Farm Operating Loans

Pub. L. 101 82, title III, §302, Aug. 14, 1989, 103 Stat. 582, provided that:

"(a) Direct Credit.—To the maximum extent practicable, the Secretary of Agriculture shall ensure that direct operating loans made or insured under subtitle B of the Consolidated Farm and Rural Development Act (7 U.S.C. 1941 et seq.) for 1990 crop production are made available to farmers and ranchers suffering major losses due to excess moisture, freeze, storm, or related condition occurring in 1989 or drought or related condition occurring in 1988 or 1989, as authorized under existing law and under regulations of the Secretary that implement the objective of enabling farmers and ranchers to stay in business.

"(b) Loan Guarantees.—

"(1) In general.—Notwithstanding any other provision of law, the Secretary shall make available in fiscal year 1990 guarantees to commercial or cooperative lenders for loans under subtitle B of the Consolidated Farm and Rural Development Act [7 U.S.C. 1941 et seq.], to refinance and reamortize 1989 operating loans, or 1989 or 1990 installments due and payable on real estate debt, farm equipment or building (including storage facilities) debt, livestock loans, or other operating debt, of farmers and ranchers that otherwise cannot be repaid due to major losses incurred by such farmers or ranchers as a result of excess moisture, freeze, storm, or related condition occurring in 1989 or drought or related condition occurring in 1988 or 1989.

"(2) Reamortization.—Each fiscal year 1990 guaranteed loan for 1988 or 1989 natural disaster purposes, as described in paragraph (1), shall contain terms and conditions governing the reamortization of the debt of the farmer or rancher that will provide the farmer or rancher a reasonable opportunity to continue to receive new operating credit while repaying the guaranteed loan, as determined by the Secretary.

"(3) Eligibility.—Notwithstanding any other provision of law, any person eligible to receive payments under subtitle A of title I [7 U.S.C. 1421 note] shall be deemed eligible to have guaranteed, in accordance with this subsection, loans made to such person by a commercial or cooperative lender to refinance installment payments that are or become due and payable during 1989 or 1990, as described in paragraph (1), except that, to be deemed eligible to have such loan guaranteed, the person must otherwise—

"(A) be current in the person's obligation to the commercial or cooperative lender that agrees to accept the guarantee in consideration of allowing the person to make the 1989 or 1990 payment or installment over a period of time not to exceed 6 years from the original due date of such payment or installment; and

"(B) meet the criteria for guaranteed loan borrowers under subtitle B of the Consolidated Farm and Rural Development Act established by the Secretary.

"(c) Use of Agricultural Credit Insurance Fund.—For purposes of providing guaranteed loans in accordance with subsection (b), in addition to funds otherwise available, the Secretary may use any funds available from the Agricultural Credit Insurance Fund during fiscal years [sic] 1989 or 1990 for emergency insured and guaranteed loans under subtitle C of the Consolidated Farm and Rural Development Act (7 U.S.C. 1961 et seq.) to meet the needs resulting from natural disasters, except that funds available from such Fund first shall be used to satisfy the level of assistance estimated by the Secretary to meet the needs of persons eligible for emergency disaster loans."

Similar provisions were contained in the following prior act:

Pub. L. 100 387, title III, §312, Aug. 11, 1988, 102 Stat. 948.

Section Referred to in Other Sections

This section is referred to in sections 1942, 2006a of this title.

§1942. Purposes of loans; grants for pollution abatement and control projects, limitations; nonsupervised accounts

(a) Loans may be made under this subchapter for (1) paying costs incident to reorganizing the farming system for more profitable operation, (2) purchasing livestock, poultry, and farm equipment (including equipment which utilizes solar energy), (3) purchasing feed, seed, fertilizer, insecticides, and farm supplies and to meet other essential farm operating expenses including cash rent, (4) financing land and water development, use, and conservation, (5) without regard to the requirements of section 1941(a)(2) and (3) of this title, to farmers or ranchers to finance outdoor recreational enterprises or to convert to recreational uses their farming or ranching operations, including those heretofore financed under this chapter, (6) enterprises needed to supplement farm income, (7) refinancing existing indebtedness, (8) other farm and home needs including but not limited to family subsistence, (9) loan closing costs, (10) for assisting farmers or ranchers in effecting additions to or alterations in the equipment, facilities, or methods of operation of their farms or ranches in order to comply with the applicable standards promulgated pursuant to section 655 of title 29 or standards adopted by a State pursuant to a plan approved under section 667 of title 29, if the Secretary determines that any such farmer or rancher is likely to suffer substantial economic injury due to such compliance without assistance under this paragraph, (11) assisting farmers and ranchers in reducing their dependence on nonrenewable energy resources through the development and construction of solar energy systems, including the modification of existing systems, (12) training in maintaining records of farming and ranching operations for limited resource borrowers receiving loans under section 1934 of this title, and (13) borrower training under section 2006a of this title. For the purposes of this subchapter, the term "solar energy" means energy derived from sources (other than fossil fuels) and technologies included in the Federal Non-Nuclear¹ Energy Research and Development Act of 1974, as amended [42 U.S.C. 5901 et seq.].

(b) Loans may also be made under this subchapter to residents of rural areas without regard to the requirements of clauses (2) and (3) of section 1941(a) of this title to operate in rural areas small business enterprises to provide such residents with essential income.

(c) Loans may also be made to eligible applicants under this subchapter for pollution abatement and control projects in rural areas.

(d) The Secretary may make grants, not to exceed $25,000,000 annually, to eligible applicants under this subchapter for pollution abatement and control projects in rural areas. No such grant shall exceed 50 per centum of the development cost of such a project.

(e) Notwithstanding any other provision of this chapter, the Secretary shall reserve not more than 10 percent of any loan made under this subchapter or $5,000 of such loan, whichever is less, to be placed in a nonsupervised bank account which may be used at the discretion of the borrower for necessary family living needs or purposes not inconsistent with previously agreed upon farming or ranching plans. If the borrower exhausts this reserve, the Secretary may review and adjust the farm plan with the borrower and consider rescheduling the loan, extending additional credit, the use of income proceeds to pay necessary farm and home and other expenses, or additional available loan servicing.

(Pub. L. 87 128, title III, §312, Aug. 8, 1961, 75 Stat. 310; Pub. L. 87 703, title IV, §401(4), Sept. 27, 1962, 76 Stat. 632; Pub. L. 90 488, §8, Aug. 15, 1968, 82 Stat. 771; Pub. L. 92 419, title I, §§120(b), 121, Aug. 30, 1972, 86 Stat. 665; Pub. L. 95 113, title XIV, §1448(b), Sept. 29, 1977, 91 Stat. 1012; Pub. L. 95 334, title I, §115, Aug. 4, 1978, 92 Stat. 425; Pub. L. 96 438, §1(3), Oct. 13, 1980, 94 Stat. 1871; Pub. L. 99 198, title XIII, §§1306, 1307, Dec. 23, 1985, 99 Stat. 1521; Pub. L. 101 624, title XVIII, §1818(b), Nov. 28, 1990, 104 Stat. 3830; Pub. L. 102 237, title V, §501(b), Dec. 13, 1991, 105 Stat. 1866; Pub. L. 102 552, title V, §516(f)(1)(A), (2), Oct. 28, 1992, 106 Stat. 4137, 4138.)

References in Text

For definition of "this chapter", referred to in subsecs. (a) and (e), see note set out under section 1921 of this title.

The Federal Nonnuclear Energy Research and Development Act of 1974, as amended, referred to in subsec. (a), is Pub. L. 93 577, Dec. 31, 1974, 88 Stat. 1878, as amended, which is classified generally to chapter 74 (§5901 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 5901 of Title 42 and Tables.

Amendments

1992—Subsec. (a). Pub. L. 102 552, §516(f)(2), repealed amendment by Pub. L. 102 237, §501(b). See 1991 Amendment note below.

Pub. L. 102 552, §516(f)(1)(A), made technical correction to directory language of Pub. L. 101 624, §1818(b). See 1990 Amendment note below.

1991—Subsec. (a). Pub. L. 102 237, §501(b), which directed the substitution of "systems (for purposes of this subchapter, the term 'solar energy' means energy derived from sources (other than fossil fuels) and technologies included in the Federal Nonnuclear Energy Research and Development Act of 1974) (42 U.S.C. 5901 et seq.), (12) training in maintaining records of farming and ranching operations for limited resource borrowers receiving loans under section 1934 of this title, and (13) borrower training under section 2006a of this title." for "'systems.' and all that follows", could not be executed because "systems." does not appear in subsec. (a) was repealed by Pub. L. 102 552, §516(f)(2). See Construction of 1991 Amendment note below.

1990—Subsec. (a). Pub. L. 101 624, §1818(b), as amended by Pub. L. 102 552, §516(f)(1)(A), added cl. (13).

1985—Subsec. (a). Pub. L. 99 198, §1306, added cl. (12).

Subsec. (e). Pub. L. 99 198, §1307, added subsec. (e).

1980—Subsec. (a). Pub. L. 96 438 added cl. (11).

1978—Subsec. (a). Pub. L. 95 334, struck out "individual" after "title, to".

1977—Subsec. (a). Pub. L. 95 113 inserted parenthetical provision extending the section to include farm equipment which utilizes solar energy and inserted definition of "solar energy".

1972—Subsec. (a). Pub. L. 92 419, §§120(b), 121(1), (2), substituted "section 1941(a) for "section 1941", designated existing provisions as subsec. (a), and added cl. (10).

Subsecs. (b) to (d). Pub. L. 92 419, §121(3), added subsecs. (b) to (d).

1968—Pub. L. 90 488 struck out from cl. (4) the concluding phrase, "including recreational uses and facilities", added cls. (5) and (6), and redesignated former cls. (5) to (7) as (7) to (9), respectively.

1962—Pub. L. 87 703 authorized, in cl. (4), loans to be made for recreational uses and facilities.

Effective Date of 1992 Amendment

Section (f)(1)(B) of Pub. L. 102 552 provided that: "The amendment made by subparagraph (A) [amending this section] shall take effect as if included in the Food, Agriculture, Conservation, and Trade Act of 1990 [Pub. L. 101 624] at the time such Act became law."

Effective Date of 1977 Amendment

Amendment by Pub. L. 95 113 effective Oct. 1, 1977, see section 1901 of Pub. L. 95 113, set out as a note under section 1307 of this title.

Transfer of Functions

Powers, duties, and assets of agencies, offices, and other entities within Department of Agriculture relating to rural development functions transferred to Rural Development Administration by section 2302(b) of Pub. L. 101 624.

Construction of 1991 Amendment

Section 516(f)(2) of Pub. L. 102 552 provided that: "Subsection (b) of section 501 of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Public Law 102 237; 105 Stat. 1866) [amending this section] is repealed. The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) shall be applied and administered as if such subsection had never become law."

Section Referred to in Other Sections

This section is referred to in sections 1926, 1929a, 1932, 1941, 1946, 1947, 1991, 1992, 2008f of this title.

¹So in original. Probably should be "Nonnuclear".

§1943. Limitations and prohibitions on loans

The Secretary shall make or insure no loan under this subchapter (1) that would cause the total principal indebtedness outstanding at any one time for loans made under this subchapter to any one borrower to exceed, in the case of a loan other than a loan guaranteed by the Secretary, $200,000, or, in the case of a loan guaranteed by the Secretary, $400,000; or (2) for the purchasing or leasing of land other than for cash rent, or for carrying on any land leasing or land purchasing program.

(Pub. L. 87 128, title III, §313, Aug. 8, 1961, 75 Stat. 310; Pub. L. 90 488, §9, Aug. 15, 1968, 82 Stat. 771; Pub. L. 92 419, title I, §122, Aug. 30, 1972, 86 Stat. 665; Pub. L. 95 334, title I, §116, Aug. 4, 1978, 92 Stat. 426; Pub. L. 98 258, title VI, §604(a), Apr. 10, 1984, 98 Stat. 139.)

Amendments

1984—Pub. L. 98 258 substituted "$200,000" and "$400,000" for "$100,000" and "$200,000", respectively.

1978—Pub. L. 95 334 substituted provisions setting forth criteria for Secretary to make or insure loans under this subchapter for provisions setting forth criteria for Secretary to make loans under this subchapter.

1972—Pub. L. 92 419 substituted "$50,000" for "$35,000".

1968—Pub. L. 90 488 struck out from item (1) the proviso which limited the amount to be used for loans which would cause the indebtedness of any borrower to exceed $15,000 to 25 per centum of the sums made available for loans.

§1944. Soil conservation district loans; limitation; purchase of conservation equipment

Loans aggregating not more than $500,000 in any one year may also be made to soil conservation districts which cannot obtain necessary credit elsewhere upon reasonable terms and conditions for the purchase of equipment customarily used for soil conservation purposes.

(Pub. L. 87 128, title III, §314, Aug. 8, 1961, 75 Stat. 311.)

§1945. Participating loans

The Secretary is authorized to participate in loans which could otherwise be made by the Secretary under this subchapter which are made by commercial banks, cooperative lending agencies, or other legally organized agricultural lending agencies up to 80 per centum of the amount of the loan.

(Pub. L. 87 128, title III, §315, Aug. 8, 1961, 75 Stat. 311.)

§1946. Liability of borrower; determination of interest rates; payment period; consolidation and rescheduling of loans

(a)(1) The Secretary shall make all loans under this subchapter upon the full personal liability of the borrower and upon such security as the Secretary may prescribe. The interest rates on such loans, except for guaranteed loans and loans provided in paragraphs (2) and (3), shall be as determined by the Secretary, but not in excess of the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, plus an additional charge not to exceed 1 per centum as determined by the Secretary, which charge shall be deposited in the Rural Development Insurance Fund or the Agricultural Credit Insurance Fund, as appropriate, and adjusted to the nearest one-eighth of 1 per centum. The interest rate on any guaranteed loan made under this subchapter shall be such rate as may be agreed upon by the borrower and lender, but not in excess of a rate as may be determined by the Secretary.

(2) The interest rate on any loan (other than a guaranteed loan) to a low income, limited resource borrower under this subchapter shall not be—

(A) greater than the sum of—

(i) an amount that does not exceed one-half of the current average market yield on outstanding marketable obligations of the United States with maturities of 5 years; and

(ii) an amount not exceeding 1 percent per year, as the Secretary determines is appropriate; or

(B) less than 5 percent per year.

(3) The interest rate on any loan (other than a guaranteed loan) made or insured under clause (5) of section 1942(a) of this title for activities that involve the use of prime farmland as defined in section 1927(a)(6)(C) of this title shall be the interest rate otherwise applicable under this section increased by 2 per centum per annum.

(b) Loans made under this subchapter shall be payable in not to exceed seven years. The Secretary may consolidate or reschedule outstanding loans for payment over a period not to exceed seven years (or, in the case of loans for farm operating purposes, fifteen years) from the date of such consolidation or rescheduling, and the amount of unpaid principal and interest of the prior loans so consolidated or rescheduled shall not create a new charge against any loan levels authorized by law. A new loan may be included in a consolidation. Such new loan shall be charged against any loan level authorized by law. Except as otherwise provided for farm loans under section 1981b of this title, the interest rate on such consolidated or rescheduled loans, other than guaranteed loans, may be changed by the Secretary to a rate not to exceed the rate being charged for loans made under this subchapter at the time of the consolidation or rescheduling. The interest rate on any guaranteed loan under this subchapter that may be consolidated or rescheduled for payment shall be such rate as may be agreed upon by the borrower and the lender, but not in excess of a rate as may be determined by the Secretary.

(Pub. L. 87 128, title III, §316, Aug. 8, 1961, 75 Stat. 311; Pub. L. 90 488, §10, Aug. 15, 1968, 82 Stat. 771; Pub. L. 95 334, title I, §117, Aug. 4, 1978, 92 Stat. 426; Pub. L. 97 35, title I, §160(b), Aug. 13, 1981, 95 Stat. 377; Pub. L. 98 258, title VI, §604(b), Apr. 10, 1984, 98 Stat. 139; Pub. L. 101 624, title XVIII, §1803(b), Nov. 28, 1990, 104 Stat. 3818.)

Amendments

1990—Subsec. (a)(2). Pub. L. 101 624 amended par. (2) generally. Prior to amendment, par. (2) read as follows: "The interest rate on any loan (other than a guaranteed loan) to a low-income, limited resource borrower under this subchapter shall be the interest rate otherwise applicable under this section reduced by 3 per centum per annum."

1984—Subsec. (b). Pub. L. 98 258 inserted "(or, in the case of loans for farm operating purposes, fifteen years)" and substituted "Except as otherwise provided for farm loans under section 1981b of this title, the interest rate" for "The interest rate".

1981—Subsec. (a). Pub. L. 97 35 redesignated existing provisions as par. (1), inserted reference to loans guaranteed under pars. (2) and (3), and added pars. (2) and (3).

1978—Pub. L. 95 334 designated existing provisions as subsec. (a), inserted provisions relating to depositing of charges and provisions relating to interest rates on guaranteed loans, struck out provisions relating to payment and renewal of loans, and added subsec. (b).

1968—Pub. L. 90 488 substituted provisions for determination of interest rate by taking into consideration current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of the loans, adjusted to the nearest one-eighth of 1 per centum, plus not to exceed 1 per centum per annum as determined by the Secretary, for former prohibition of an interest rate exceeding 5 per centum per annum.

Effective Date of 1981 Amendment

Amendment by Pub. L. 97 35 applicable to loans made after Sept. 30, 1981, see section 160(c) of Pub. L. 97 35, set out as a note under section 1927 of this title.

§1947. Insured operating loans

Loans meeting the requirements of this subchapter (except section 1942(b) of this title) may be insured, or made to be sold and insured, in accordance with and subject to sections 1928 and 1929 and the last sentence of section 1927 of this title.

(Pub. L. 87 128, title III, §317, as added Pub. L. 92 419, title I, §123, Aug. 30, 1972, 86 Stat. 665.)

§1948. Special assistance to certain qualified beginning farmers and ranchers

(a) In general

The Secretary shall provide special assistance in accordance with this section to enable a qualified beginning farmer or rancher who has not operated a farm or ranch, or who has operated a farm or ranch for not more than 5 years (referred to in this section as the "applicant"), to conduct viable farming or ranching operations.

(b) Submission of plan of farm operation

An applicant who desires to apply for special assistance under this section shall submit a plan, in coordination with activities conducted under sections 2006a, 2006b, 2006c, and 2006d of this title, that—

(1) describes, for each of the first 5 years for which assistance under this section is sought for the operation—

(A) how the operation is to be conducted;

(B) the types and quantities of commodities to be produced by the operation;

(C) the production methods and practices to be employed by the operation;

(D) the conservation measures to be taken in the operation;

(E) the equipment needed to conduct the operation (including any expected replacements for the equipment) and, with respect to each item of needed equipment, whether the applicant owns, leases, or otherwise has access to the item, or proposes to purchase, lease, or otherwise gain access to the item;

(F) the expected income and expenses of the operation;

(G) the expected credit needs of the operation, including the types and amounts of assistance to be sought under this section; and

(H) the site or sites at which the operation is (or is to be) located; and

(2) projects the financial status of the operation after assistance under this section has been provided for a period of not more than 10 years, consistent with section 1949 of this title, as is necessary for the operation to become financially viable without further assistance from the Secretary, including specific goals that the applicant projects to meet in order to progress toward graduation as expeditiously as possible.

(c) Determinations by county committee; approval of plan

The county committee shall approve a plan submitted by an applicant in accordance with subsection (b) of this section if the county committee determines that—

(1) the applicant has not operated a farm or ranch, or has operated a farm or ranch for not more than 5 years;

(2) during the 5-year period ending with the submission of the plan, the applicant has had sufficient education and experience to indicate that the applicant is able to conduct a successful farming or ranching operation, as the case may be;

(3) the applicant owns, leases, or has a commitment to have leased to the applicant the site or sites of the operation;

(4) there is, or will be, available to the applicant equipment sufficient to conduct the operation in accordance with the plan;

(5) the applicant agrees to participate in such loan assessment, borrower training, and financial management programs as the Secretary may require; and

(6) the applicant is otherwise eligible for assistance under this chapter.

(d) Determination by Secretary; approval of application for assistance

The Secretary shall approve an application for assistance under this section for an operation described in a plan approved by a county committee under this section if the Secretary determines that—

(1) the operation would generate income sufficient to cover the expenses of the operation, debt service, and adequate living expenses of the applicant, to the extent that other income would not cover the living expenses, if the operation received assistance under this section as provided for in the plan; and

(2) during the commitment period established in accordance with subsection (e)(1) of this section, the operation will be financially viable without further assistance from the Secretary and the identified goals are reasonable and practicable.

(e) Provision of assistance

(1) Determination of commitment period

(A) Initial determination

In approving an application under subsection (d) of this section, the Secretary shall, subject to subparagraph (C), determine the period during which assistance under this section is to be provided for the operation described in the application (referred to in this subsection as the "commitment period").

(B) Authority to extend period; no authority to reduce period

At any time, the Secretary may, subject to subparagraph (C) and subsections (f) and (g) of this section, extend the duration of the commitment period. The Secretary shall not reduce the duration of the commitment period.

(C) Limitations

(i) In general

The duration of any commitment period (including any extensions of the period) shall not exceed 10 years and shall be consistent with section 1949 of this title.

(ii) Eligibility for insured operating loans

During the commitment period, an applicant shall not be eligible to receive an insured operating loan under this section after the date that is 8 years after the date on which the applicant first receives assistance under this section.

(2) Operating loans; loan guarantees

(A)¹ In general

To the extent that an applicant whose application is approved under subsection (d) of this section is unable to obtain sufficient credit from commercial or cooperative lenders to finance the operation described in the application at reasonable rates and terms (taking into consideration prevailing private and cooperative rates, and terms in the community in which the operation is (or is to be) located, for loans for similar purposes and periods of time), the Secretary shall, subject to the availability of funds and to subsections (f) and (g) of this section and consistent with sections 2006b and 2006d of this title, make a conditional commitment to the applicant for each of the years of the commitment period—

(i) to provide to any commercial or cooperative lender who makes a loan to the applicant that is within the credit needs of the operation (as specified in the plan contained in the application) a guarantee under section 1929(h) of this title for the repayment of 90 percent of the loan principal and interest;

(ii)(I) to provide to any commercial or cooperative lender who makes a loan to the applicant that is within the credit needs of the operation (as specified in the plan contained in the application) a guarantee under section 1929(h) of this title for the repayment of 90 percent of the loan principal and interest and an interest subsidy payment in the amount necessary to ensure that the applicant qualifies for such a loan but not more than the amount of interest assistance allowed by section 1999 of this title; or

(II) if during any of the first 4 years for which assistance is provided under this section the Secretary determines that the applicant will not qualify for a loan described in subclause (I), an interest subsidy payment sufficient to ensure that the effective rate of interest payable by the applicant on the loan equals the rate of interest charged to low income, limited resource borrowers on insured operating loans made under this subchapter that are of comparable size and maturity; or

(iii) to make an insured loan under this subchapter to the applicant, in the amount specified in the plan contained in the application, at an interest rate that is no higher than the interest rate charged to regular borrowers and no lower than the interest rate charged to low income, limited resource borrowers under this subchapter.

(3) Loans or guarantees for new or improved equipment

The Secretary shall make a commitment to any applicant whose application is approved under subsection (d) of this section to provide the applicant with loans under this subchapter or loan guarantees under section 1929(h) of this title to finance the acquisition, improvement, or repair of equipment needed in the operation described in the application if the plan contained in the application provides for the commitment, to the extent that the applicant is unable to obtain sufficient credit from commercial or cooperative lenders for such purposes at reasonable rates and terms (taking into consideration prevailing private and cooperative rates and terms in the community in which the operation is, or is to be, located, for loans for similar purposes and periods of time).

(4) Priority in purchase of inventory equipment; loans or guarantees for the purchases in certain cases

During the commitment period, the Secretary shall—

(A) accord the applicant whose application is approved under subsection (d) of this section priority for the purchase of equipment in the inventory of the Farmers Home Administration necessary for the success of the operation described in the application; and

(B) provide the applicant with loans under this subchapter or loan guarantees under section 1929(h) of this title to finance the purchases if the plan contained in the application provides for the assistance, to the extent that the applicant is unable to obtain sufficient credit from commercial or cooperative lenders for such purpose at reasonable rates and terms (taking into consideration prevailing private and cooperative rates, and terms in the community in which the operation is, or is to be, located, for loans for similar purposes and periods of time).

(5) Other kinds of assistance

During the commitment period, the Farmers Home Administration, the Extension Service, the Soil Conservation Service, and the other entities of the Department of Agriculture shall provide the applicant with such other assistance and information as may be needed in developing and implementing the operation described in the application.

(6) Fees

(A) Secretary

The Secretary shall not charge a fee to any person (including a lender) in connection with any loan guarantee provided in accordance with this section.

(B) Lender

A lender may charge a loan origination and servicing fee in connection with a loan or loan guarantee provided in accordance with this section in an amount not to exceed 1 percent of the amount of the loan.

(f) Annual plan revisions required as condition of continued assistance

The Secretary shall not provide assistance under this section for an operation for any particular year after the first year for which the assistance is provided, unless—

(1) not later than 60 days before the assistance is to be first provided for the particular year, the plan describing the operation has been revised, pursuant to section 2006b of this title, based on the experience of the year preceding the particular year, to provide the information required by subsection (b) of this section for the 5-year period beginning with the particular year (or, if shorter, the period beginning with the particular year and ending with the year in which the plan projects the operation as becoming financially viable); and

(2) the Secretary has approved the revised plan.

(g) Effects of avoidable failure to achieve goals

(1) Termination of commitments

The Secretary shall revoke commitment for assistance made to an applicant under this section if the operation of the applicant fails, for 2 consecutive years, to meet the goals specified in the plan, unless the failure has not materially reduced the likelihood of the operation becoming financially viable and is due to circumstances beyond the control of the applicant.

(2) Suspension of eligibility for assistance

During the 3-year period that begins with the date a commitment made to an applicant is revoked under paragraph (1), the applicant shall not be eligible for assistance under this section.

(Pub. L. 87 128, title III, §318, as added Pub. L. 102 554, §8, Oct. 28, 1992, 106 Stat. 4146.)

References in Text

For definition of "this chapter", referred to in subsec. (c)(6), see note set out under section 1921 of this title.

Section Referred to in Other Sections

This section is referred to in sections 1936, 1994 of this title.

¹So in original. No subpar. (B) has been enacted.

§1949. Graduation of borrowers with operating loans or guarantees to private commercial credit

(a) Graduation plan

The Secretary shall establish a plan, in coordination with activities under sections 2006a, 2006b, 2006c, and 2006d of this title, to encourage each borrower with an outstanding loan under this subchapter or with respect to whom there is an outstanding guarantee under this subchapter to graduate to private commercial or other sources of credit.

(b) Limitation on period for which borrowers are eligible for assistance under this subchapter

Notwithstanding any other provision of this subchapter:

(1) General rule

Except as provided in paragraph (2), the Secretary shall not—

(A) make a loan to a borrower under this subchapter for any year after the 10th year for which such a loan is made to the borrower; or

(B) guarantee for any year a loan made to a borrower for a purpose specified in this subchapter, after the 15th year for which loans under this subchapter are made to, or such a guarantee is provided with respect to, the borrower.

(2) Transition rule

If, as of October 28, 1992, the Secretary has made a loan to a borrower under this subchapter for 5 or more years, or has provided a guarantee for 10 or more years with respect to one or more loans made to the borrower for a purpose specified in this subchapter, the Secretary shall not make a loan to the borrower under this subchapter, or provide such a guarantee with respect to a loan made to the borrower for a purpose specified in this subchapter, after the 5th year occurring after October 28, 1992, for which a loan is made under this subchapter to, or such a guarantee is provided with respect to, the borrower.

(Pub. L. 87 128, title III, §319, as added Pub. L. 102 554, §9, Oct. 28, 1992, 106 Stat. 4150.)

Section Referred to in Other Sections

This section is referred to in section 1948 of this title.

SUBCHAPTER III—EMERGENCY LOANS

Subchapter Referred to in Other Sections

This subchapter is referred to in sections 1981b, 1981e, 1983a of this title.

Emergency Agricultural Credit

Pub. L. 95 334, title II, §§201 211, Aug. 4, 1978, 92 Stat. 429 433, as amended by Pub. L. 96 220, §1, Mar. 30, 1980, 94 Stat. 129; Pub. L. 97 98, title XVI, §1605, Dec. 22, 1981, 95 Stat. 1346; Pub. L. 98 258, title VI, §603, Apr. 10, 1984, 98 Stat. 139; Pub. L. 99 198, title XIII, §1310(b), Dec. 23, 1985, 99 Stat. 1523, which authorized the Secretary of Agriculture to insure or guarantee loans to (1) bona fide farmers and ranchers who were primarily and directly engaged in agricultural production and who were citizens of the United States and (2) farm cooperatives and private domestic corporations and partnerships that were primarily and directly engaged in agricultural production and in which a majority interest was held by members, stockholders, or partners, as applicable, who themselves were citizens of the United States and were primarily and directly engaged in agricultural production, if the applicant for such loan: (A) had the experience or training and resources necessary to assure a reasonable prospect for successful operation with the assistance of such loan; (B) needed such credit in order to maintain a viable agricultural production operation; and (C) was not able to obtain sufficient credit elsewhere due to economic stresses, such as a general tightening of agricultural credit or an unfavorable relationship between production costs and prices received for agricultural commodities; and which provided requirements as to purposes of loans, loan limits, interest rates, repayment period, loan certifications and conditions, loan security, funding, maximum amount of outstanding loans, full faith and credit of the United States, issuance of certificates of beneficial ownership, assignment of contracts of guarantee, geographical availability, the conduct of a study and report on the program, and termination of authority to make new contracts of insurance or guarantee on Sept. 30, 1982, except with respect to the economic emergency loan program operated from Dec. 22, 1983, to Sept. 30, 1984, was repealed by Pub. L. 101 624, title XVIII, §1851, Nov. 28, 1990, 104 Stat. 3837.

Emergency Livestock Credit

Pub. L. 93 357, July 25, 1974, 88 Stat. 391, as amended by Pub. L. 94 35, §1, June 16, 1975, 89 Stat. 213; Pub. L. 94 517, Oct. 15, 1976, 90 Stat. 2446; Pub. L. 95 334, title III, §301, Aug. 4, 1978, 92 Stat. 433; Pub. L. 96 470, title I, §102(d), Oct. 19, 1980, 94 Stat. 2237, authorized the Secretary of Agriculture to provide financial assistance to bona fide farmers and ranchers, including bona fide farmers or ranchers owning livestock that were fed in custom feedyards, who were primarily and directly engaged in agricultural production and who had substantial operations in breeding, raising, fattening, or marketing livestock, and to corporations or partnerships when a majority interest in such corporations or partnerships was held by stockholders or partners who themselves were primarily and directly engaged in such agricultural production and required the Secretary to guarantee loans, including both principal and interest, made by any legally organized lending agency. The provisions also provided requirements as to loan limits, fees or charges, interest rates, repayment period, loan certifications and conditions, loan security, maximum amount of outstanding loans, exclusion from budget totals, full faith and credit of the United States, issuance of certificates of beneficial ownership, assignment of contracts of guarantee, rules and regulations, and termination of authority to make new guarantees on Sept. 30, 1979.

§1961. Eligibility for loans

(a) Persons eligible

The Secretary shall make and insure loans under this subchapter only to the extent and in such amounts as provided in advance in appropriation Acts to (1) established farmers, ranchers, or persons engaged in aquaculture, who are citizens of the United States and who are owner-operators (in the case of loans for a purpose under subchapter I of this chapter) or operators (in the case of loans for a purpose under subchapter II of this chapter) of not larger than family farms, and (2) farm cooperatives, private domestic corporations, partnerships, or joint operations (A) that are engaged primarily in farming, ranching, or aquaculture, and (B) in which a majority interest is held by individuals who are citizens of the United States and who are owner-operators (in the case of loans for a purpose under subchapter I of this chapter) or operators (in the case of loans for a purpose under subchapter II of this chapter) of not larger than family farms (or in the case of such cooperatives, corporations, partnerships, or joint operations in which a majority interest is held by individuals who are related by blood or marriage, as defined by the Secretary, such individuals must be either owners or operators of not larger than a family farm and at least one such individual must be an operator of not larger than a family farm), where the Secretary finds that the applicants' farming, ranching, or aquaculture 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 and Emergency Assistance Act [42 U.S.C. 5121 et seq.]: Provided, That they have experience and resources necessary to assure a reasonable prospect for successful operation with the assistance of such loan and are not able to obtain sufficient credit elsewhere. In addition to the foregoing requirements of this subsection, in the case of farm cooperatives, private domestic corporations, partnerships, and joint operations, the family farm requirement of the preceding sentence shall apply as well to all farms in which the entity has an ownership and operator interest (in the case of loans for a purpose under subchapter I of this chapter) or an operator interest (in the case of loans for a purpose under subchapter II of this chapter). The Secretary shall accept applications from, and make or insure loans pursuant to the requirements of this subchapter to, applicants, otherwise eligible under this subchapter, that conduct farming, ranching, or aquaculture operations in any county contiguous to a county where the Secretary has found that farming, ranching, or aquaculture 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 and Emergency Assistance Act. The Secretary shall accept applications for assistance under this subchapter from persons affected by a natural disaster at any time during the eight-month period beginning (A) on the date on which the Secretary determines that farming, ranching, or aquaculture operations have been substantially affected by such natural disaster or (B) on the date the President makes the major disaster or emergency designation with respect to such natural disaster, as the case may be.

(b) Persons ineligible

An applicant shall be ineligible for financial assistance under this subchapter for crop losses if crop insurance was available to the applicant for such crop losses under the Federal Crop Insurance Act (7 U.S.C. 1501 et seq.).

(c) Family farm system

The Secretary shall conduct the emergency loan program under this subchapter in a manner that will foster and encourage the family farm system of agriculture, consistent with the reaffirmation of policy and declaration of the intent of Congress contained in section 2266(a) of this title.

(d) Definitions

For the purposes of this subchapter—

(1) "aquaculture" means the husbandry of aquatic organisms under a controlled or selected environment; and

(2) "able to obtain sufficient credit elsewhere" means able to obtain sufficient credit elsewhere to finance the applicant's actual needs at reasonable rates and terms, taking into consideration prevailing private and cooperative rates and terms in the community in or near which the applicant resides for loans for similar purposes and periods of time.

(Pub. L. 87 128, title III, §321, Aug. 8, 1961, 75 Stat. 311; Pub. L. 87 832, Oct. 15, 1962, 76 Stat. 958; Pub. L. 93 24, §§2, 3, 6, Apr. 20, 1973, 87 Stat. 24, 25; Pub. L. 93 237, §10(a), (d), Jan. 2, 1974, 87 Stat. 1025; Pub. L. 94 68, §§2, 3, Aug. 5, 1975, 89 Stat. 381; Pub. L. 95 334, title I, §118, Aug. 4, 1978, 92 Stat. 426; Pub. L. 96 302, title I, §120(a), July 2, 1980, 94 Stat. 841; Pub. L. 96 438, §3(a), (b)(1), Oct. 13, 1980, 94 Stat. 1872; Pub. L. 97 35, title I, §161, Aug. 13, 1981, 95 Stat. 378; Pub. L. 98 258, title VI, §602(a), Apr. 10, 1984, 98 Stat. 138; Pub. L. 99 198, title XIII, §1308(a), (b)(1), Dec. 23, 1985, 99 Stat. 1522; Pub. L. 100 707, title I, §109(c)(1), Nov. 23, 1988, 102 Stat. 4708.)

References in Text

The Disaster Relief and Emergency Assistance Act, referred to in subsec. (a), is Pub. L. 93 288, May 22, 1974, 88 Stat. 143, as amended, known as The Robert T. Stafford Disaster Relief and Emergency Assistance Act, which is classified principally to chapter 68 (§5121 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 5121 of Title 42 and Tables.

The Federal Crop Insurance Act, referred to in subsec. (b), is title V of act Feb. 16, 1938, ch. 30, 52 Stat. 72, as amended, which is classified generally to chapter 36 (§1501 et seq.) of this title. For complete classification of this Act to the Code, see section 1501 of this title and Tables.

Amendments

1988—Subsec. (a). Pub. L. 100 707 substituted "and Emergency Assistance Act" for "Act of 1974" in two places.

1985—Subsec. (a)(1). Pub. L. 99 198, §1308(a), inserted "and who are owner-operators (in the case of loans for a purpose under subchapter I of this chapter) or operators (in the case of loans for a purpose under subchapter II of this chapter) of not larger than family farms" after "United States" in cl. (1) of first sentence, extended applicability to joint operations, and substituted requirement that a majority interest be held by individuals who are citizens of the United States and who are owner-operators (in the case of loans for a purpose under subchapter I of this chapter) or operators (in the case of loans for a purpose under subchapter II of this chapter) of not larger than family farms (or in the case of such cooperatives, corporations, partnerships, or joint operations in which a majority interest is held by individuals who are related by blood or marriage, as defined by the Secretary, that such individuals must be either owners or operators of not larger than a family farm and at least one such individual must be an operator of not larger than a family farm) for requirement that a majority interest be held by members, stockholders or partners who are citizens of the United States, in cl. (2) of first sentence, and inserted provision extending the family farm requirement to all farms in which the entity has an ownership and operator interest (in the case of loans for a purpose under subchapter I of this chapter) or an operator interest (in the case of loans for a purpose under subchapter II of this chapter).

Subsec. (b). Pub. L. 99 198, §1308(b)(1), amended subsec. (b) generally, substituting provision declaring a loan applicant ineligible for financial assistance for crop losses where crop insurance was available to the applicant for former provision which made applicants eligible for loans, though able to obtain credit elsewhere, subject to the other terms and conditions for loans under this subchapter and as prescribed under regulations by the Secretary.

1984—Subsec. (a). Pub. L. 98 258 inserted provisions directing the Secretary to accept applications from, and make or insure loans pursuant to the requirements of this subchapter to, applicants, otherwise eligible under this subchapter, that conduct farming, ranching, or aquaculture operations in any county contiguous to a county where the Secretary has found that farming, ranching, or aquaculture 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, and further directing the Secretary to accept applications for assistance under this subchapter from persons affected by a natural disaster at any time during the eight-month period beginning (A) on the date on which the Secretary determines that farming, ranching, or aquaculture operations have been substantially affected by such natural disaster or (B) on the date the President makes the major disaster or emergency designation with respect to such natural disaster, as the case may be.

1981—Subsec. (a). Pub. L. 97 35 inserted provisions relating to requirement for advance appropriation of amounts.

1980—Subsec. (a). Pub. L. 96 348, §3(a), (b)(1), repealed section 120 of Pub. L. 96 302 (see par. below) and amended section generally, designating existing provisions as subsec. (a) and, as so designated, restoring provision to proviso requiring loan recipients to be unable to obtain sufficient credit elsewhere.

Pub. L. 96 302, §120(a) (see par. above), struck out from proviso requirement that persons to be eligible for loans be unable to obtain sufficient credit elsewhere to finance their actual needs at reasonable rates and terms, taking into consideration prevailing private and cooperative rates and terms in the community in or near which they reside for loans for similar purposes and periods of time.

Subsecs. (b) to (d). Pub. L. 96 438, §3(b)(1), added subsecs. (b) to (d).

1978—Pub. L. 95 334 struck out subsec. (a) which set forth provisions relating to designation of emergency areas and definition of term "aquaculture", and incorporated provisions of subsec. (b) as entire section and, as so incorporated, substituted provisions relating to criteria authorizing the Secretary to make and insure loans, for provisions relating to criteria authorizing the Secretary to make loans in designated areas.

1975—Subsec. (a). Pub. L. 94 68, §2, substituted provisions authorizing the Secretary to designate an emergency area if he finds that a natural disaster has occurred in that area which substantially affected farming, ranching, or aquaculture operations for provisions authorizing the Secretary to designate an emergency area if he finds that there exists in that area a general need for agricultural credit and that the need for such credit in that area is the result of a natural disaster, and inserted definition of "aquaculture".

Subsec. (b). Pub. L. 94 68, §3, extended the authority of the Secretary to make loans to areas designated by the President as "Emergency" pursuant to Disaster Relief Act of 1970, substituted reference to persons engaged in aquaculture and aquaculture for reference to oyster planters and oyster planting respectively, struck out provision that such loans be made without regard to whether the required financial assistance is otherwise available from private, cooperative, or other responsible sources, inserted requirement that the loan applicant be unable to obtain credit elsewhere at reasonable rates and terms, and inserted sentence that the provisions of this subsection shall not apply to loan applications filed prior to July 9, 1975.

1974—Subsec. (a). Pub. L. 93 237, §10(d), struck out "which cannot be met for temporary periods of time by private, cooperative, or other responsible sources (including loans the Secretary is authorized to make or insure under subchapters I and II of this chapter or any other Act of Congress), at reasonable rates and terms for loans for similar purposes and periods of time" after "a general need for agricultural credit".

Subsec. (b). Pub. L. 93 237, §10(a), struck out ", and are unable to obtain sufficient credit elsewhere to finance their actual needs at reasonable rates and terms, taking into consideration prevailing practice and cooperative rates and terms in the community in or near which the applicant resides for loans for similar purposes and periods of time" after "a reasonable prospect for successful operation with the assistance of such loan" and inserted provision that the loans be made without regard to whether the required financial assistance is otherwise available from the private, cooperative, or other responsible sources.

1973—Subsec. (a). Pub. L. 93 24, §§2, 6, substituted in parenthetical text "authorized to make or insure under subchapters I and II of this chapter" for "authorized to make under subchapter II of this chapter or to make or insure under subchapter I of this chapter" and introductory words "shall designate" for "may designate".

Subsec. (b). Pub. L. 93 24, §3, substituted introductory text "shall make loans in any such area designated by the Secretary in accordance with subsection (a) of this section and in any area designated as a major disaster by the President pursuant to the provisions of the Disaster Relief Act of 1970, as amended," for "is authorized to make loans in any such area" and ": Provided, That" for "provided" before "they have experience".

1962—Subsec. (b). Pub. L. 87 832 authorized loans to established oyster planters and to private domestic corporations or partnerships engaged primarily in oyster planting.

Effective Date of 1985 Amendment

Section 1308(b)(2) of Pub. L. 99 198 provided that: "The amendment made by paragraph (1) [amending this section] shall not apply to a person whose eligibility for an emergency loan is the result of damage to an annual crop planted or harvested before the end of 1986."

Effective Date of 1984 Amendment

Section 602(c) of Pub. L. 98 258 provided that: "the amendments made by this section [amending this section and section 1964 of this title] shall be applicable to disasters occurring after May 30, 1983."

Effective Date of 1980 Amendments

Section 3(d) of Pub. L. 96 438 provided that: "The amendments to subtitle C of the Consolidated Farm and Rural Development Act made by subsection (b) of this section [amending this section and sections 1962 to 1964 and 1971 of this title] shall be effective with respect to loans approved by the Secretary of Agriculture under subtitle C [this subchapter] after the date of enactment of this Act [Oct. 13, 1980], except that, for borrowers with loans outstanding under subtitle C as of December 15, 1979—

"(1) the limits on loans under section 324 of the Consolidated Farm and Rural Development Act [section 1964 of this title] made by subsection (b)(1) of this section [amending this section and sections 1962 to 1964 of this title], and

"(2) the reduction in the time limit on subsequent emergency loans under section 330 of the Consolidated Farm and Rural Development Act [section 1971 of this title] made by subsection (b)(2) of this section [amending section 1971 of this title]

shall not apply to subsequent emergency loans under section 330 (as in effect on the date preceding the date of enactment of this Act) that are made to such borrowers for the disasters for which the borrowers obtained loans under subtitle C prior to December 16, 1979."

Amendment by Pub. L. 96 302 effective Oct. 1, 1980, see section 507 of Pub. L. 96 302, set out as an Effective Date of 1980 Amendment note under section 631 of Title 15, Commerce and Trade.

Effective Date of 1974 Amendment

Section 10(b) of Pub. L. 93 237 provided that: "The provisions of subsection (a) of this section [amending this section] shall be given effect with respect to all loan applications and loans made in connection with a disaster occurring on or after April 20, 1973."

Section 10(d) of Pub. L. 93 237 provided in part that: "The provisions of this subsection [amending this section] shall be given effect with respect to all loan applications and loans made in connection with a disaster occurring on or after December 27, 1972."

Ineligibility for Emergency Loans

Pub. L. 101 82, title III, §301, Aug. 14, 1989, 103 Stat. 581, provided that: "Section 321(b) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1961(b)) shall not apply to a person who otherwise would be eligible for an emergency loan under subtitle C of such Act [7 U.S.C. 1961 et seq.], if such eligibility is the result of damage to an annual crop planted for harvest in 1989."

Similar provisions were contained in the following prior act:

Pub. L. 100 387, title III, §311, Aug. 11, 1988, 102 Stat. 948.

Ninety-Day Extension After January 2, 1974, of Deadline for Seeking Assistance With Regard to Disasters Occurring on or After December 27, 1972

Section 10(c) of Pub. L. 93 237 provided that: "With regard to all disasters occurring on or after December 27, 1972, the Secretary of Agriculture shall extend for ninety days after the date of enactment of this section [Jan. 2, 1974] the deadline for seeking assistance under section 321 of the Consolidated Farm and Rural Development Act [this section] as amended by this section [amending this section]."

Section Referred to in Other Sections

This section is referred to in sections 1444f, 1445b 3a, 1964, 1991, 2008f of this title; title 15 section 636.

§1962. Loan determination factors; written credit declinations

(a) For the purpose of determining whether to make or insure any loan under this subchapter, the Secretary shall take into consideration the net worth of the applicant involved, including all the assets and liabilities of the applicant.

(b) For the purpose of determining whether an applicant under this subchapter is not able to obtain sufficient credit elsewhere, the Secretary shall require at least one written indication of declination of credit, from a legally organized lending institution within reasonable proximity to the applicant, that specifies the reasons for the declination: Provided, That for loans in excess of $300,000, the Secretary shall require at least two such written declinations: Provided further, That for loans of $300,000 or less, the Secretary may waive the requirement of this subsection if the Secretary determines that it would impose an undue burden on the applicant.

(Pub. L. 87 128, title III, §322, Aug. 8, 1961, 75 Stat. 311; Pub. L. 94 68, §4, Aug. 5, 1975, 89 Stat. 381; Pub. L. 96 438, §3(b)(1), Oct. 13, 1980, 94 Stat. 1873.)

Amendments

1980—Pub. L. 96 438 substituted provisions prescribing factors to be considered in determining whether to make or insure a loan and relating to the need for applicants unable to obtain sufficient credit elsewhere to provide written credit declinations for provisions relating to the purpose and extent of loans under this subchapter.

1975—Pub. L. 94 68 extended authority to finance crop or livestock changes deemed desirable as a result of changes in market demand, and to make emergency loans in excess of the actual loss sustained as a result of the natural disaster.

Effective Date of 1980 Amendment

Amendment by Pub. L. 96 438 effective with respect to loans approved after Oct. 13, 1980, except for certain subsequent emergency loans, see section 3(d) of Pub. L. 96 438, set out as a note under section 1961 of this title.

§1963. Purpose and extent of loans

Loans may be made or insured under this subchapter for any purpose authorized for loans under subchapter I or II of this chapter and for crop or livestock changes deemed desirable by the applicant, subject to the limitations on the amounts of loans provided in section 1964(a) of this title.

(Pub. L. 87 128, title III, §323, Aug. 8, 1961, 75 Stat. 311; Pub. L. 96 438, §3(b)(1), Oct. 13, 1980, 94 Stat. 1873.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

Amendments

1980—Pub. L. 96 438 substituted provisions relating to the purposes and extent of loans made or insured under this subchapter for provisions limiting loans to amounts certified by the county committee.

Effective Date of 1980 Amendment

Amendment by Pub. L. 96 438 effective with respect to loans approved after Oct. 13, 1980, except for certain subsequent emergency loans, see section 3(d) of Pub. L. 96 438, set out as a note under section 1961 of this title.

§1964. Loan limitation, interest rates and subsidies, and repayment; grant eligibility

(a) Limitation on loans

No loan made or insured under this subchapter may exceed the amount of the actual loss caused by the disaster or $500,000, whichever is less, for each disaster.

(b) Interest rates

Loans under this subchapter shall be at rates of interest as follows:

(1) For loans or portions of loans up to the amount of the applicant's actual loss caused by the disaster, as limited under subsection (a)(1) of this section, the interest shall be at rates prescribed by the Secretary, but not in excess of 8 percent per annum; and

(2) For loans or portions of loans in excess of the amount of the applicant's actual loss caused by the disaster, as limited under subsection (a)(1) of this section, (A) the interest for insured loans shall be at rates prevailing in the private market for similar loans, as determined by the Secretary, and (B) the interest for guaranteed loans shall be at rates agreed on by the borrower and lender, but not in excess of such rates as may be determined by the Secretary.

(c) Interest subsidies

For guaranteed loans under this subchapter, the Secretary may pay interest subsidies to the lenders for those portions of the loans up to the amount of the actual loss caused by the disaster, as limited under subsection (a)(1) of this section. Any such subsidy shall not exceed the difference between the interest rate being charged for loans up to the amount of the actual loss, as established under subsection (b)(1) of this section, and the maximum interest rate for guaranteed loans, as established under subsection (b)(2) of this section.

(d) Repayment; security; repayment period extension; review

All loans under this subchapter shall be repayable at such times as the Secretary may determine, taking into account the purposes of the loan and the nature and effect of the disaster, but not later than as provided for loans for similar purposes under subchapters I and II of this chapter, and upon the full personal liability of the borrower and upon the best security available, as the Secretary may prescribe: 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, a portion or all of which may have depreciated in value due to the disaster and which in the opinion of the Secretary, together with the Secretary's confidence in the repayment ability of the applicant, is adequate security for the loan, and (2) make such loan repayable at such times as the Secretary may determine, not later than as provided under subchapters I and II of this chapter, as justified by the needs of the applicant: Provided further, That for any disaster occurring after January 1, 1975, the Secretary, if the loan is for a purpose described in subchapter II of the chapter, may make the loan repayable at the end of a period of more than seven years, but not more than twenty years, if the Secretary determines that the need of the loan applicant justifies such a longer repayment period: Provided further, That for any direct or insured loan (other than a guaranteed loan) approved under section 1961(b) of this title, three years after the loan is made or insured, and every two years thereafter for the term of the loan, the Secretary shall review the loan; and if, based on such review, the Secretary determines that the borrower is able to obtain a loan from non-Federal sources at reasonable rates and terms for loans for similar purposes and periods of time, the borrower shall on request by the Secretary, apply for and accept such non-Federal loan in sufficient amount to repay the Secretary. If farm assets (including land, livestock, and equipment) are used as collateral to secure a loan made under this subchapter, the Secretary shall value the assets based on the higher of (A) the value of the assets on the day before the date the governor of the State in which the farm is located requests assistance under this subchapter or the Disaster Relief and Emergency Assistance Act [42 U.S.C. 5121 et seq.] for any portion of such State affected by the disaster with respect to which the application for the loan is made, or (B) the value of the assets one year before such day.

(e) Grant eligibility

Any political subdivision of a State with a population of less than ten thousand inhabitants that, if such subdivision had a population of ten thousand or more inhabitants, would be eligible for a grant under the first title of the Community Emergency Drought Relief Act of 1977 shall be eligible for a grant under this chapter during any period in which the Community Emergency Drought Relief Act of 1977 is or has been in effect.

(Pub. L. 87 128, title III, §324, Aug. 8, 1961, 75 Stat. 311; Pub. L. 93 24, §4, Apr. 20, 1973, 87 Stat. 25; Pub. L. 94 68, §5, Aug. 5, 1975, 89 Stat. 381; Pub. L. 95 89, title IV, §406, Aug. 4, 1977, 91 Stat. 561; Pub. L. 95 334, title I, §119, Aug. 4, 1978, 92 Stat. 427; Pub. L. 96 302, title I, §120(b), July 2, 1980, 94 Stat. 841; Pub. L. 96 438, §3(a), (b)(1), Oct. 13, 1980, 94 Stat. 1872, 1873; Pub. L. 97 35, title I, §162(a), Aug. 13, 1981, 95 Stat. 378; Pub. L. 98 258, title VI, §602(b), Apr. 10, 1984, 98 Stat. 138; Pub. L. 99 198, title XIII, §1308(b)(3), (c), Dec. 23, 1985, 99 Stat. 1523; Pub. L. 100 707, title I, §109(c)(2), Nov. 23, 1988, 102 Stat. 4708.)

References in Text

For definition of "this chapter", referred to in subsecs. (d) and (e), see note set out under section 1921 of this title.

The Disaster Relief and Emergency Assistance Act, referred to in subsec. (d), is Pub. L. 93 288, May 22, 1974, 88 Stat. 143, as amended, known as The Robert T. Stafford Disaster Relief and Emergency Assistance Act, which is classified principally to chapter 68 (§5121 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 5121 of Title 42 and Tables.

The Community Emergency Drought Relief Act of 1977, referred to in subsec. (e), is Pub. L. 95 31, May 23, 1977, 91 Stat. 169. Title I of the Community Emergency Drought Relief Act of 1977 is set out as a note under section 5184 of Title 42. For complete classification of this Act to the Code, see Tables.

Amendments

1988—Subsec. (d). Pub. L. 100 707 substituted "and Emergency Assistance Act" for "Act of 1974".

1985—Subsec. (a). Pub. L. 99 198, §1308(c), in amending subsec. (a) generally, struck out par. (1) designation, substituted "No loan" for "Except as otherwise provided in paragraph (2) of this subsection, no loan", and struck out par. (2) authorization of loans through Sept. 30, 1982 for applicants unable to obtain sufficient credit elsewhere, limited to an amount that would not cause the total unpaid principal indebtedness of the loan applicant to exceed: $1,500,000 through end of fiscal year 1980; $1,000,000 during fiscal year 1981; and $500,000 during fiscal year 1982; and restricted loans in excess of amount of actual loss that were for more than $300,000 without a prior determination of the Secretary of applicant's inability to obtain loans to finance actual needs at reasonable rates and terms in the residential community of the applicant for loans for similar purposes and periods of time.

Subsec. (b)(1). Pub. L. 99 198, §1308(b)(3), substituted provision for interest rates prescribed by the Secretary but "not in excess of 8 percent per annum" for former such provision but "(A) if the applicant is not able to obtain sufficient credit elsewhere, not in excess of 8 per centum per annum, and (B) if the applicant is able to obtain sufficient credit elsewhere, not in excess of the rate prevailing in the private market for similar loans, as determined by the Secretary".

1984—Subsec. (d). Pub. L. 98 258 inserted provision that, if farm assets (including land, livestock, and equipment) are used as collateral to secure a loan made under this subchapter, the Secretary shall value the assets based on the higher of (A) the value of the assets on the day before the date the governor of the State in which the farm is located requests assistance under this subchapter or the Disaster Relief Act of 1974 for any portion of such State affected by the disaster with respect to which the application for the loan is made, or (B) the value of the assets one year before such day.

1981—Subsec. (b)(1). Pub. L. 97 35 in cl. (A) increased amount from 5 to 8 per centum, and in cl. (B) substituted provisions relating to a rate not in excess of the rate prevailing in the private market for similar loans, for provisions relating to a rate not in excess of current average market yield on outstanding United States marketable obligations, plus additional charges and adjustments.

1980—Subsec. (a). Pub. L. 96 348, §3(a), (b)(1), repealed section 120 of Pub. L. 96 302 (see par. below) and amended subsec. (a) generally, substituting provisions relating to the limitation on loans made or insured under this subchapter and authorizing excess loan amounts for provisions relating to the interest rates, maturity and security of loans made or insured under this chapter.

Pub. L. 96 302, §120(b) (see par. above), substituted interest rate provisions of first sentence for prior provision for loans "(1) at a rate of interest not in excess of 5 per centum per annum on loans up to the amount of the actual loss caused by the disaster, and (2) for any loans or portions of loans in excess of that amount, the interest rate will be that prevailing in the private market for similar loans, as determined by the Secretary" and inserted proviso in second sentence for repayment of subsec. (a)(1)(B) loans.

Subsec. (b). Pub. L. 96 438, §3(b)(1), substituted provisions relating to interest rates on loans made or insured under this subchapter for provisions relating to eligibility of political subdivisions of states for grants under this chapter.

Subsecs. (c) to (e). Pub. L. 96 438, §3(b)(1), added subsecs. (c) to (e).

1978—Subsecs. (b), (c). Pub. L. 95 334 redesignated subsec. (c) as (b). Former subsec. (b), which related to reductions in the interest rate based on interest rate of the Small Business Administration, was struck out.

1977—Subsec. (a). Pub. L. 95 89 designated existing provisions as subsec. (a) and struck out last proviso prescribing for any loan made by the Small Business Administration in connection with a disaster occurring on or after Aug. 5, 1975, under section 636(b)(1), (2), or (4) of title 15 a rate of interest determined in the first paragraph following section 636(b)(8) of title 15 for loans under paragraphs (3), (5), (6), (7), or (8) of section 636(b) of title 15, now covered in subsec. (b) of this section.

Subsecs. (b), (c). Pub. L. 95 89 added subsecs. (b) and (c).

1975—Pub. L. 94 68 made the existing rate of 5 percent applicable to loans up to the amount of the actual loss caused by the disaster, inserted provisions that for loans or portions of loans in excess of that amount the interest rate will be that prevailing in the private market for similar loans, as determined by the Secretary, and inserted provisos relating to security, disasters occurring after Jan. 1, 1975, and loans made by Small Business Administration.

1973—Pub. L. 93 24 substituted "5" for "3" per centum.

Effective Date of 1984 Amendment

Amendment by Pub. L. 98 258 applicable to disasters occurring after May 30, 1983, see section 602(c) of Pub. L. 98 258, set out as a note under section 1961 of this title.

Effective Date of 1981 Amendment

Section 162(b) of Pub. L. 97 35 provided that: "The amendments made by this section [amending this section] shall apply to loans made with respect to disasters occurring after September 30, 1981".

Effective Date of 1980 Amendments

Amendment by section 3(b)(1) of Pub. L. 96 438 effective with respect to loans approved after Oct. 13, 1980, except for certain subsequent emergency loans, see section 3(d) of Pub. L. 96 438, set out as a note under section 1961 of this title.

Amendment by Pub. L. 96 302 effective Oct. 1, 1980, see section 507 of Pub. L. 96 302, set out as a note under section 631 of Title 15, Commerce and Trade.

Effective Date of 1978 Amendment

Section 119 of Pub. L. 95 334 provided that the amendment made by that section is effective Oct. 1, 1978.

Small Business Disaster Loans; Interest Rate; Cancellation of Loans

Loans by Small Business Administration in connection with any disaster occurring on or after Apr. 20, 1973 made under section 636(b)(1), (2), or (4) of Title 15, as subject to interest rate determined under this section and prohibition against cancellation of such loan under any provision of law, see section 9 of Pub. L. 93 24, set out as a note under section 636 of Title 15, Commerce and Trade.

Section Referred to in Other Sections

This section is referred to in section 1963 of this title.

§1965. Repealed. Pub. L. 95 334, title I, §120, Aug. 4, 1978, 92 Stat. 427

Section, Pub. L. 87 128, title III, §325, Aug. 8, 1961, 75 Stat. 311; Pub. L. 94 68, §6, Aug. 5, 1975, 89 Stat. 382, authorized delegation of authority to State Directors of Farmers Home Administration for making emergency loans.

§1966. Emergency Credit Revolving Fund utilization

The Secretary is authorized to utilize the revolving fund created by section 1148a¹ of title 12 (hereinafter in this subchapter referred to as the "Emergency Credit Revolving Fund") for carrying out the purposes of this subchapter.

(Pub. L. 87 128, title III, §326, Aug. 8, 1961, 75 Stat. 312.)

References in Text

Section 1148a of title 12, referred to in text, was repealed by Pub. L. 92 181, title V, §5.26(a), Dec. 10, 1971, 85 Stat. 624. See section 2252 of Title 12, Banks and Banking.

The Emergency Credit Revolving Fund, referred to in text, was abolished and its assets and liabilities transferred to the Agricultural Credit Insurance Fund by section 1929 of this title.

Section Referred to in Other Sections

This section is referred to in section 1929 of this title.

¹See References in Text note below.

§1967. Addition to Emergency Credit Revolving Fund of sums from liquidation of loans; authorization of appropriations

(a) All sums received by the Secretary from the liquidation of loans made under the provisions of this subchapter or under the Act of April 6, 1949, as amended, or the Act of August 31, 1954, and from the liquidation of any other assets acquired with money from the Emergency Credit Revolving Fund shall be added to and become a part of such fund.

(b) There are authorized to be appropriated to the Emergency Credit Revolving Fund such additional sums as the Congress shall from time to time determine to be necessary.

(Pub. L. 87 128, title III, §327, Aug. 8, 1961, 75 Stat. 312.)

References in Text

Act of April 6, 1949, as amended, referred to in subsec. (a), is act Apr. 6, 1949, ch. 49, 63 Stat. 43, as amended, which was classified to sections 1148a 1 to 1148a 3 of Title 12, Banks and Banking, was repealed by section 341(a) of Pub. L. 87 128, and is covered by this chapter.

Act of August 31, 1954, referred to in subsec. (a), is act Aug. 31, 1954, ch. 1145, 68 Stat. 999, which was classified as a note under section 1148a 1 of Title 12, was repealed by section 341(a) of Pub. L. 87 128, and is covered by this chapter.

Abolition of Emergency Credit Revolving Fund

The Emergency Credit Revolving Fund, referred to in this section and in section 1966 of this title, was abolished and its assets and liabilities transferred to the Agricultural Credit Insurance Fund by section 1929 of this title.

§1968. Insurance of loans

Loans meeting the requirements of this subchapter and any amendatory or supplementary Act may be insured, or made to be sold and insured, in accordance with and subject to sections 1928 and 1929 and the last sentence of section 1927 of this title.

(Pub. L. 87 128, title III, §328, as added Pub. L. 92 173, Nov. 24, 1971, 85 Stat. 491; amended Pub. L. 93 24, §5, Apr. 20, 1973, 87 Stat. 25; Pub. L. 95 334, title I, §109(b), Aug. 4, 1978, 92 Stat. 423.)

Amendments

1978—Pub. L. 95 334 struck out proviso relating to inclusion of loans under this section in applying limitation under section 1929(f)(1) of this title.

1973—Pub. L. 93 24 substituted "$500,000,000" for "$100,000,000".

§1969. Repealed. Pub. L. 93 24, §1, Apr. 20, 1973, 87 Stat. 24

Section, Pub. L. 87 128, title III, §328, as added Pub. L. 92 385, §5, Aug. 16, 1972, 86 Stat. 557, provided for emergency loans for major and natural disasters occurring between June 30, 1971, and July 1, 1973, providing in: subsec. (a) for cancellation of existing loans and the considerations in making grants, loans, and refinancing of loans; subsec. (b) for loans for loss or damage to agricultural crops; subsec. (c) for amount of loans and interest rates; subsec. (d) for availability of benefits irrespective of age; subsec. (e) for availability of benefits irrespective of approval date; and subsec. (f) for report to Congress.

Loans to Eligible Applicants in Areas Determined as Natural Disaster Areas After January 1, 1972, and Before December 27, 1972; Time for Acceptance of Applications

Section 8 of Pub. L. 93 24 provided that: "Notwithstanding the repeal herein of section 5 of Public Law 92 385 [this section], and notwithstanding any other provision of law, the Secretary of Agriculture shall make loans in accordance with the provisions of section 5 of Public Law 92 385 [this section] to eligible applicants in natural disaster areas determined or designated by the Secretary of Agriculture where such determination or designation had been made after January 1, 1972 and prior to December 27, 1972. The authority to accept applications for such loans shall expire 18 days after the effective date of this Act [Apr. 20, 1973]."

Continuation of Secretary's Authority With Respect to Natural Disasters Occurring After December 26, 1972, and Prior to April 20, 1973

Pub. L. 93 237, §4, Jan. 2, 1974, 87 Stat. 1024, provided that: "Notwithstanding the provisions of Public Law 93 24 [which repealed this section], the Secretary of Agriculture shall continue to exercise his authority with respect to natural disasters which occurred after December 26, 1972, but prior to April 20, 1973, in accordance with the provisions of section 5 of Public Law 92 385 [this section] as such section was in effect prior to April 20, 1973."

§1970. Eligibility for assistance based on production loss

The Secretary shall make financial assistance under this subchapter available to any applicant seeking assistance based on production losses if the applicant shows that a single enterprise which constitutes a basic part of the applicant's farming, ranching, or aquaculture operation has sustained at least a 30 per centum loss of normal per acre or per animal production, or such lesser per centum of loss as the Secretary may determine, as a result of the disaster based upon the average monthly price in effect for the previous year and the applicant otherwise meets the conditions of eligibility prescribed under this subtitle. Such loans shall be made available based upon 80 per centum, or such greater per centum as the Secretary may determine, of the total calculated actual production loss sustained by the applicant.

(Pub. L. 87 128, title III, §329, as added Pub. L. 94 68, §7, Aug. 5, 1975, 89 Stat. 382; amended Pub. L. 97 35, title I, §163, Aug. 13, 1981, 95 Stat. 378.)

Amendments

1981—Pub. L. 97 35 increased specific per centum loss from 20 to 30, and authorized a lesser per centum loss pursuant to determinations by the Secretary under applicable criteria.

§1971. Repealed. Pub. L. 99 198, title XIII, §1308(d), Dec. 23, 1985, 99 Stat. 1523

Section, Pub. L. 87 128, title III, §330, as added Pub. L. 94 68, §8, Aug. 5, 1975, 89 Stat. 382; amended Pub. L. 96 438, §3(b)(2), Oct. 13, 1980, 94 Stat. 1875, authorized additional emergency loans.

SUBCHAPTER IV—ADMINISTRATIVE PROVISIONS

Subchapter Referred to in Other Sections

This subchapter is referred to in title 25 section 492.

§1981. Farmers Home Administration

(a) Appointment and compensation of Administrator; transfer of powers, duties, and assets pertaining to agricultural credit

In accordance with section 2006a of this title, for purposes of this chapter, and for the administration of assets under the jurisdiction of the Secretary of Agriculture pursuant to the Farmers Home Administration Act of 1946, as amended, the Bankhead-Jones Farm Tenant Act, as amended, the Act of August 28, 1937, as amended, the Act of April 6, 1949, as amended, the Act of August 31, 1954, as amended, and the power and duties of the Secretary under any other Act authorizing agricultural credit, the Secretary may assign and transfer such powers, duties, and assets to such officers or agencies of the Department of Agriculture as the Secretary considers appropriate.

(b) Powers of Secretary of Agriculture

The Secretary may—

(1) administer his powers and duties through such national, area, State, or local offices and employees in the United States as he determines to be necessary and may authorize an office to serve the area composed of two or more States if he determines that the volume of business in the area is not sufficient to justify separate State offices, and until January 1, 1975, make contracts for services incident to making, insuring, collecting, and servicing loans and property as determined by the Secretary to be necessary for carrying out the purposes of this chapter; (and the Secretary shall prior to June 30, 1974, report to the Congress through the President on the experience in using such contracts, together with recommendations for such legislation as he may see fit);

(2) accept and utilize voluntary and uncompensated services, and, with the consent of the agency concerned, utilize the officers, employees, equipment, and information of any agency of the Federal Government, or of any State, territory, or political subdivision;

(3) within the limits of appropriations made therefor, make necessary expenditures for purchase or hire of passenger vehicles, and such other facilities and services as he may from time to time find necessary for the proper administration of this chapter;

(4) compromise, adjust, reduce, or charge-off debts or claims, and adjust, modify, subordinate, or release the terms of security instruments, leases, contracts, and agreements entered into or administered by the Farmers Home Administration or the Rural Development Administration, except for activities under the Housing Act of 1949 [42 U.S.C. 1441 et seq.]. The Secretary may not require liquidation of property securing any farmer program loan or acceleration of any payment required under any farmer program loan as a prerequisite to initiating an action authorized under this subsection. The Secretary may release borrowers or others obligated on a debt, except for debt incurred under the Housing Act of 1949, from personal liability with or without payment of any consideration at the time of the compromise, adjustment, reduction, or charge-off of any claim, except that no compromise, adjustment, reduction, or charge-off of any claim may be made or carried out—

(A) with respect to farmer program loans, on terms more favorable than those recommended by the appropriate county committee utilized pursuant to section 1982¹ of this title; or

(B) after the claim has been referred to the Attorney General, unless the Attorney General approves;

(5) except for activities conducted under the Housing Act of 1949 [42 U.S.C. 1441 et seq.], collect all claims and obligations administered by the Farmers Home Administration, or under any mortgage, lease, contract, or agreement entered into or administered by the Farmers Home Administration and, if in his judgment necessary and advisable, pursue the same to final collection in any court having jurisdiction;

(6) release mortgage and other contract liens if it appears that they have no present or prospective value or that their enforcement likely would be ineffectual or uneconomical;

(7) obtain fidelity bonds protecting the Government against fraud and dishonesty of officers and employees of the Farmers Home Administration in lieu of faithful performance of duties bonds under section 14¹ of title 6, and regulations issued pursuant thereto, but otherwise in accordance with the provisions thereof;

(8) consent to (A) long-term leases of facilities financed under this subchapter notwithstanding the failure of the lessee to meet any of the requirements of this subchapter if such long-term leases are necessary to ensure the continuation of services for which financing was extended to the lessor, and (B) the transfer of property securing any loan or financed by any loan or grant made, insured, or held by the Secretary under this chapter, or the provisions of any other law administered by the Rural Development Administration under this chapter or by the Farmers Home Administration, upon such terms as he deems necessary to carry out the purpose of the loan or grant or to protect the financial interest of the Government, and shall document the consent of the Secretary for the transfer of the property of a borrower in the file of the borrower; and

(9) notwithstanding that an area ceases, or has ceased, to be "rural", in a "rural area", or an eligible area, make loans and grants, and approve transfers and assumptions, under this chapter on the same basis as though the area still was rural in connection with property securing any loan made, insured, or held by the Secretary under this chapter or in connection with any property held by the Secretary under this chapter.

(c) Delinquent claims and obligations

The Secretary may use for the prosecution or defense of any claim or obligation described in subsection (b)(5) of this section the Attorney General, the General Counsel of the Department of Agriculture, or a private attorney who has entered into a contract with the Secretary.

(Pub. L. 87 128, title III, §331, Aug. 8, 1961, 75 Stat. 312; Pub. L. 90 488, §11, Aug. 15, 1968, 82 Stat. 771; Pub. L. 92 419, title I, §124, Aug. 30, 1972, 86 Stat. 665; Pub. L. 95 334, title I, §121, Aug. 4, 1978, 92 Stat. 427; Pub. L. 97 98, title XVI, §1603, Dec. 22, 1981, 95 Stat. 1346; Pub. L. 99 198, title XIII, §1309, Dec. 23, 1985, 99 Stat. 1523; Pub. L. 100 233, title VI, §615(c), Jan. 6, 1988, 101 Stat. 1682; Pub. L. 101 624, title XVIII, §§1805, 1806, title XXIII, §§2303(a), 2388(d)(1), Nov. 28, 1990, 104 Stat. 3819, 3981, 4052; Pub. L. 102 237, title V, §501(c), title VII, §701(h)(1)(E), Dec. 13, 1991, 105 Stat. 1866, 1880; Pub. L. 103 248, §2, May 11, 1994, 108 Stat. 619; Pub. L. 103 354, title II, §226(h), Oct. 13, 1994, 108 Stat. 3216.)

References in Text

For definition of "this chapter", referred to in subsecs. (a) and (b)(1), (3), (8), (9), see note set out under section 1921 of this title.

The Farmers Home Administration Act of 1946, as amended, referred to in subsec. (a), is act Aug. 14, 1946, ch. 964, 60 Stat. 1062, as amended, which was classified to sections 1001 to 1005, 1005a to 1005d, 1007, 1008, 1009, 1015 to 1029, 1030, and 1031 of this title, section 371 of Title 12, Banks and Banking, and section 82h of Title 31, Money and Finance, and in so far as it amended provisions of Title I, II, and IV of the Bankhead-Jones Farm Tenant Act, was repealed by section 341(a) of Pub. L. 87 128, and is covered by this chapter.

The Bankhead-Jones Farm Tenant Act, as amended, referred to in subsec. (a), is act July 22, 1937, ch. 517, 50 Stat. 522, as amended. Title III of act July 22, 1937, as amended, is classified to sections 1010 to 1012 and 1013a of this title. Titles I, II, and IV of act July 22, 1937, as amended, were formerly classified to sections 1001 to 1005, 1005a to 1005d, 1006, 1006c to 1006e, 1007, 1008, 1009, 1014 to 1025, 1026, and 1027 to 1029 of this title, respectively, were repealed by section 341(a) of Pub. L. 87 128, and are covered by this chapter.

Act of August 28, 1937, as amended, referred to in subsec. (a), is act Aug. 28, 1937, ch. 870, 50 Stat. 869, as amended, which was formerly classified to sections 590r to 590x 4 of Title 16, Conservation, was repealed by section 341(a) of Pub. L. 87 128, and is covered by this chapter.

Act of April 6, 1949, as amended, referred to in subsec. (a), is act Apr. 6, 1949, ch. 49, 63 Stat. 43, as amended, which was formerly classified to sections 1148a 1 to 1148a 3 of Title 12, Banks and Banking, was repealed by section 341(a) of Pub. L. 87 128, and is covered by this chapter.

Act of August 31, 1954, as amended, referred to in subsec. (a), is act Aug. 31, 1954, ch. 1145, 68 Stat. 999, which was formerly classified as a note under section 1148a 1 of Title 12, was repealed by section 341(a) of Pub. L. 87 128, and is covered by this chapter.

The Housing Act of 1949, as amended, referred to in subsec. (b)(4), (5), is act July 15, 1949, ch. 338, 63 Stat. 413, as amended, which is classified principally to chapter 8A (§1441 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 1441 of Title 42 and Tables.

Section 1982 of this title, referred to in subsec. (b)(4)(A), was repealed by Pub. L. 103 354, title II, §227(b)(1), Oct. 13, 1994, 108 Stat. 3218.

Section 14 of title 6, referred to in subsec. (b)(7), was repealed by Pub. L. 92 310, title II, §203(1), June 6, 1972, 86 Stat. 202. For provisions relating to surety bonds of Federal personnel, see section 9301 et seq. of Title 31, Money and Finance.

Amendments

1994—Subsec. (a). Pub. L. 103 354 substituted "assets to such officers or agencies of the Department of Agriculture as the Secretary considers appropriate." for "assets to the Farmers Home Administration, to be headed by an Administrator, appointed by the President, by and with the advice and consent of the Senate, without regard to the civil service laws or chapter 51 and subchapter III of chapter 53 of title 5, who shall receive basic compensation as provided by law for that office, or may assign and transfer such powers, duties, and assets to the Rural Development Administration as provided by law for that office."

Subsec. (c). Pub. L. 103 248 added subsec. (c).

1991—Pub. L. 102 237, §501(c)(2)(B)(i), amended directory language of Pub. L. 101 624, §2388(d)(1). See 1990 Amendment note below.

Subsec. (b)(1), (2). Pub. L. 102 237, §501(c)(2)(B)(iii), (v), amended directory language of Pub. L. 101 624, §2388(d)(1)(A)(vi). See 1990 Amendment note below.

Subsec. (b)(3). Pub. L. 102 237, §701(h)(1)(E), substituted "this chapter" for "this Act".

Pub. L. 102 237, §501(c)(2)(B)(iii), (v), amended directory language of Pub. L. 101 624, §2388(d)(1)(A)(vi). See 1990 Amendment note below.

Subsec. (b)(4). Pub. L. 102 237, §501(c)(2)(B)(iii), (v), amended directory language of Pub. L. 101 624, §2388(d)(1)(A)(vi). See 1990 Amendment note below.

Pub. L. 102 237, §501(c)(1), struck out "this chapter" after "activities under the Housing Act of 1949" and substituted "1949, from" for "1949 from".

Subsec. (b)(4)(A). Pub. L. 102 237, §501(c)(2)(B)(iii), redesignated Pub. L. 101 624, §2388(d)(1)(A)(vi), as (v). See 1990 Amendment note below.

Subsec. (b)(4)(B). Pub. L. 102 237, §501(c)(2)(B)(iii), redesignated Pub. L. 101 624, §2388(d)(1)(A)(vi), as (v). See 1990 Amendment note below.

Subsec. (b)(5). Pub. L. 102 237, §501(c)(2)(B)(iii), (v), amended directory language of Pub. L. 101 624, §2388(d)(1)(A)(vi). See 1990 Amendment note below.

Subsec. (b)(6). Pub. L. 102 237, §501(c)(2)(B)(ii), (iii), (v), amended directory language of Pub. L. 101 624, §2388(d)(1)(A)(i), (vi). See 1990 Amendment note below.

Pub. L. 102 237, §501(c)(2)(A), repealed Pub. L. 101 624, §1805(c)(1), (2). See 1990 Amendment note below.

Subsec. (b)(7). Pub. L. 102 237, §501(c)(2)(B)(ii), (iii), (v), amended directory language of Pub. L. 101 624, §2388(d)(1)(A)(i), (vi). See 1990 Amendment note below.

Pub. L. 102 237, §501(c)(2)(A), repealed Pub. L. 101 624, §1805(c)(1), (3). See 1990 Amendment note below.

Subsec. (b)(8). Pub. L. 102 237, §501(c)(2)(B)(ii) (v), amended directory language of Pub. L. 101 624, §2388(d)(1)(A)(i), (iv), (vi). See 1990 Amendment note below.

Pub. L. 102 237, §501(c)(2)(A), repealed Pub. L. 101 624, §1805(c)(1), (4). See 1990 Amendment note below.

Subsec. (b)(9). Pub. L. 102 237, §501(c)(2)(B)(iii), (v), amended directory language of Pub. L. 101 624, §2388(d)(1)(A)(vi). See 1990 Amendment note below.

Pars. (c) to (g). Pub. L. 102 237, §501(c)(2)(B)(iii), (v), amended directory language of Pub. L. 101 624, §2388(d)(1)(A)(vi). See 1990 Amendment note below.

Par. (h). Pub. L. 102 237, §501(c)(2)(B)(iii), repealed Pub. L. 101 624, §2388(d)(1)(A)(iv). See 1990 Amendment note below.

Pub. L. 102 237, §501(c)(2)(A), amended Pub. L. 101 624, §1805(b), and repealed Pub. L. 101 624, §1805(c)(5). See 1990 Amendment note below.

Pars. (i), (j). Pub. L. 102 237, §501(c)(2)(A), amended Pub. L. 101 624, §1805(b), and repealed Pub. L. 101 624, §1805(c)(5). See 1990 Amendment note below.

1990—Pub. L. 101 624, §2388(d)(1), was amended in its directory language by Pub. L. 102 237, §501(c)(2)(B)(i), resulting in no change in text.

Subsec. (a). Pub. L. 101 624, §§2303(a)(1), 2388(d)(1)(B), designated first undesignated par. as subsec. (a) and substituted "In accordance with section 2006a of this title, for purposes of this chapter, and" for "For the purposes of this chapter and", and inserted before period at end ", or may assign and transfer such powers, duties, and assets to the Rural Development Administration as provided by law for that office".

Subsec. (b). Pub. L. 101 624, §2388(d)(1)(B), designated second undesignated par. beginning "The Secretary may—" as subsec. (b).

Subsec. (b)(1) to (3). Pub. L. 101 624, §2388(d)(1)(A)(vi), formerly (vii), as redesignated and amended by Pub. L. 102 237, §501(c)(2)(B)(iii), (v), redesignated pars. (a) to (c) as (1) to (3), respectively, of subsec. (b).

Subsec. (b)(4). Pub. L. 101 624, §2388(d)(1)(A)(vi), formerly (vii), as redesignated and amended by Pub. L. 102 237, §501(c)(2)(B)(iii), (v), redesignated par. (d) as (4) of subsec. (b).

Pub. L. 101 624, §§1805(a)(1)(A), (B), 2303(a)(2), inserted "or the Rural Development Administration" after "Farmers Home Administration" in first sentence, substituted ", except for activities under the Housing Act of 1949" for "under any of its programs, as circumstances may require, to carry out" in first sentence, and substituted ", except for debt incurred under the Housing Act of 1949" for "incurred under this chapter" in third sentence.

Subsec. (b)(4)(A). Pub. L. 101 624, §2388(d)(1)(A)(v), formerly (vi), as redesignated by Pub. L. 102 237, §501(c)(2)(B)(iii), redesignated subpar. (1) as (A).

Pub. L. 101 624, §1805(a)(1)(C), inserted "with respect to farmer program loans," before "on terms".

Subsec. (b)(4)(B). Pub. L. 101 624, §2388(d)(1)(A)(v), formerly (vi), as redesignated by Pub. L. 102 237, §501(c)(2)(B)(iii), redesignated subpar. (2) as (B).

Subsec. (b)(5). Pub. L. 101 624, §2388(d)(1)(A)(vi), formerly (vii), as redesignated and amended by Pub. L. 102 237, §501(c)(2)(B)(iii), (v), redesignated par. (e) as (5) of subsec. (b).

Pub. L. 101 624, §1805(a)(2), inserted "except for activities conducted under the Housing Act of 1949," before "collect", struck out "arising or" after "obligations", substituted "by the Farmers Home Administration" for "under this chapter" before ", or under any" and "by the Farmers Home Administration" for "pursuant to this chapter" before "and, if in his".

Subsec. (b)(6). Pub. L. 101 624, §2388(d)(1)(A)(vi), formerly (vii), as redesignated and amended by Pub. L. 102 237, §501(c)(2)(B)(iii), (v), redesignated par. (f) as (6) of subsec. (b).

Pub. L. 101 624, §2388(d)(1)(A)(ii), substituted "release" for "Release".

Pub. L. 101 624, §2388(d)(1)(A)(i), as amended by Pub. L. 102 237, §501(c)(2)(B)(ii), realigned margin.

Pub. L. 101 624, §1805(c)(1), (2), which made amendments identical to those by Pub. L. 101 624, §2388(d)(1)(A)(i), (ii), was repealed by Pub. L. 102 237, §501(c)(2)(A).

Subsec. (b)(7). Pub. L. 101 624, §2388(d)(1)(A)(vi), formerly (vii), as redesignated and amended by Pub. L. 102 237, §501(c)(2)(B)(iii), (v), redesignated par. (g) as (7) of subsec. (b).

Pub. L. 101 624, §2388(d)(1)(A)(iii), substituted "obtain" for "Obtain".

Pub. L. 101 624, §2388(d)(1)(A)(i), as amended by Pub. L. 102 237, §501(c)(2)(B)(ii), realigned margin.

Pub. L. 101 624, §1805(c)(1), (3), which made amendments identical to those by Pub. L. 101 624, §2388(d)(1)(A)(i), (iii), was repealed by Pub. L. 102 237, §501(c)(2)(A).

Subsec. (b)(8). Pub. L. 101 624, §2388(d)(1)(A)(vi), formerly (vii), as redesignated and amended by Pub. L. 102 237, §501(c)(2)(B)(iii), (v), redesignated par. (h) [par. (i) prior to redesignation by Pub. L. 101 624, §1805(b), as amended] as (8) of subsec. (b).

Pub. L. 101 624, §2388(d)(1)(A)(iv)(II), formerly (v)(II), as redesignated and amended by Pub. L. 102 237, §501(c)(2)(B)(iii), (iv), redesignated former subpars. (1) and (2) as (A) and (B), respectively.

Pub. L. 101 624, §2303(a)(3), inserted "Rural Development Administration under this chapter or by the" before "Farmers Home Administration".

Pub. L. 101 624, §1806, inserted before semicolon at end ", and shall document the consent of the Secretary for the transfer of the property of a borrower in the file of the borrower".

Pub. L. 101 624, §2388(d)(1)(A)(i), (iv)(I), formerly (v)(I), as redesignated and amended by Pub. L. 102 237, §501(c)(2)(B)(ii) (iv), realigned margin and substituted "consent" for "Consent".

Pub. L. 101 624, §1805(c)(1), (4), which made amendments identical to those by Pub. L. 101 624, §2388(d)(1)(A)(i), (iv)(I), was repealed by Pub. L. 102 237, §501(c)(2)(A).

Subsec. (b)(9). Pub. L. 101 624, §2388(d)(1)(A)(vi), formerly (vii), as redesignated and amended by Pub. L. 102 237, §501(c)(2)(B)(iii), (v), redesignated par. (i) [par. (j) prior to redesignation by Pub. L. 101 624, §1805(b), as amended] as (9) of subsec. (b).

Pars. (c) to (g). Pub. L. 101 624, §2388(d)(1)(A)(vi), formerly (vii), (B), as redesignated and amended by Pub. L. 102 237, §501(c)(2)(B)(iii), (v), redesignated former pars. (c) to (g) as (3) to (7), respectively, of subsec. (b). See above.

Par. (h). Pub. L. 101 624, §2388(d)(1)(A)(iv), which directed substitution of "not" for "Not" before "require", was repealed by Pub. L. 102 237, §501(c)(2)(B)(iii).

Pub. L. 101 624, §1805(c)(5), which redesignated par. (i) as (h), was repealed by Pub. L. 102 237, §501(c)(2)(A).

Pub. L. 101 624, §1805(b), as amended by Pub. L. 102 237, §501(c)(2)(A), redesignated par. (i) as (h) and struck out par. (h) which read as follows: "Not require borrowers to pay interest accrued after December 31, 1972, on interest which is not more than 90 days overdue on any loan held or insured by the Farmers Home Administration;".

Pars. (i), (j). Pub. L. 101 624, §1805(c)(5), which redesignated pars. (i) and (j) as (h) and (i), respectively, was repealed by Pub. L. 102 237, §501(c)(2)(A).

Pub. L. 101 624, §1805(b), as amended by Pub. L. 102 237, §501(c)(2)(A), redesignated pars. (i) and (j) as (h) and (i), respectively. Pars. (h) and (i) subsequently redesignated pars. (8) and (9) of subsec. (b). See above.

1988—Par. (d). Pub. L. 100 233 inserted "or debts" before "claims", and inserted "The Secretary may not require liquidation of property securing any farmer program loan or acceleration of any payment required under any farmer program loan as a prerequisite to initiating an action authorized under this subsection."

1985—Par. (d). Pub. L. 99 198, §1309, in amending par. (d) generally, substituted provisions authorizing the Secretary to compromise, adjust, reduce, or charge-off claims, and adjust, modify, subordinate, or release the terms of security instruments, leases, contracts, and agreements entered into or administered by the Farmers Home Administration to carry out this chapter for provisions which had authorized the Secretary to compromise, adjust, or reduce claims, and adjust and modify the terms of mortgages, leases, contracts and agreements entered into or administered by the Administration under any of its programs, but not in the event of claims of $25,000 or more without the approval of the Administrator, substituted provisions authorizing the Secretary to release borrowers or others obligated on a debt incurred under this chapter from personal liability with or without consideration at the time of the compromise, adjustment, reduction or charge-off of any claim for provisions authorizing the Secretary to release from personal liability, with or without payment of any consideration at the time of adjustment of the claims, borrowers who transferred the security property to approved applicants, to other than approved applicants, or for amounts less than the indebtedness secured thereby, struck out provisions that compromise, adjustment, or reduction of the claim shall be based on the value of the security and a determination of the debtor's reasonable ability to pay considering his other assets and income, and struck out provisions relating to any claim due and payable for five years or more and to partial releases and subordination of mortgages.

1981—Par. (i). Pub. L. 97 98 designated existing provisions following "consent to" as cl. (2) and added cl. (1).

1978—Pub. L. 95 334 in par. (a) struck out references to Puerto Rico and the Virgin Islands, in par. (d) substituted "$25,000" for "$15,000", and added par. (j).

1972—Par. (a). Pub. L. 92 419, §124(1), authorized the Secretary of Agriculture, until Jan. 1, 1975, to make contracts for services incident to making, insuring, collecting, and servicing loans and property as determined by the Secretary to be necessary for carrying out the purposes of this chapter, and required the Secretary, prior to June 30, 1974, to report to Congress through the President on the experience in using such contracts, together with recommendations for such legislation as he may see fit.

Pars. (d) to (i). Pub. L. 92 419, §124(2), substituted a semicolon for a period at end of lettered pars. (d), (e) and (f) and added pars. (g) to (i).

1968—Par. (f). Pub. L. 90 488 added par. (f).

Effective Date of 1991 Amendment

Amendment by section 501(c) of Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, and amendment by section 701(h)(1)(E) of Pub. L. 102 237 to any provision specified therein effective as if included in act that added provision so specified at the time such act became law, see section 1101(b)(3), (c) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective Date of 1981 Amendment

Amendment by Pub. L. 97 98 effective Dec. 22, 1981, see section 1801 of Pub. L. 97 98, set out as an Effective Date note under section 4301 of this title.

Continuation of Small Farmer Training and Technical Assistance Program

Section 1328 of Pub. L. 99 198 provided that: "The Secretary of Agriculture shall, during the period beginning on the date of enactment of this Act [Dec. 23, 1985] and ending on September 30, 1988, maintain at substantially current levels the small farmer training and technical assistance program in the office of the Administrator of the Farmers Home Administration."

Reamortization of Distressed Farmers Home Administration Loans From Revenues From Softwood Timber Crop Plantings on Marginal Land

Pub. L. 98 258, title VI, §608, Apr. 10, 1984, 98 Stat. 140, as amended by Pub. L. 99 198, title XII, §1254, Dec. 23, 1985, 99 Stat. 1517, provided that:

"(a)(1) Notwithstanding any other provision of law, the Secretary of Agriculture (hereinafter in this section referred to as the 'Secretary') may implement a program, pursuant to the recommendations contained in the study mandated by section 608 of the Agricultural Programs Adjustment Act of 1984 (7 U.S.C. 1421 [1981] note), under which a distressed loan (as determined by the Secretary) made or insured under the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.), or a portion thereof, may be reamortized with the use of future revenue produced from the planting of softwood timber crops on marginal land (as determined by the Secretary) that—

"(A) was previously used to produce an agricultural commodity or as pasture; and

"(B) secures a loan made or insured under such Act.

"(2) Accrued interest on a loan reamortized under this section may be capitalized and interest charged on such interest.

"(3) All or a portion of the payments on such reamortized loan may be deferred until such softwood timber crop produces revenue or for a term of 45 years, whichever comes first.

"(4) Repayment of such reamortized loan shall be made not later than 50 years after the date of reamortization.

"(b) The interest rate on such reamortized loans shall be determined by the Secretary, but not in excess of the current average yield on outstanding marketable obligations of the United States with periods to maturity comparable to the average maturities of such loans, plus not to exceed 1 percent, as determined by the Secretary and adjusted to the nearest one-eighth of 1 percent.

"(c) To be eligible for such program—

"(1) the borrower of such reamortized loan must place not less than 50 acres of such land in softwood timber production;

"(2) such land (including timber) may not have any lien against such land other than a lien for—

"(A) a loan made or insured under the Consolidated Farm and Rural Development Act [7 U.S.C. 1921 et seq.] to secure such reamortized loan; or

"(B) a loan made under this section, at the time of reamortization or thereafter, that is subject to a lien on such land (including timber) in favor of the Secretary; and

"(3) the total amount of loans secured by such land (including timber) may not exceed $1,000 per acre.

"(d)(1) To assist such borrowers to place such land in softwood timber production, the Secretary may make loans to such borrowers for such purpose in an aggregate amount not to exceed the actual cost of tree planting for land placed in the program.

"(2) Any such loan shall be secured by the land (including timber) on which the trees are planted.

"(3) Such loans shall be made on the same terms and conditions as are provided in this section for reamortized loans.

"(e) The Secretary shall issue such rules as are necessary to carry out this section, including rules prescribing terms and conditions for—

"(1) reamortizing and making loans under this section;

"(2) entering into security instruments and agreements under this section; and

"(3) management and harvesting practices of the timber crop.

"(f) There are authorized to be appropriated such sums as are necessary to carry out this section.

"(g) No more than 50,000 acres may be placed in such program."

Section Referred to in Other Sections

This section is referred to in section 2005 of this title.

¹See References in Text note below.

§1981a. Loan moratorium and policy on foreclosures

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 or by the Rural Development 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.

(Pub. L. 87 128, title III, §331A, as added Pub. L. 95 334, title I, §122, Aug. 4, 1978, 92 Stat. 427; amended Pub. L. 101 624, title XXIII, §2303(b), Nov. 28, 1990, 104 Stat. 3981.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

Amendments

1990—Pub. L. 101 624 inserted "or by the Rural Development Administration" after "Farmers Home Administration".

Similar Provisions

Similar provisions were contained in the following appropriation acts:

Pub. L. 102 341, title III, Aug. 14, 1992, 106 Stat. 897.

Pub. L. 102 142, title III, Oct. 28, 1991, 105 Stat. 902.

Pub. L. 101 506, title II, Nov. 5, 1990, 104 Stat. 1333.

Pub. L. 101 161, title II, Nov. 21, 1989, 103 Stat. 969.

Pub. L. 100 460, title II, Oct. 1, 1988, 102 Stat. 2246.

Pub. L. 100 202, §101(k) [title II], Dec. 22, 1987, 101 Stat. 1329 322, 1329 340.

Pub. L. 99 500, §101(a) [title II], Oct. 18, 1986, 100 Stat. 1783, 1783 16, and Pub. L. 99 591, §101(a) [title II], Oct. 30, 1986, 100 Stat. 3341, 3341 16.

Pub. L. 99 190, §101(a) [H.R. 3037, title II], Dec. 19, 1985, 99 Stat. 1185.

Pub. L. 98 473, title I, §101(a) [H.R. 5743, title II], Oct. 12, 1984, 98 Stat. 1837.

Pub. L. 98 151, §101(d) [H.R. 3223, title II], Nov. 14, 1983, 97 Stat. 972.

Pub. L. 97 370, title II, Dec. 18, 1982, 96 Stat. 1800.

Forbearance and Restructuring for Farm Loans

Pub. L. 100 387, title III, §313(a), Aug. 11, 1988, 102 Stat. 949, provided that: "It is the sense of Congress that the Secretary of Agriculture should, with respect to farmers and ranchers who suffer major losses due to drought, hail, excessive moisture, or related condition in 1988—

"(1) exercise forbearance in the collection of interest and principal on direct farmer program loans under the Consolidated Farm and Rural Development Act [7 U.S.C. 1921 et seq.] outstanding for such farmers and ranchers;

"(2) expedite the use of credit restructuring and other credit relief mechanisms authorized under the Agricultural Credit Act of 1987 [Pub. L. 100 233, Jan. 6, 1988, 101 Stat. 1568, see Tables for classification] and similar provisions of law for such farmers and ranchers; and

"(3) encourage commercial lenders participating in guaranteed farmer lending programs under the Consolidated Farm and Rural Development Act to exercise forbearance before declaring loans to such farmers and ranchers under such programs in default."

§1981b. Farm loan interest rates

Any loan for farm ownership purposes under subchapter I of this chapter, farm operating purposes under subchapter II of this chapter, or disaster emergency purposes under subchapter III of this chapter, other than a guaranteed loan, that is deferred, consolidated, rescheduled, or reamortized under this chapter shall, notwithstanding any other provision of this chapter, bear interest on the balance of the original loan and for the term of the original loan at a rate that is the lower of (1) the rate of interest on the original loan or (2) the rate being charged by the Secretary for loans, other than guaranteed loans, of the same type at the time of the deferral, consolidation, rescheduling, or reamortization.

(Pub. L. 87 128, title III, §331B, as added Pub. L. 98 258, title VI, §605, Apr. 10, 1984, 98 Stat. 139.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

Adjustment of Interest Rates

Pub. L. 100 71, title I, July 11, 1987, 101 Stat. 428, provided that: "The Secretary may adjust interest rates on existing nonsubsidized loans if he determines such interest rates are excessive in relation to prevailing commercial rates for comparable loans: Provided, That such rate adjustments shall constitute a change in the loan agreement and not a new loan."

Section Referred to in Other Sections

This section is referred to in section 1946 of this title.

§1981c. Oil and gas royalty payments on loans

(a) The Secretary shall permit a borrower of a loan made or insured under this chapter to make a prospective payment on such loan with proceeds from—

(1) the leasing of oil, gas, or other mineral rights to real property used to secure such loan; or

(2) the sale of oil, gas, or other minerals removed from real property used to secure such loan, if the value of the rights to such oil, gas, or other minerals has not been used to secure such loan.

(b) Subsection (a) of this section shall not apply to a borrower of a loan made or insured under this chapter with respect to which a liquidation or foreclosure proceeding is pending on December 23, 1985.

(Pub. L. 87 128, title III, §331C, as added Pub. L. 99 198, title XIII, §1310(a), Dec. 23, 1985, 99 Stat. 1523.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

§1981d. Notice of loan service programs

(a) Requirement

The Secretary shall provide notice by certified mail to each borrower who is at least 180 days delinquent in the payment of principal or interest on a loan made or insured under this chapter.

(b) Contents

The notice required under subsection (a) of this section shall—

(1) include a summary of all primary loan service programs, preservation loan service programs, debt settlement programs, and appeal procedures, including the eligibility criteria, and terms and conditions of such programs and procedures;

(2) include a summary of the manner in which the borrower may apply, and be considered, for all such programs, except that the Secretary shall not require the borrower to select among such programs or waive any right in order to be considered for any program carried out by the Secretary;

(3) advise the borrower regarding all filing requirements and any deadlines that must be met for requesting loan servicing;

(4) provide any relevant forms, including applicable response forms;

(5) advise the borrower that a copy of regulations is available on request; and

(6) be designed to be readable and understandable by the borrower.

(c) Contained in regulations

All notices required by this section shall be contained in the regulations implementing this chapter.

(d) Timing

The notice described in subsection (b) of this section shall be provided—

(1) at the time an application is made for participation in a loan service program;

(2) on written request of the borrower; and

(3) before the earliest of—

(A) initiating any liquidation;

(B) requesting the conveyance of security property;

(C) accelerating the loan;

(D) repossessing property;

(E) foreclosing on property; or

(F) taking any other collection action.

(e) Consideration of borrowers for loan service programs

The Secretary shall consider a farmer program borrower for all loan service programs if, within 60 days after receipt of the notice required in this section or, in extraordinary circumstances as determined by the applicable State director, after the 60-day period, the borrower requests such consideration in writing. In considering a borrower for loan service programs, the Secretary shall place the highest priority on the preservation of the borrower's farming operations.

(Pub. L. 87 128, title III, §331D, as added Pub. L. 100 233, title VI, §605, Jan. 6, 1988, 101 Stat. 1666; amended Pub. L. 101 624, title XVIII, §1807, Nov. 28, 1990, 104 Stat. 3819; Pub. L. 102 554, §10, Oct. 28, 1992, 106 Stat. 4151.)

References in Text

For definition of "this chapter", referred to in subsecs. (a) and (c), see note set out under section 1921 of this title.

Amendments

1992—Subsec. (e). Pub. L. 102 554, which directed the insertion of "or, in extraordinary circumstances as determined by the applicable State director, after the 60-day period" after "not later than 60 days after receipt of the notice required in this section", was executed by making the insertion after "within 60 days after receipt of the notice required in this section" to reflect the probable intent of Congress.

1990—Subsec. (b)(1). Pub. L. 101 624, §1807(1), inserted "debt settlement programs," after "preservation loan service programs".

Subsec. (e). Pub. L. 101 624, §1807(2), substituted "60 days" for "45 days".

Effective Date of 1990 Amendment

Amendment by section 1807(1) of Pub. L. 101 624 effective 120 days after Nov. 28, 1990, see section 1861(b) of Pub. L. 101 624, set out as a note under section 2001 of this title.

Section Referred to in Other Sections

This section is referred to in section 1991 of this title.

§1981e. Planting and production history guidelines

(a) In general

The Secretary shall ensure that appropriate procedures, including to the extent practicable onsite inspections, or use of county or State yield averages, are used in calculating future yields for an applicant for a loan, when an accurate projection cannot be made because the applicant's past production history has been affected by natural disasters declared under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.).

(b) Calculation of yields

(1) In general

For purposes of averaging past yields of the farm of a borrower or applicant over a period of crop years to calculate future yields for the farm under this chapter (except for loans under subchapter III of this chapter), the Secretary shall permit the borrower or applicant to exclude the crop year with the lowest actual or county average yield for the farm from the calculation, if the borrower or applicant was affected by a disaster during at least 2 of the crop years during the period.

(2) Affected by a disaster

For purposes of paragraph (1), a borrower or applicant was affected by a disaster if the Secretary finds that the borrower or applicant's farming 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 Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.), including a borrower or applicant who has a qualifying loss but is not located in a designated or declared disaster area.

(3) Application of subsection

Paragraph (1) shall apply to all actions taken by the Secretary to carry out this chapter (except for loans under subchapter III of this chapter) that involve the yields of a farm of a borrower or applicant, including making loans and loan guarantees, servicing loans, and making credit sales.

(Pub. L. 87 128, title III, §331E, as added Pub. L. 100 233, title VI, §606, Jan. 6, 1988, 101 Stat. 1667; amended Pub. L. 102 237, title V, §501(d)(1), Dec. 13, 1991, 105 Stat. 1866; Pub. L. 102 552, title V, §516(g)(1), Oct. 28, 1992, 106 Stat. 4138.)

References in Text

The Robert T. Stafford Disaster Relief and Emergency Assistance Act, referred to in subsecs. (a) and (b)(2), is Pub. L. 93 288, May 22, 1974, 88 Stat. 143, as amended, which is classified principally to chapter 68 (§5121 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 5121 of Title 42 and Tables.

For definition of "this chapter", referred to in subsec. (b)(1), (3), see note set out under section 1921 of this title.

Amendments

1992—Subsec. (a). Pub. L. 102 552, §516(g)(1)(A), substituted "Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.)" for "Disaster Relief Act of 1974".

Subsec. (b)(2). Pub. L. 102 552, §516(g)(1)(B), inserted "Robert T. Stafford" before "Disaster Relief".

1991—Pub. L. 102 237 designated existing provisions as subsec. (a), inserted heading, and added subsec. (b).

Effective Date of 1992 Amendment

Section 516(g)(2) of Pub. L. 102 552 provided that: "The amendments made by paragraph (1) of this subsection [amending this section] shall take effect immediately after section 501(d) of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Public Law 102 237; 105 Stat. 1866) [amending this section and enacting provisions set out below] took effect."

Effective Date of 1991 Amendment

Section 501(d)(3) of Pub. L. 102 237 provided that:

"(A) In general.—Except as provided in subparagraph (B), the amendment made by paragraph (1) [amending this section] shall become effective on the date of publication of the interim regulations issued pursuant to paragraph (2)(A) [set out below].

"(B) Exception.—The amendment made by paragraph (1) shall apply to each primary loan servicing application submitted on or after the date of enactment of this Act [Dec. 13, 1991]."

Regulations

Section 501(d)(2) of Pub. L. 102 237 provided that:

"(A) Interim regulations.—Notwithstanding section 553 of title 5, United States Code, as soon as practicable after the date of enactment of this Act [Dec. 13, 1991] and without a requirement for prior public notice and comment, the Secretary of Agriculture shall issue interim regulations that provide for the implementation of the amendment made by paragraph (1) [amending this section] beginning in crop year 1992.

"(B) Final regulations.—The Secretary of Agriculture shall provide for public notice and comment before the issuance of final regulations to implement the amendment made by paragraph (1)."

§1981f. Underwriting forms and standards

In the administration of this chapter, the Secretary shall, to the extent practicable, use underwriting forms, standards, practices, and terminology similar to the forms, standards, practices, and terminology used by lenders in the private sector.

(Pub. L. 87 128, title III, §331F, as added Pub. L. 101 624, title XVIII, §1808(a), Nov. 28, 1990, 104 Stat. 3820.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

Regulations

Section 1808(b) of Pub. L. 101 624 provided that: "The Secretary of Agriculture shall not issue final regulations providing for the use of ratios and standards for determining the degree of potential loan risk under section 331F of the Consolidated Farm and Rural Development Act [7 U.S.C. 1981f] (as added by subsection (a) of this section), prior to the submission of the study and report on the effects of the regulations required by section 621 of the Agricultural Credit Act of 1987 (7 U.S.C. 1989 note)."

§1982. Repealed. Pub. L. 103 354, title II, §227(b)(1), Oct. 13, 1994, 108 Stat. 3218

Section, Pub. L. 87 128, title III, §332, Aug. 8, 1961, 75 Stat. 314; Pub. L. 99 198, title XIII, §1311, Dec. 23, 1985, 99 Stat. 1524; Pub. L. 100 233, title VI, §607, Jan. 6, 1988, 101 Stat. 1667; Pub. L. 101 624, title XVIII, §1809, Nov. 28, 1990, 104 Stat. 3820; Pub. L. 102 554, §11, Oct. 28, 1992, 106 Stat. 4151, related to county committees.

§1983. Special conditions and limitations on loans

In connection with loans made or insured under this chapter, the Secretary shall require—

(1) the applicant (A) to certify in writing, and the Secretary shall determine, that he is unable to obtain sufficient credit elsewhere to finance his actual needs at reasonable rates and terms, taking into consideration prevailing private and cooperative rates and terms in the community in or near which the applicant resides for loans for similar purposes and periods of time, and (B) to furnish a written statement showing the applicant's net worth;

(2) except for guaranteed loans, an agreement by the borrower that if at any time it shall appear to the Secretary that the borrower may be able to obtain a loan from a production credit association, a Federal land bank, or other responsible cooperative or private credit source (or, in the case of a borrower under section 1934 of this title, the borrower may be able to obtain a loan under section 1922 of this title), at reasonable rates and terms for loans for similar purposes and periods of time, the borrower will, upon request by the Secretary, apply for and accept such loan in sufficient amount to repay the Secretary or the insured lender, or both, and to pay for any stock necessary to be purchased in a cooperative lending agency in connection with such loan;

(3) such provision for supervision of the borrower's operations as the Secretary shall deem necessary to achieve the objectives of the loan and protect the interests of the United States; and

(4) the applications of veterans for loans under subchapter I or II of this chapter to be given preference over similar applications of nonveterans on file in any county or area office at the same time. Veterans as used herein shall mean persons who served in the Armed Forces of the United States during any war between the United States and any other nation, during the Korean conflict or the Vietnam era and who were discharged or released therefrom under conditions other than dishonorable.

(Pub. L. 87 128, title III, §333, Aug. 8, 1961, 75 Stat. 314; Pub. L. 90 488, §12, Aug. 15, 1968, 82 Stat. 771; Pub. L. 91 620, §3, Dec. 31, 1970, 84 Stat. 1862; Pub. L. 92 419, title I, §§118(b), 125, 126, Aug. 30, 1972, 86 Stat. 664, 666; Pub. L. 95 334, title I, §123, Aug. 4, 1978, 92 Stat. 428; Pub. L. 96 438, §3(c), Oct. 13, 1980, 94 Stat. 1875; Pub. L. 97 98, title XVI, §1604, Dec. 22, 1981, 95 Stat. 1346; Pub. L. 101 624, title XVIII, §1810, title XXIII, §2388(e), Nov. 28, 1990, 104 Stat. 3820, 4053; Pub. L. 102 237, title V, §501(e), Dec. 13, 1991, 105 Stat. 1867; Pub. L. 102 554, §12, Oct. 28, 1992, 106 Stat. 4151; Pub. L. 103 354, title II, §227(b)(2), Oct. 13, 1994, 108 Stat. 3218.)

References in Text

For definition of "this chapter", referred to in introductory clause and par. (4), see note set out under section 1921 of this title.

Amendments

1994—Pars. (2) to (5). Pub. L. 103 354 redesignated pars. (3) to (5) as (2) to (4), respectively, and struck out former par. (2) relating to certification by county committee of applicant's eligibility for loan.

1992—Par. (2)(A)(iii). Pub. L. 102 554 substituted "5 years" for "2 years".

1991—Par. (2)(A). Pub. L. 102 237 redesignated cls. (1) to (3) as (i) to (iii), respectively.

1990—Pub. L. 101 624, §2388(e), redesignated pars. (a) to (e) as (1) to (5), respectively, and in par. (1) redesignated subpars. (1) and (2) as (A) and (B), respectively; in par. (2) redesignated subpars. (1) and (2) as (A) and (B), respectively, and in subpar. (A) redesignated cls. (A) to (C) as (1) to (3), respectively; in par. (3) made technical amendments to references to sections 1934 and 1922 of this title involving original act and requiring no change in text; and in par. (5) made technical amendments to reference to subchapter I or II of this chapter involving original act and requiring no change in text.

Pub. L. 101 624, §1810, amended par. (b) generally. Prior to amendment, par. (b) read as follows: "except for loans under sections 1926, 1932, 1944 and 1961(a)(2) of this title, the county committee to certify in writing that the applicant meets the eligibility requirements for the loan, and has the character, industry, and ability to carry out the proposed operations, and will, in the opinion of the committee, honestly endeavor to carry out his undertakings and obligations; and for loans under section 1961(a)(2) of this title, the Secretary shall require the recommendation of the county committee as to the making or insuring of the loan: Provided, That the Secretary may provide a procedure for appeal and review of any determination relating to a certification or recommendation required to be made by the county committee, and for reversal or modification thereof should the facts warrant such action;".

1981—Par. (a). Pub. L. 97 98 designated existing provisions after "the applicant" as cl. (1), and added cl. (2).

1980—Par. (b). Pub. L. 96 438 substituted "section 1961(a)(2)" for "section 1961(b)(2)" in two places.

1978—Par. (b). Pub. L. 95 334, §123(1), inserted proviso relating to appeal and review procedure for any determination regarding a certification, etc.

Par. (c). Pub. L. 95 334, §123(2), (3), inserted provisions excepting guaranteed loans and provisions relating to borrowers under section 1934 of this title obtaining loans under section 1922 of this title.

1972—Par. (a). Pub. L. 92 419, §125, inserted ", and the Secretary shall determine," after "in writing".

Par. (b). Pub. L. 92 419, §§118(b), 126, inserted reference to section 1932 of this title and substituted "section 1961(b)(2) of this title" for "said sections", respectively.

1970—Pub. L. 91 620 included persons who served during the Vietnam era within the definition of "Veterans" in par. (e).

1968—Par. (b). Pub. L. 90 488 struck out "farming" from phrase "proposed farming operations".

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(3) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective Date of 1981 Amendment

Amendment by Pub. L. 97 98 effective Dec. 22, 1981, see section 1801 of Pub. L. 97 98, set out as an Effective Date note under section 4301 of this title.

Section Referred to in Other Sections

This section is referred to in section 1932 of this title.

§1983a. Prompt approval of loans and loan guarantees

(a) Applications; time for action by Secretary; notice; statement of reasons

(1) The Secretary shall approve or disapprove an application for a loan or loan guarantee made under this chapter, and notify the applicant of such action, not later than 60 days after the Secretary has received a complete application for such loan or loan guarantee.

(2)(A) If an application for a loan or loan guarantee under this chapter (other than under subchapter II of this chapter) is incomplete, the Secretary shall inform the applicant of the reasons such application is incomplete not later than 20 days after the Secretary has received such application.

(B)(i) Not later than 10 calendar days after the Secretary receives an application for an operating loan or loan guarantee under subchapter II of this chapter, the Secretary shall notify the applicant of any information required before a decision may be made on the application. On receipt of an application, the Secretary shall request from other parties such information as may be needed in connection with the application.

(ii) Not later than 15 calendar days after the date an agency of the Department of Agriculture receives a request for information made pursuant to clause (i), the agency shall provide the Secretary with the requested information.

(iii) If, not later than 20 calendar days after the date a request is made pursuant to clause (i) with respect to an application, the Secretary has not received the information requested, the Secretary shall notify the applicant and the district office of the Farmers Home Administration, in writing, of the outstanding information.

(iv) A county office shall notify the district office of the Farmers Home Administration of each application for an operating loan or loan guarantee under subchapter II of this chapter that is pending more than 45 days after receipt, and the reasons the application is pending.

(v) A district office that receives a notice provided under clause (iv) with respect to an application shall immediately take steps to ensure that final action is taken on the application not later than 15 days after the date of the receipt of the notice.

(vi) The district office shall report to the State office of the Farmers Home Administration on each application for an operating loan or loan guarantee under subchapter II of this chapter that is pending more than 45 days after receipt by the county committee, and the reasons the application is pending.

(vii) Each month, the Secretary shall notify the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate, on a State-by-State basis, as to each application for an operating loan or loan guarantee under subchapter II of this chapter on which final action had not been taken within 60 calendar days after receipt by the Secretary, and the reasons final action had not been taken.

(3) If an application for a loan or loan guarantee under this chapter is disapproved by the Secretary, the Secretary shall state the reasons for the disapproval in the notice required under paragraph (1).

(4)(A) Notwithstanding paragraph (1), each application for a loan or loan guarantee under section 1932(a) of this title, or for a loan under section 1926(a) of this title, that is to be disapproved by the Secretary solely because the Secretary lacks the necessary amount of funds to make the loan or guarantee shall not be disapproved but shall be placed in pending status.

(B) The Secretary shall retain the pending application and reconsider the application beginning on the date that sufficient funds become available.

(C) Not later than 60 days after funds become available regarding each pending application, the Secretary shall notify the applicant of the approval or disapproval of funding for the application.

(b) Loan proceeds; time for receipt

(1) Except as provided in paragraph (2), if an application for an insured loan under this chapter is approved by the Secretary, the Secretary shall provide the loan proceeds to the applicant not later than 15 days (or such longer period as the applicant may approve) after the application for the loan is approved by the Secretary.

(2) If the Secretary is unable to provide the loan proceeds to the applicant within such 15-day period because sufficient funds are not available to the Secretary for such purpose, the Secretary shall provide the loan proceeds to the applicant as soon as practicable (but in no event later than 15 days unless the applicant agrees to a longer period) after sufficient funds for such purpose become available to the Secretary.

(c) Reconsideration of applications; time for action by Secretary

If an application for a loan or loan guarantee under this chapter is disapproved by the Secretary, but such action is subsequently reversed or revised as the result of an appeal within the Department of Agriculture or to the courts of the United States and the application is returned to the Secretary for further consideration, the Secretary shall act on the application and provide the applicant with notice of the action within 15 days after return of the application to the Secretary.

(d) Approved lender designation applications; time for decision by Secretary

In carrying out the approved lender program established by exhibit A to subpart B of part 1980 of title 7, Code of Federal Regulations, the Secretary shall ensure that each request of a lending institution for designation as an approved lender under such program is reviewed, and a decision made on the application, not later than 15 days after the Secretary has received a complete application for such designation.

(e) Processing loan applications; personnel and other resources made available; use of authorities of law

(1) As soon as practicable after December 23, 1985, the Secretary shall take such steps as are necessary to make personnel, including the payment of overtime for such personnel, and other resources of the Department of Agriculture available to the Farmers Home Administration as are sufficient to enable the Farmers Home Administration to expeditiously process loan applications that are submitted by farmers and ranchers.

(2) In carrying out paragraph (1), the Secretary may use any authority of law provided to the Secretary, including—

(A) the Agricultural Credit Insurance Fund established under section 1929 of this title; and

(B) the employment procedures used in connection with the emergency loan program established under subchapter III of this chapter.

(f) Graduation of seasoned direct loan borrowers to loan guarantee program

(1) As used in this subsection:

(A) The term "approved lender" means a lender approved prior to October 28, 1992, by the Secretary under the approved lender program established by exhibit A to subpart B of part 1980 of title 7, Code of Federal Regulations (as in effect on January 1, 1991), or a lender certified under section 1989¹ of this title.

(B) The term "seasoned direct loan borrower" means a borrower receiving a direct loan under this chapter who has been classified as "commercial" or "standard" under subpart W of part 2006 of the Instruction Manual (as in effect on January 1, 1991).

(2) The Secretary, or a contracting third party, shall annually review under section 2006b of this title the loans of each seasoned loan borrower. If, based on the review, it is determined that a borrower would be able to obtain a loan, guaranteed by the Secretary, from a commercial or cooperative lender at reasonable rates and terms for loans for similar purposes and periods of time, the Secretary shall assist the borrower in applying for the commercial or cooperative loan.

(3) In accordance with section 2006d of this title, the Secretary shall prepare a prospectus on each seasoned direct loan borrower determined eligible to obtain a guaranteed loan. The prospectus shall contain a description of the amounts of loan guarantee and interest assistance that the Secretary will provide to the seasoned direct loan borrower to enable the seasoned direct loan borrower to carry out a financially viable farming plan if a guaranteed loan is made.

(4) With the approval of the borrower, the Secretary shall provide the prospectus of the seasoned direct loan borrower to each approved lender whose lending area includes the location of the seasoned direct loan borrower. If the Secretary receives an offer from an approved lender to extend credit to the seasoned direct loan borrower under terms and conditions contained in the prospectus, the seasoned direct loan borrower shall not be eligible for an insured loan from the Secretary under subchapter I or II of this chapter, except as otherwise provided in this subsection.

(5) If the Secretary is unable to provide loan guarantees and, if necessary, interest assistance to the seasoned direct loan borrower under this subsection in amounts sufficient to enable the seasoned direct loan borrower to borrow from commercial sources the amount required to carry out a financially viable farming plan, or if the Secretary does not receive an offer from an approved lender to extend credit to a seasoned direct loan borrower under the terms and conditions contained in the prospectus, the Secretary shall make an insured loan to the seasoned direct loan borrower under subchapter I or II of this chapter, whichever is applicable.

(6) To the extent necessary for the borrower to obtain a loan, guaranteed by the Secretary, from a commercial or cooperative lender, the Secretary shall provide interest rate reductions as provided for under section 1999 of this title.

(g) Simplified application for guaranteed loans of $50,000 or less

(1) The Secretary shall provide to lenders a short, simplified application form for guarantees under this chapter of loans the principal amount of which is $50,000 or less.

(2) In developing the application, the Secretary shall—

(A) consult with commercial and cooperative lenders; and

(B) ensure that—

(i) the form can be completed manually or electronically, at the option of the lender;

(ii) the form minimizes the documentation required to accompany the form;

(iii) the cost of completing and processing the form is minimal; and

(iv) the form can be completed and processed in an expeditious manner.

(Pub. L. 87 128, title III, §333A, as added Pub. L. 99 198, title XIII, §1312(a), Dec. 23, 1985, 99 Stat. 1524; amended Pub. L. 101 624, title XVIII, §1811, title XXIII, §2388(f), Nov. 28, 1990, 104 Stat. 3821, 4053; Pub. L. 102 554, §§13 15, Oct. 28, 1992, 106 Stat. 4152, 4153.)

References in Text

For definition of "this chapter", referred to in subsecs. (a), (b)(1), (c), (f)(1)(B), and (g)(1), see note set out under section 1921 of this title.

Section 1989 of this title, referred to in subsec. (f)(1)(A), was in the original "section 114", and was translated as meaning section 339 of Pub. L. 87 128, which is classified to section 1989 of this title, to reflect the probable intent of Congress, because Pub. L. 87 128 does not contain a section 114 and section 1989 provides for a lender certification program.

Amendments

1992—Subsec. (a)(2). Pub. L. 102 554, §13, designated existing provisions as subpar. (A), inserted "(other than under subchapter II of this chapter)" after "under this chapter", and added subpar. (B).

Subsec. (f). Pub. L. 102 554, §14, added subsec. (f).

Subsec. (g). Pub. L. 102 554, §15, added subsec. (g).

1990—Subsec. (a)(4). Pub. L. 101 624, §1811, added par. (4).

Subsec. (c). Pub. L. 101 624, §2388(f), substituted "If" for "In".

Effective Date

Section 1312(b) of Pub. L. 99 198 provided that: "The amendment made by subsection (a) [enacting this section] shall be effective with respect to applications for loans or loan guarantees under the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) received by the Secretary of Agriculture after the date of enactment of this Act [Dec. 23, 1985]."

¹See References in Text note below.

§1983b. Repealed. Pub. L. 103 354, title II, §281(c), Oct. 13, 1994, 108 Stat. 3233

Section, Pub. L. 87 128, title III, §333B, as added Pub. L. 99 198, title XIII, §1313(a), Dec. 23, 1985, 99 Stat. 1525; amended Pub. L. 100 233, title VI, §608, Jan. 6, 1988, 101 Stat. 1667; Pub. L. 101 624, title XVIII, §1812, Nov. 28, 1990, 104 Stat. 3821, related to appeals from adverse decisions under Consolidated Farm and Rural Development Act. See section 6991 et seq. of this title.

§1983c. Provision of information to borrowers

(a) In general

On request of a farm borrower of a farmer program loan, the Secretary shall make available to the borrower the following:

(1) One copy of each document signed by the borrower.

(2) One copy of each appraisal performed with respect to the loan.

(3) All documents that the Secretary otherwise is required to provide to the borrower under any law or rule of law in effect on the date of such request.

(b) Construction of section

Subsection (a) of this section shall not be construed to supersede any duty imposed on the Secretary by any law or rule of law in effect immediately before January 6, 1988, unless such duty is in direct conflict with any duty imposed by subsection (a) of this section.

(Pub. L. 87 128, title III, §333C, as added Pub. L. 100 233, title VI, §609, Jan. 6, 1988, 101 Stat. 1668.)

§1984. Taxation

All property subject to a lien held by the United States or the title to which is acquired or held by the Secretary under this chapter other than property used for administrative purposes shall be subject to taxation by State, territory, district, and local political subdivisions in the same manner and to the same extent as other property is taxed: Provided, however, That no tax shall be imposed or collected on or with respect to any instrument if the tax is based on—

(1) the value of any notes or mortgages or other lien instruments held by or transferred to the Secretary;

(2) any notes or lien instruments administered under this chapter which are made, assigned, or held by a person otherwise liable for such tax; or

(3) the value of any property conveyed or transferred to the Secretary,

whether as a tax on the instrument, the privilege of conveying or transferring or the recordation thereof; nor shall the failure to pay or collect any such tax be a ground for refusal to record or file such instruments, or for failure to impart notice, or prevent the enforcement of its provisions in any State or Federal court.

(Pub. L. 87 128, title III, §334, Aug. 8, 1961, 75 Stat. 315.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

Section Referred to in Other Sections

This section is referred to in title 25 section 492.

§1985. Security servicing; operation or lease of realty; disposition of surplus property; conveyance of complete interest of United States; easements; condemnations; farmland sales and leases: management contracts, installments, selection of purchasers, subdivisions, announcements, conservation practices, and adverse effects prohibition; normal security income; conservation easements on wetlands on inventoried property

(a) The Secretary is authorized and empowered to make advances, without regard to any loan or total indebtedness limitation, to preserve and protect the security for or the lien or priority of the lien securing any loan or other indebtedness owing to, insured by, or acquired by the Secretary under this chapter or under any other programs administered by the Farmers Home Administration or the Rural Development Administration; to bid for and purchase at any execution, foreclosure, or other sale or otherwise to acquire property upon which the United States has a lien by reason of a judgment or execution arising from, or which is pledged, mortgaged, conveyed, attached, or levied upon to secure the payment of, any such indebtedness whether or not such property is subject to other liens, to accept title to any property so purchased or acquired; and to sell, manage, or otherwise dispose of such property as hereinafter provided.

(b) Except as provided in subsection (e) of this section, real property administered under the provisions of this chapter may be operated or leased by the Secretary for such period or periods as the Secretary may deem necessary to protect the Government's investment therein.

(c)(1) Except as provided in subsection (e) of this section, the Secretary may determine whether real property administered under this chapter is suitable for disposition to persons eligible for assistance under the provisions of any law administered by the Farmers Home Administration or the Rural Development Administration. The County Committee shall classify or reclassify real property (including real property administered by the Secretary on January 6, 1988) that is farmland, as being suitable for farming operation for such disposition unless the property, including property subdivided in accordance with subsection (e)(5) of this section, cannot be used to meet any of the purposes of section 1923 of this title (including being used as a start-up or add-on parcel of farmland). Any property which the Secretary determines to be suitable for such purposes shall, whenever practicable, be sold by the Secretary as expeditiously as possible to such eligible persons in a manner consistent with such provisions. Real property which is not determined suitable for sale to such eligible persons or which has not been purchased by such persons within a period of 12 months from the date first published under paragraph (2)(D), shall be (A) sold by the Secretary after public notice at public sale and, if no acceptable bid is received then by negotiated sale, at the best price obtainable for cash or on secured credit without regard to the laws governing the disposition of excess or surplus property of the United States or (B) leased to persons eligible for assistance under the provisions of any law administered by the Farmers Home Administration or the Rural Development Administration under an annual lease or a lease with an option to purchase, with a preference for sale. The terms of such sale shall require an initial downpayment and the remainder of the sales price payable in installments with interest on unpaid balance at the rate determined by the Secretary, but not in any event at rates and terms more favorable than those legally permissible for eligible borrowers. Any conveyances under this section shall include all of the interest of the United States, including mineral rights, other than easements acquired under section 1997 of this title. Notwithstanding the preceding sentence, the Secretary may for conservation purposes grant or sell an easement, restriction, development rights, or the equivalent thereof, to a unit of local or State government or a private nonprofit organization separately from the underlying fee or sum of all other rights possessed by the United States.

(2)(A) Notwithstanding any other provision of law, the Secretary shall sell suitable farmland administered under this chapter to persons in the following order:

(i) Qualified beginning farmers or ranchers (as defined pursuant to section 1991(a)(8) of this title), as of the time immediately after such contract for sale or lease is entered into, as determined by the county committee.

(ii) Operators, as of the time immediately after such contract for sale or lease is entered into, of not larger than family sized farms, as determined by the county committee.

(B) In selling such land, the county committee shall—

(i) grant a priority to persons eligible for loans under subchapter I of this chapter, including individuals approved for, but who, as of January 6, 1988, have not yet received, such loans;

(ii) offer such land—

(I) for sales pursuant to subsection (e)(1)(C) of this section, at a price not greater than that which reflects the appraised market value of such farmland; and

(II) for all other sales, at a price not greater than that which reflects the fair market value of such land as determined by bids after advertising or by negotiated sale;

(iii) select from among qualified applicants the applicant who has the greatest need for farm income and best meets the criteria for eligibility to receive loans under subchapter I of this chapter, except that if the committee determines that two or more applicants meet the loan eligibility criteria, the committee shall select between the qualified applicants on a random basis; and

(iv) publish or cause to be published three consecutive weekly announcements at least twice annually of the availability of such farmland, in at least one newspaper that is widely circulated in the county in which the land is located until the property is sold.

(d) With respect to any real property administered under this chapter, the Secretary is authorized to grant or sell easements or rights-of-way for roads, utilities, and other appurtenances not inconsistent with the public interest. With respect to any rights-of-way over land on which the United States has a lien administered under this chapter, the Secretary may release said lien upon payment to the United States of adequate consideration, and the interest of the United States arising under any such lien may be acquired for highway purposes by any State or political subdivision thereof in condemnation proceedings under State law by service by certified mail upon the United States attorney for the district, the State Director of the Farmers Home Administration for the State in which the farm is located, and the Attorney General of the United States: Provided, however, That the United States shall not be required to appear, answer, or respond to any notice or writ sooner than ninety days from the time such notice or writ is returnable or purports to be effective, and the taking or vesting of title to the interest of the United States shall not become final under any proceeding, order, or decree until adequate compensation and damages have been finally determined and paid to the United States or into the registry of the court.

(e)(1)(A)(i) During the 180-day period beginning on the date of acquisition, or during the applicable period under State law, the Secretary shall allow the borrower-owner (as defined in subparagraph (F)) to purchase or lease such property, if such borrower-owner has acted in good faith with the Secretary, as defined in regulations issued by the Secretary, in connection with such loan.

(ii) The period for the purchase or lease of real property described under clause (i), by a person described in clauses (i) or (ii) of subparagraph (C), shall expire 190 days after the date of acquisition, or after the applicable period under State law.

(iii) The rights regarding the purchase or lease of real property provided by this paragraph and accorded a person described in subparagraph (C) may be freely and knowingly waived by such person.

(iv) In the case of real property described in clause (i) that was acquired by the Secretary before January 6, 1988, that is (or has been at any time during the 12-month period preceding November 28, 1990) under lease to a person described in subparagraph (C), and that has not been conveyed (or contracted to be conveyed) by the Secretary prior to November 28, 1990, the Secretary shall, during the 30-day period following November 28, 1990, make the person an offer, to be held open for a period of 90 days, to purchase the property on the same terms and conditions that such offers are made in the case of property coming into inventory on or after November 28, 1990.

(B) Any purchase or lease under subparagraph (A) shall be on such terms and conditions as are established in regulations promulgated by the Secretary.

(C) The Secretary shall give preference in the sale or lease, with option to purchase, of property that has been foreclosed, purchased, redeemed, or otherwise acquired by the Secretary to persons in the following order:

(i) The immediate previous borrower-owner of the acquired property, if such borrower-owner has acted in good faith with the Secretary, as defined in regulations issued by the Secretary, in connection with the loan of such borrower-owner for which such property served as security.

(ii) If actively engaged in farming—

(I) the spouse or child of the previous borrower-owner; or

(II) a stockholder in the corporation, if the borrower-owner is a corporation held exclusively by members of the same family.

(iii) The immediate previous family size farm operator of such acquired property.

(iv) Qualified beginning farmers or ranchers (as defined pursuant to section 1991(a)(8) of this title) as of the time immediately after such contract for sale or lease is entered into, of not larger than family-sized farm or ranching operations.

(v) Operators (as of the time immediately after such sale or lease is entered into) of not larger than family-size farms.

(D)(i) Except as provided in subparagraph (G), if—

(I) the real property described in subparagraph (A)(i) is located within an Indian reservation,

(II) the borrower-owner is the Indian tribe that has jurisdiction over the reservation in which the real property is located or the borrower-owner is a member of such Indian tribe, and

(III) the period in which the right to purchase or lease such real property provided in clauses (i) and (ii) of subparagraph (A) has expired,

the Secretary shall dispose of or administer the property only as provided for in this subparagraph.

(ii) For purposes of this subparagraph, the term "Indian reservation" means all land located within the limits of any Indian reservation under the jurisdiction of the United States, notwithstanding the issuance of any patent, and, including rights-of-way running through the reservation; trust or restricted land located within the boundaries of a former reservation of a federally recognized Indian tribe in the State of Oklahoma; or all Indian allotments the Indian titles to which have not been extinguished if such allotments are subject to the jurisdiction of a federally recognized Indian tribe.

(iii) The Secretary shall, within 90 days after the expiration of the period for which the right to purchase or lease real property described in clause (i) is provided in clauses (i) and (ii) of subparagraph (A), afford an opportunity to purchase or lease the real property in accordance with the order of priority established under clause (iv) by the Indian tribe having jurisdiction over the Indian reservation within which the real property is located or, if no order of priority is established by such Indian tribe under clause (iv), in the following order:

(I) to an Indian member of the Indian tribe that has jurisdiction over the reservation within which the real property is located;

(II) to an Indian corporate entity;

(III) to such Indian tribe.

(iv) The governing body of any Indian tribe having jurisdiction over an Indian reservation may revise the order of priority provided in clause (iii) under which lands located within such reservation shall be offered for purchase or lease by the Secretary under clause (iii) and may restrict the eligibility for such purchase or lease to—

(I) persons who are members of such Indian tribe,

(II) Indian corporate entities that are authorized by such Indian tribe to lease or purchase lands within the boundaries of such reservation, or

(III) such Indian tribe itself.

(v) If real property described in clause (i) is not purchased or leased under clause (iii) and the Indian tribe having jurisdiction over the reservation within which the real property is located is unable to purchase or lease the real property, the Secretary shall transfer the real property to the Secretary of the Interior who shall administer the real property as if the real property were held in trust by the United States for the benefit of such Indian tribe. From the rental income derived from the lease of the transferred real property, and all other income generated from the transferred real property, the Secretary of the Interior shall pay those State, county, municipal, or other local taxes to which the transferred real property was subject at the time of acquisition by the Secretary, until the earlier of—

(I) the expiration of the 4-year period beginning on the date on which the real property is so transferred, or

(II) such time as the lands are transferred into trust pursuant to clause (viii).

(vi) At any time any real property is transferred to the Secretary of the Interior under clause (v), the Secretary of Agriculture shall be deemed to have no further responsibility under this Act for collection of any amounts with regard to the farm program loan which had been secured by such real property, nor with regard to any lien arising out of such loan transaction, nor for repayments of any amount with regard to such loan transactions or liens to the Treasury of the United States, and the Secretary of the Interior shall be deemed to have succeeded to all right, title and interest of the Secretary of Agriculture in such real estate arising from the farm program loan transaction, including the obligation to remit to the Treasury of the United States, in repayment of the original loan, those amounts provided in clause (vii).

(vii) After the payment of any taxes which are required to be paid under clause (v), all remaining rental income derived from the lease of the real property transferred to the Secretary of the Interior under clause (v), and all other income generated from the real property transferred to the Secretary of the Interior under clause (v), shall be deposited as miscellaneous receipts in the Treasury of the United States until the amount deposited is equal to the lesser of—

(I) the amount of the outstanding lien of the United States against such real property, as of the date the real property was acquired by the Secretary;

(II) the fair market value of the real property, as of the date of the transfer to the Secretary of the Interior; or

(III) the capitalized value of the real property, as of the date of the transfer to the Secretary of the Interior.

(viii) When the total amount that is required to be deposited under clause (vii) with respect to any real property has been deposited into the Treasury of the United States, title to the real property shall be held in trust by the United States for the benefit of the Indian tribe having jurisdiction over the Indian reservation within which the real property is located.

(ix) Notwithstanding any other clause of this subparagraph, the Indian tribe having jurisdiction over the Indian reservation within which the real property described in clause (i) is located may, at any time after the real property has been transferred to the Secretary of the Interior under clause (v), offer to pay the remaining amount on the lien, or the fair market value of the real property, whichever is less. Upon payment of such amount, title to such real property shall be held by the United States in trust for the tribe and such trust or restricted lands that have been acquired by the Secretary under foreclosure or voluntary transfer under a loan made or insured under this chapter and transferred to an Indian person, entity, or tribe under the provisions of this subparagraph shall be deemed to have never lost trust or restricted status.

(x) This subparagraph shall apply to all lands in the land inventory established under this chapter (as of November 28, 1990) that were (immediately prior to November 28, 1990) owned by an Indian borrower-owner described in clause (i) and that are situated within an Indian reservation (as defined in clause (ii)), regardless of the date of foreclosure or acquisition by the Secretary. The Secretary shall afford an opportunity to a tribal member, an Indian corporate entity, or the tribe to purchase or lease the real property as provided in clause (iii). If the right is not exercised or no expression of intent to exercise such right is received within 180 days after November 28, 1990, the Secretary shall transfer the real property to the Secretary of the Interior as provided in clause (v).

(E) The rights provided in this subsection shall be in addition to any such right of first refusal under the law of the State in which the property is located.

(F) As used in this paragraph, the term "borrower-owner" means—

(i) a borrower from whom the Secretary acquired real farm or ranch property (including the principal residence of the borrower) used to secure any loan made to the borrower under this chapter; or

(ii) in any case in which an owner of property pledged the property to secure the loan and the owner is different than the borrower, the owner.

(G)(i) If—

(I) the real property described in subparagraph (A)(i) is located within an Indian reservation;

(II) the borrower-owner is an Indian tribe that has jurisdiction over the reservation in which the real property is located or the borrower-owner is a member of an Indian tribe;

(III) the borrower-owner has obtained a loan made, insured, or guaranteed under this chapter; and

(IV) the borrower-owner and the Secretary have exhausted all of the procedures provided for in this chapter to permit a borrower-owner to retain title to the real property, such that it is necessary for the borrower-owner to relinquish title,

the Secretary shall dispose of or administer the property only as provided in subparagraph (D), as modified by this subparagraph.

(ii) The Secretary shall provide the borrower-owner of real property that is described in clause (i) with written notice of—

(I) the right of the borrower-owner to voluntarily convey the real property to the Secretary; and

(II) the fact that real property so conveyed will be placed in the inventory of the Secretary.

(iii) The Secretary shall provide the borrower-owner of the real property with written notice of the rights and protections provided under this chapter to the borrower-owner, and the Indian tribe that has jurisdiction over the reservation in which the real property is located, from foreclosure or liquidation of the real property, including written notice of—

(I) the provisions of subparagraphs (C)(i), (C)(ii), and (D), this subparagraph, and subsection (g)(6) of this section;

(II) if the borrower-owner does not voluntarily convey the real property to the Secretary, that—

(aa) the Secretary may foreclose on the property;

(bb) in the event of foreclosure, the property will be offered for sale;

(cc) the Secretary must offer a bid for the property that is equal to the fair market value of the property or the outstanding principal and interest of the loan, whichever is higher;

(dd) the property may be purchased by another party; and

(ee) if the property is purchased by another party, the property will not be placed in the inventory of the Secretary and the borrower-owner will forfeit the rights and protections provided under this chapter; and

(III) the opportunity of the borrower-owner to consult with the Indian tribe that has jurisdiction over the reservation in which the real property is located or counsel to determine if State or tribal law provides rights and protections that are more beneficial than those provided the borrower-owner under this chapter.

(iv)(I) Except as provided in subclause (II), the Secretary shall accept the voluntary conveyance of real property described in clause (i).

(II) If a hazardous substance (as defined in section 9601(14) of title 42) is located on the property and the Secretary takes remedial action to protect human health or the environment if the property is taken into inventory, the Secretary shall accept the voluntary conveyance of the property only if the Secretary determines that it is in the best interests of the Federal Government.

(v) If a borrower-owner does not voluntarily convey to the Secretary real property described in clause (i), at least 30 days before a foreclosure sale of the property, the Secretary shall provide written notice to the Indian tribe that has jurisdiction over the reservation in which the real property is located of—

(I) the sale;

(II) the fair market value of the property; and

(III) the requirements of this subparagraph.

(vi)(I) Except as provided in subclause (II), at a foreclosure sale of real property described in clause (i), the Secretary shall offer a bid for the property that is equal to the higher of—

(aa) the fair market value of the property; or

(bb) the outstanding principal and interest of the loan.

(II) If a hazardous substance (as defined in section 9601(14) of title 42) is located on the property and the Secretary takes remedial action to protect human health or the environment if the property is taken into inventory, subclause (I) shall apply only if the Secretary determines that it is in the best interests of the Federal Government.

(2) The Secretary shall not offer for sale or sell any such farmland if the placing of such farmland on the market will have a detrimental effect on the value of farmland in the area.

(3)(A) The Secretary shall issue regulations providing for leasing such land, or leasing such land with an option to purchase, on a fair and equitable basis.

(B) In leasing such land, the Secretary shall determine if the lessee has financial resources, and farm management skills and experience, that the Secretary determines are sufficient to assure a reasonable prospect of success in the proposed farming operation.

(C) To the extent the Secretary may lease or operate real property under this subsection, the Secretary shall, if the Secretary determines to administer such property through management contracts, offer the contracts on a competitive bid basis, giving preference to persons who will live in, and own and operate qualified small businesses in, the area where the property is located.

(D) The Secretary may enter into a contract with a borrower of a farmer program loan made or insured under this chapter, to provide for the subsequent sale or lease of land that will be acquired from the borrower in the future, before the Secretary takes possession of such land.

(4)(A)(i) The Secretary may sell farmland administered under this chapter through an installment sale or similar device that contains such terms as the Secretary considers necessary to protect the investment of the Federal Government in such land.

(ii) The Secretary may subsequently sell any contract entered into to carry out clause (i).

(B) If two or more qualified operators of not larger than family-size farms desire to purchase, or lease with an option to purchase, such land, the appropriate county committee shall randomly select the operator who may purchase such land, on such basis as the Secretary may prescribe by regulation, in accordance with subsection (c)(2)(B)(iii) of this section.

(5)(A) If the Secretary determines that farmland administered under this chapter is not suitable for sale or lease to persons eligible for a loan made or insured under subchapter I of this chapter because such farmland is in a tract or tracts that the Secretary determines to be larger than that necessary for such eligible persons, the Secretary shall, to the greatest extent practicable, subdivide such land into tracts suitable for sale under subsection (c) of this section. Such land shall be subdivided into parcels of land the shape and size of which are suitable for farming, the value of which shall not exceed the individual loan limits as prescribed under section 1925 of this title.

(B) The Secretary shall dispose of such subdivided farmland in accordance with this subsection.

(6) If suitable farmland is available for disposition under this subsection, the Secretary shall—

(A) publish an announcement of the availability of such farmland in at least one newspaper that is widely circulated in the county in which the farmland is located;

(B) post an announcement of the availability of such farmland in a prominent place in the local office of the Farmers Home Administration that serves the county in which the farmland is located; and

(C) provide written notice reasonably calculated to inform the immediate previous owner or immediate previous family-size farm operator of such farmland, of the availability of such farmland.

(7) In the case of farmland administered under this chapter that is highly erodible land (as defined in section 3801 of title 16), the Secretary may require the use of specified conservation practices on such land as a condition of the sale or lease of such land.

(8) Notwithstanding any other provisions of law, compliance by the Secretary with this subsection shall not cause any acreage allotment, marketing quota, or acreage base assigned to such property to lapse, terminate, be reduced, or otherwise be adversely affected.

(9) Denials of applications for or disputes over terms and conditions of a lease or purchase agreement under this section are appealable under section 1983b¹ of this title.

(10) In the event of any conflict between any provision of this subsection and any provision of the law of any State providing a right of first refusal to the owner of farmland or the operator of a farm before the sale or lease of land to any other person, such provision of State law shall prevail.

(f)(1) As used in this subsection, the term "normal income security" means all security not considered basic security, including crops, livestock, poultry products, Agricultural Stabilization and Conservation Service payments and Commodity Credit Corporation payments, and other property covered by Farmers Home Administration liens that is sold in conjunction with the operation of a farm or other business, but shall not include any equipment (including fixtures in States that have adopted the Uniform Commercial Code), or foundation herd or flock, that is the basis of the farming or other operation, and is the basic security for a Farmers Home Administration farmer program loan.

(2) The Secretary shall release from the normal income security provided for such loan an amount sufficient to pay for the essential household and farm operating expenses of the borrower, until such time as the Secretary accelerates such loan.

(3) A borrower whose account was accelerated on or after November 1, 1985, and on or before May 7, 1987, but not thereafter foreclosed on or liquidated, shall be entitled to the release of security income for a period of 12 months, to pay the essential household and farm operating expenses of such borrower in an amount not to exceed $18,000 over 12 months, if such borrower—

(A) as of October 30, 1987, continued to be actively engaged in the farming operations for which the Secretary had made the farmer program loan; and

(B) as of the deadline for responding to the notice provided for under paragraph (5), requests restructuring of such loans pursuant to section 2001 of this title.

(4) The county committee in the county in which borrower's land is located shall determine whether the borrower has complied with the requirements of paragraph (3)(A).

(5)(A) Within 45 days after January 6, 1988, the Secretary shall provide to the borrowers described in paragraph (3) notice by certified mail of the right of such borrowers to apply for the benefits under such paragraph.

(B) Releases under such paragraph shall be made to qualified borrowers who have responded to the notice within 30 days after receipt.

(C) Within 12 months after a borrower has requested restructuring under section 2001 of this title, the Secretary shall make a final determination on the request. Notwithstanding the 12-month limitation provided for in paragraph (3), releases shall continue to be made to the borrower until a denial or dismissal of the application of the borrower for restructuring under section 2001 of this title is made. The amount of essential household and farm operating expenses which may be released to any borrower eligible for such releases after 12 months may exceed $18,000, by an amount proportionate to the period of time beyond 12 months before a final determination is made by the Secretary.

(6) If a borrower is required to plan for or to report on how proceeds from the sale of collateral property will be used, the Secretary shall—

(A) notify the borrower of such requirement; and

(B) notify the borrower of the right to the release of funds under this section and the means by which a request for the funds may be made.

(7) The Secretary shall issue regulations consistent with this section that—

(A) ensure the release of funds to each borrower; and

(B) establish guidelines for releases under paragraph (3), including a list of expenditures for which funds will normally be released.

(g)(1) Subject to paragraphs (2) through (5), in the disposal of real property under this section, the Secretary shall establish perpetual wetland conservation easements to protect and restore wetlands or converted wetlands that exist on inventoried property, as determined by the Secretary in accordance with title XII of the Food Security Act of 1985 (16 U.S.C. 3801 et seq.).

(2) In establishing the wetland conservation easements on land that is considered to be cropland as of November 28, 1990, the Secretary shall avoid, to the extent practicable, an adverse impact on the productivity of the croplands, as provided in this subsection.

(3) In order to avoid the adverse impact, the Secretary shall—

(A) not establish the wetland conservation easements with respect to wetlands that were converted prior to December 23, 1985, and that have been in cropland use, as determined by the Secretary, in excess of 10 percent of the existing cropland available for production of agricultural commodities on the particular parcel of inventoried property;

(B) not establish the wetland conservation easements with respect to wetlands that have been frequently planted to agricultural commodities and wetlands described in subparagraph (A), in excess of 20 percent of the existing cropland available for production of agricultural commodities on the particular parcel of inventoried property;

(C) ensure that the buffer area adjacent to the wetland is generally not more than 100 feet in average width; and

(D) ensure that access to other portions of the property for farming and other uses is provided.

(4) The wetland conservation easements shall be placed on wetlands that have a history of haying and grazing, as determined by the Secretary, except that in no case shall the quantity of the wetland subject to the easements exceed 50 percent of the existing forage lands on the parcel of inventoried property. All haying and grazing practices on the wetlands (including the timing and intensity of haying and grazing) shall conform to forage management standards designed to protect wetlands.

(5) If, despite the limitations contained in paragraph (3), wetland conservation easements established under paragraph (1) would prevent a particular parcel of inventoried property that is to be sold or leased to a borrower described in clause (i), (ii), or (iii) of subsection (e)(1)(C) of this section, or to a borrower who is a beginning farmer or rancher, from being a marketable agricultural production unit that is comparable to the parcel as acquired, the Secretary may—

(A) establish wetland conservation easements on wetland that was converted prior to December 23, 1985, in a quantity that is less than 10 percent of the existing croplands available for production of agricultural commodities on the particular parcel; and

(B) if the reduction provided in subparagraph (A) is not applicable, or is not sufficient to ensure that the particular parcel would be a marketable agricultural production unit, amend the wetland conservation easements established on the wetlands that have been frequently planted to agricultural commodities to permit the production of agricultural commodities (consistent with title XII of the Food Security Act of 1985 [16 U.S.C. 3801 et seq.]) on the wetlands, to the extent necessary to maintain the parcel as a marketable agricultural production unit.

(6) The Secretary shall provide prior written notification to a borrower considering preservation loan servicing that a wetlands conservation easement may be placed on land for which the borrower is negotiating a lease option.

(7) The appraised value of the farm shall reflect the value of the land due to the placement of wetland conservation easements.

(8) Notwithstanding the limitations described under paragraphs (3) and (4), the limitations may be voluntarily, knowingly waived by any person with respect to real property described in paragraph (3) or (4).

(Pub. L. 87 128, title III, §335, Aug. 8, 1961, 75 Stat. 315; Pub. L. 92 419, title I, §127, Aug. 30, 1972, 86 Stat. 666; Pub. L. 99 198, title XIII, §§1314(a), 1315, 1318(b)(1), Dec. 23, 1985, 99 Stat. 1526, 1528, 1531; Pub. L. 100 233, title VI, §§610, 611, Jan. 6, 1988, 101 Stat. 1669, 1673; Pub. L. 101 624, title XVIII, §§1813(a) (h)(1), 1816(e), title XXIII, §§2303(c), 2388(g), Nov. 28, 1990, 104 Stat. 3821 3823, 3827, 3981, 4053; Pub. L. 102 237, title V, §501(f), Dec. 13, 1991, 105 Stat. 1867; Pub. L. 102 552, title V, §516(h)(1), Oct. 28, 1992, 106 Stat. 4138; Pub. L. 102 554, §§16, 17, Oct. 28, 1992, 106 Stat. 4154.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

This Act, referred to in subsec. (e)(1)(D)(vi), refers to the Agricultural Act of 1961, Pub. L. 87 128, Aug. 8, 1961, 75 Stat. 294, as amended. For classification of this Act to the Code, see Short Title note set out under section 1911 of this title and Tables. However, the reference was probably intended to be "this title" meaning the Consolidated Farm and Rural Development Act, title III of Pub. L. 87 128, as amended, which is classified principally to this chapter. For classification of this title to the Code, see Short Title note set out under section 1921 of this title and Tables.

Section 1983b of this title, referred to in subsec. (e)(9), was repealed by Pub. L. 103 354, title II, §281(c), Oct. 13, 1994, 108 Stat. 3233.

The Food Security Act of 1985, referred to in subsec. (g)(1), (5)(B), is Pub. L. 99 198, Dec. 23, 1985, 99 Stat. 1354, as amended. Title XII of the Act, popularly known as the "Sodbuster Law", is classified principally to chapter 58 (§3801 et seq.) of Title 16, Conservation. For complete classification of this Act to the Code, see Tables.

Amendments

1992—Subsec. (c)(1). Pub. L. 102 554, §16, in fourth sentence, inserted "(A)" after "shall be" and "or (B) leased to persons eligible for assistance under the provisions of any law administered by the Farmers Home Administration or the Rural Development Administration under an annual lease or a lease with an option to purchase, with a preference for sale" before period at end.

Subsec. (e)(1)(A)(i). Pub. L. 102 552, which, in amending directory language of Pub. L. 102 237, §501(f)(1), directed the substitution of "the borrower-owner (as defined in subparagraph (F))" for "borrower-owner (as defined in subparagraph (F))", was executed by making the substitution in text which did not contain a closing parenthesis after "(F)", to reflect the probable intent of Congress. See 1991 Amendment note below.

Subsec. (e)(1)(D)(i). Pub. L. 102 554, §17(1), substituted "Except as provided in subparagraph (G), if" for "If".

Subsec. (e)(1)(G). Pub. L. 102 554, §17(2), added subpar. (G).

1991—Subsec. (e)(1)(A)(i). Pub. L. 102 237, §501(f)(1), as amended by Pub. L. 102 552, substituted "the borrower-owner (as defined in subparagraph (F))" for "the borrower from whom the Secretary acquired real farm or ranch property (including the principal residence of the borrower) used to secure any loan made to the borrower under this chapter (hereinafter referred to in this paragraph as the 'borrower-owner')". See 1992 Amendment note above.

Subsec. (e)(1)(F). Pub. L. 102 237, §501(f)(2), added subpar. (F).

1990—Subsec. (a). Pub. L. 101 624, §§1813(a), 2303(c)(1), inserted "or the Rural Development Administration" after "Farmers Home Administration" and substituted "12 months from the date first published under paragraph (2)(D)" for "three years from the date of acquisition".

Subsec. (c)(1). Pub. L. 101 624, §2303(c)(2), inserted "or the Rural Development Administration" after "Farmers Home Administration".

Subsec. (c)(2)(A), (B). Pub. L. 101 624, §1813(e)(1), added subpar. (A) and subpar. (B) introductory provisions, redesignated former subpars. (A) through (D) as cls. (i) through (iv), respectively, of subpar. (B), and struck out former introductory provisions which read as follows: "Notwithstanding any other provision of law, the Secretary shall sell suitable farmland administered under this subchapter to operators (as of the time immediately after such contract for sale or lease is entered into) of not larger than family sized farms, as determined by the county committee. In selling such land, the county committee shall—".

Subsec. (c)(2)(B)(ii). Pub. L. 101 624, §1813(g)(1), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: "offer suitable land at a price not greater than that which reflects the appraised market value of such land;".

Subsec. (c)(2)(B)(iii). Pub. L. 101 624, §1813(b)(1), inserted before semicolon ", except that if the committee determines that two or more applicants meet the loan eligibility criteria, the committee shall select between the qualified applicants on a random basis".

Subsec. (c)(2)(B)(iv). Pub. L. 101 624, §2388(g), substituted "cause" for "caused".

Subsec. (e)(1)(A)(i). Pub. L. 101 624, §1813(c), substituted "real farm or ranch property (including the principal residence of the borrower)" for "real property".

Pub. L. 101 624, §1816(e)(1), inserted before period at end ", if such borrower-owner has acted in good faith with the Secretary, as defined in regulations issued by the Secretary, in connection with such loan".

Subsec. (e)(1)(A)(iv). Pub. L. 101 624, §1813(d), added cl. (iv).

Subsec. (e)(1)(C)(i). Pub. L. 101 624, §1816(e)(2), inserted before period at end ", if such borrower-owner has acted in good faith with the Secretary, as defined in regulations issued by the Secretary, in connection with the loan of such borrower-owner for which such property served as security".

Subsec. (e)(1)(C)(iv), (v). Pub. L. 101 624, §1813(e)(2), added cl. (iv) and redesignated former cl. (iv) as (v).

Subsec. (e)(1)(D)(x). Pub. L. 101 624, §1813(f), added cl. (x).

Subsec. (e)(4)(B). Pub. L. 101 624, §1813(g)(2), redesignated subpar. (C) as (B) and struck out former subpar. (B) which read as follows: "The Secretary shall offer such land for sale to operators of not larger than family-size farms at a price that reflects the average annual income that may be reasonably anticipated to be generated from farming such land."

Subsec. (e)(4)(C). Pub. L. 101 624, §1813(g)(2), redesignated former subpar. (C) as (B).

Pub. L. 101 624, §1813(b)(2), substituted "shall randomly" for "shall, by majority vote," and inserted ", in accordance with subsection (c)(2)(B)(iii) of this section".

Subsec. (g). Pub. L. 101 624, §1813(h)(1), added subsec. (g).

1988—Subsec. (c). Pub. L. 100 233, §610(a), designated existing provisions as par. (1), inserted provisions requiring the County Committee to classify or reclassify real property that is farmland, as being suitable for farming operation for such disposition unless property cannot be used to meet any of the purposes of section 1923 of this title, and added par. (2).

Subsec. (e)(1). Pub. L. 100 233, §610(b)(1), added par. (1) and struck out former par. (1) which read as follows: "The Secretary shall to the extent practicable sell or lease farmland administered under this chapter in the following order of priority:

"(A) Sale of such farmland to operators (as of the time immediately before such sale) of not larger than family-size farms.

"(B) Lease of such farmland to operators (as of the time immediately before such lease is entered into) of not larger than family-size farms."

Subsec. (e)(3). Pub. L. 100 233, §610(b)(2), redesignated subpars. (B) to (D) as (A) to (C), respectively, in subpar. (B) substituted "Secretary shall determine if the lessee" for "Secretary shall give special consideration to a previous owner or operator of such land if such owner or operator", added subpar. (D), and struck out former subpar. (A) which read as follows: "The Secretary shall consider granting, and may grant, to an operator of not larger than a family-size farm, in conjunction with paragraph (3), a lease with an option to purchase farmland administered under this chapter."

Subsec. (e)(5)(A). Pub. L. 100 233, §610(b)(3), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: "If the Secretary determines that farmland administered under this chapter is not suitable for sale or lease to an operator of not larger than a family-size farm because such farmland is in a tract or tracts that the Secretary determines to be larger than that necessary for family-size farms, the Secretary shall subdivide such land into tracts suitable for such operator."

Subsec. (e)(6)(C). Pub. L. 100 233, §610(b)(4), added subpar. (C).

Subsec. (e)(9), (10). Pub. L. 100 233, §610(b)(5), added pars. (9) and (10).

Subsec. (f). Pub. L. 100 233, §611, amended subsec. (f) generally. Prior to amendment, subsec. (f) read as follows:

"(1) As used in this subsection, the term 'normal income security' has the same meaning given such term in section 1962.17(b) of title 7, Code of Federal Regulations (as of January 1, 1985).

"(2) Until such time as the Secretary accelerates a loan made or insured under this chapter, the Secretary shall release from the normal income security provided for such loan an amount sufficient to pay the essential household and farm operating expenses of the borrower, as determined by the Secretary."

1985—Subsec. (b). Pub. L. 99 198, §1314(a)(1), substituted "Except as provided in subsection (e) of this section, real property" for "Real property".

Subsec. (c). Pub. L. 99 198, §1314(a)(2), substituted "Except as provided in subsection (e) of this section, the Secretary" for "The Secretary" and inserted sentence at end providing that notwithstanding the preceding sentence, the Secretary may for conservation purposes grant or sell an easement, restriction, development rights, or the equivalent thereof, to a unit of local or State government or a private nonprofit organization separately from the underlying fee or sum of all other rights possessed by the United States.

Pub. L. 99 198, §1318(b)(1), which directed insertion of ", other than easements acquired under section 1997 of this title" at end of last sentence, was executed to fifth sentence of subsec. (c), and not to sixth and last sentence as added by section 1314(a)(2)(B) of Pub. L. 99 198, to reflect the probable intent of Congress.

Subsec. (e). Pub. L. 99 198, §1314(a)(3), added subsec. (e).

Subsec. (f). Pub. L. 99 198, §1315, added subsec. (f).

1972—Subsec. (c). Pub. L. 92 419 substituted "the provisions of any law administered by the Farmers Home Administration" for "subchapter I of this chapter" in first sentence and "such provisions" for "the provisions of subchapter I of this chapter" in second sentence, struck out from fourth sentence initial minimum 20 per centum downpayment requirement and provision for payment of remainder in not more than five annual installments, and provided in such fourth sentence for interest rates and terms not more favorable than legally permissible for eligible borrowers.

Effective Date of 1992 Amendment

Section 516(h)(2) of Pub. L. 102 552 provided that: "The amendments made by paragraph (1) of this subsection [amending section 501(f) of Pub. L. 102 237, see 1992 Amendment note above] shall take effect immediately after section 501(f) of the Food, Agriculture, Conservation, and Trade Act of 1990 [probably should be Food, Agriculture, Conservation, and Trade Act Amendments of 1991 [Pub. L. 102 237]] took effect."

Effective Date of 1990 Amendment

Amendment by section 1816 of Pub. L. 101 624 applicable to new applications submitted under section 2001 of this title on or after Nov. 28, 1990, see section 1861 of Pub. L. 101 624, set out as a note under section 2001 of this title.

Effective Date of 1985 Amendment

Section 1314(b) of Pub. L. 99 198 provided that: "The Secretary of Agriculture shall implement the amendments made by this section [amending this section] not later than 90 days after the date of enactment of this Act [Dec. 23, 1985]."

Completion of Sales of Farmers Home Administration Inventory Farms

Pub. L. 102 142, title VII, §740, Oct. 28, 1991, 105 Stat. 915, provided that: "Hereafter, the Secretary shall complete the sales of Farmers Home Administration inventory farms, in accordance with the law and regulations in effect before November 28, 1990, in situations in which a County Committee, acting pursuant to section 335 of the Consolidated Farm and Rural Development Act [7 U.S.C. 1985], had made its initial selection of a buyer before November 28, 1990. Such sales shall be completed as soon as the selection decision is administratively final and all terms and conditions have been agreed to. In carrying out sales of inventory property, priority shall be given to the former owner and members of the immediate family."

Farm Ownership Outreach Program to Socially Disadvantaged Individuals

Section 623 of Pub. L. 100 233, as amended by Pub. L. 101 624, title XVIII, §1852, Nov. 28, 1990, 104 Stat. 3837, provided that:

"(a) In General.—The Secretary of Agriculture, in coordination with the limited resource farmers' initiative in the office of the Director of the Office of Advocacy and Enterprise, shall establish a farm ownership outreach program for persons who are members of any group with respect to which an individual may be identified as a socially disadvantaged individual under section 8(a)(5) of the Small Business Act (15 U.S.C. 637(a)(5)) to encourage the acquisition of inventory farmland of the Farmers Home Administration by—

"(1) informing persons eligible for assistance under any other provision of this Act [see Short Title of 1988 Amendment note set out under section 2001 of Title 12, Banks and Banking] of—

"(A) the possiblity [sic] of acquiring such inventory farmland; and

"(B) various farm ownership loan programs; and

"(2) providing technical assistance to such persons in the acquisition of such inventory farmland.

"(b) Authorization of Appropriations.—There are authorized to be appropriated to carry out this section $2,500,000 for each of the fiscal years 1991 through 1995."

Section Referred to in Other Sections

This section is referred to in sections 1471, 1929a, 1991, 2001 of this title.

¹See References in Text note below.

§1986. Conflicts of interests

(a) Acceptance of fees, commissions, gifts, or other considerations prohibited

No officer, attorney, or other employee of the Secretary shall, directly or indirectly, be the beneficiary of or receive any fee, commission, gift, or other consideration for or in connection with any transaction or business under this chapter other than such salary, fee, or other compensation as he may receive as such officer, attorney, or employee.

(b) Acquisition of interest in land by certain officers or employees of Department of Agriculture prohibited; 3-year period

Except as otherwise provided in this subsection, no officer or employee of the Department of Agriculture who acts on or reviews an application made by any person under this chapter for a loan to purchase land may acquire, directly or indirectly, any interest in such land for a period of three years after the date on which such action is taken or such review is made. This prohibition shall not apply to a former member of a county committee provided for in section 1982¹ of this title upon a determination by the Secretary, prior to the acquisition of such interest, that such former member acted in good faith when acting on or reviewing such application.

(c) Certifications on loans to family members prohibited

No member of a county committee shall knowingly make or join in making any certification with respect to a loan to purchase any land in which he or any person related to him within the second degree of consanguinity or affinity has or may acquire any interest or with respect to any applicant related to him within the second degree of consanguinity or affinity.

(d) Penalties

Any persons violating any provision of this section shall, upon conviction thereof, be punished by a fine of not more than $2,000 or imprisonment for not more than two years, or both.

(Pub. L. 87 128, title III, §336, Aug. 8, 1961, 75 Stat. 316; Pub. L. 98 258, title VI, §606, Apr. 10, 1984, 98 Stat. 140.)

References in Text

For definition of "this chapter", referred to in subsecs. (a) and (b), see note set out under section 1921 of this title.

Section 1982 of this title, referred to in subsec. (b), was repealed by Pub. L. 103 354, title II, §227(b)(1), Oct. 13, 1994, 108 Stat. 3218.

Amendments

1984—Pub. L. 98 258 designated first, second, and third sentences of existing provisions as subsecs. (a), (c), and (d), respectively, and added subsec. (b).

¹See References in Text note below.

§1987. Debt adjustment and credit counseling; "summary period" defined; loan summary statements

(a) The Secretary may provide voluntary debt adjustment assistance between farmers and their creditors and may cooperate with State, territorial, and local agencies and committees engaged in such debt adjustment, and may give credit counseling.

(b)(1) As used in this subsection, the term "summary period" means—

(A) the period beginning on December 23, 1985, and ending on the date on which the first loan summary statement is issued after December 23, 1985; or

(B) the period beginning on the date of issuance of the preceding loan summary statement and ending on the date of issuance of the current loan summary statement.

(2) On the request of a borrower of a loan made or insured (but not guaranteed) under this chapter, the Secretary shall issue to such borrower a loan summary statement that reflects the account activity during the summary period for each loan made or insured under this chapter to such borrower, including—

(A) the outstanding amount of principal due on each such loan at the beginning of the summary period;

(B) the interest rate charged on each such loan;

(C) the amount of payments made on and their application to each such loan during the summary period and an explanation of the basis for the application of such payments;

(D) the amount of principal and interest due on each such loan at the end of the summary period;

(E) the total amount of unpaid principal and interest on all such loans at the end of the summary period;

(F) any delinquency in the repayment of any such loan;

(G) a schedule of the amount and date of payments due on each such loan; and

(H) the procedure the borrower may use to obtain more information concerning the status of such loans.

(Pub. L. 87 128, title III, §337, Aug. 8, 1961, 75 Stat. 316; Pub. L. 99 198, title XIII, §1316, Dec. 23, 1985, 99 Stat. 1528.)

References in Text

For definition of "this chapter", referred to in subsec. (b)(2), see note set out under section 1921 of this title.

Amendments

1985—Pub. L. 99 198 designated existing provisions as subsec. (a) and added subsec. (b).

§1988. Appropriations

(a) Authorization

There is authorized to be appropriated to the Secretary such sums as the Congress may from time to time determine to be necessary to enable the Secretary to carry out the purposes of this chapter and for the administration of assets transferred to the Farmers Home Administration or the Rural Development Administration.

(b) Notes; form and denominations; maturities; terms and conditions; interest rate; purchase by Treasury; public debt transaction

When authorized by Congress, the Secretary is authorized to make and issue notes to the Secretary of the Treasury for the purpose of obtaining funds in such amounts as the Congress may approve annually in appropriation Acts for making direct loans under this chapter. Such notes shall be in such form and denominations and have such maturities and be subject to such terms and conditions as may be prescribed by the Secretary with the approval of the Secretary of the Treasury. Such notes shall bear interest at a rate fixed by the Secretary of the Treasury, taking into consideration the current average market yields of outstanding marketable obligations of the United States having maturities comparable to the notes issued by the Secretary under this chapter. The Secretary of the Treasury is authorized and directed to purchase any notes of the Secretary issued hereunder, and for that purpose the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, and the purposes for which such securities may be issued under such chapter are extended to include the purchase of notes issued by the Secretary. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes shall be treated as public debt transactions of the United States.

(c) Farmers Home Administration direct loan account; deposits; liabilities; obligations; expenditures; net expenditure basis of budgeting

The appropriations for loans made under the authority of subsection (a) of this section and funds obtained in accordance with subsection (b) of this section, and the unexpended balances of any funds made available for loans under the item "Farmers Home Administration" in the Department of Agriculture Appropriation Acts current on August 8, 1961, shall be merged into a single account known as the "Farmers Home Administration direct loan account", hereafter in this section called the "direct loan account". All claims, notes, mortgages, property, including those now held by the Secretary on behalf of the Secretary of the Treasury, and all collections therefrom, made or held under the direct loan provisions of (1) titles I, II, and IV of the Bankhead-Jones Farm Tenant Act, as amended; (2) the Farmers Home Administration Act of 1946, as amended, except the assets of the rural rehabilitation corporations; (3) the Act of August 28, 1937 (50 Stat. 869), as amended; (4) the item "Loans to Farmers—1948 Flood Damage" in the Act of June 25, 1948 (62 Stat. 1038); (5) the item "Loans to Farmers (Property Damage)" in the Act of May 24, 1949 (63 Stat. 82); (6) the Act of September 6, 1950 (64 Stat. 769); (7) the Act of July 11, 1956 (70 Stat. 525); (8) section 8 of the Watershed Protection and Flood Prevention Act, as amended [16 U.S.C. 1006a]; (9) section 32(e) of the Bankhead-Jones Farm Tenant Act, as amended [7 U.S.C. 1011(e)]; and (10) under this chapter shall be held for and deposited in said account.

The notes of the Secretary issued to the Secretary of the Treasury under said Acts or under this chapter and all other liabilities against the appropriations or assets in the direct loan account shall be liabilities of said account, and all other obligations against such appropriations or assets shall be obligations of said account. Moneys in the direct loan account shall also be available for interest and principal repayments on notes issued by the Secretary to the Secretary of the Treasury. Otherwise, the balances in said account shall remain available to the Secretary for direct loans under subchapters I or II of this chapter, section 8 of the Watershed Protection and Flood Prevention Act, as amended [16 U.S.C. 1006a], and section 32(e) of the Bankhead-Jones Farm Tenant Act, as amended [7 U.S.C. 1011(e)], and for advances in connection therewith, not to exceed any existing appropriation or authorization limitations and in such further amounts as the Congress from time to time determines in appropriation Acts. The amounts so authorized for loans and advances shall remain available until expended. Subject to the foregoing limitations, the use of collections deposited in the account may be authorized by the Congress in lieu or partially in lieu of authorizing the issuing of additional notes by the Secretary to the Secretary of the Treasury, and the account shall be budgeted on a net expenditure basis.

(d) Sale of notes and mortgages

The Secretary may sell and assign any notes and mortgages in the direct loan account with the consent of the borrower or without such consent when the borrower has failed to comply with his agreement to refinance the indebtedness at the request of the Secretary. Such loans may be sold at the balance due thereon or on such other basis as the Secretary may determine from time to time.

(e) Distribution of real estate loans among States

At least 25 per centum of the sums authorized in any fiscal year for direct loans to individuals to be made by the Secretary under subchapter I of this chapter shall be allocated equitably among the several States and territories on the basis of farm population and the prevalence of tenancy, as determined by the Secretary.

(f) Sale by lender and any holder of guaranteed portion of loan pursuant to regulations governing such sales; limitations; issuance of pool certificates representing ownership of guaranteed portion of guaranteed loan; terms and conditions, etc.; reporting requirements

(1)(A) The guaranteed portion of any loan made under this chapter may be sold by the lender, and by any subsequent holder, in accordance with regulations governing such sales as the Secretary shall establish, subject to the following limitations:

(i) All fees due the Secretary with respect to a guaranteed loan are to be paid in full before any sale.

(ii) The loan is to have been fully disbursed to the borrower before the sale.

(B) After a loan is sold in the secondary market, the lender shall remain obligated under its guarantee agreement with the Secretary, and shall continue to service the loan in accordance with the terms and conditions of such agreement.

(C) The Secretary shall develop such procedures as are necessary for the facilitation, administration, and promotion of secondary market operations, and for determining the increase of farmers' access to capital at reasonable rates and terms as a result of secondary market operations.

(D) This subsection shall not be interpreted to impede or extinguish the right of the borrower or the successor in interest to such borrower to prepay (in whole or in part) any loan made under this chapter, or to impede or extinguish the rights of any party under any provision of this chapter.

(2)(A) The Secretary may, directly or through a market maker approved by the Secretary, issue pool certificates representing ownership of part or all of the guaranteed portion of any loan guaranteed by the Secretary under this chapter. Such certificates shall be based on and backed by a pool established or approved by the Secretary and composed solely of the entire guaranteed portion of such loans.

(B) The Secretary may, on such terms and conditions as the Secretary deems appropriate, guarantee the timely payment of the principal and interest on pool certificates issued on behalf of the Secretary by approved market makers for purposes of this subsection. Such guarantee shall be limited to the extent of principal and interest on the guaranteed portions of loans that compose the pool. If a loan in such pool is prepaid, either voluntarily or by reason of default, the guarantee of timely payment of principal and interest on the pool certificates shall be reduced in proportion to the amount of principal and interest such prepaid loan represents in the pool. Interest on prepaid or defaulted loans shall accrue and be guaranteed by the Secretary only through the date of payment on the guarantee. During the term of the pool certificate, the certificate may be called for redemption due to prepayment or default of all loans constituting the pool.

(C) The full faith and credit of the United States is pledged to the payment of all amounts that may be required to be paid under any guarantee of such pool certificates issued by approved market makers under this subsection. The Secretary may expend amounts in the Agricultural Credit Insurance Fund to make payments on such guarantees.

(D) The Secretary shall not collect any fee for any guarantee under this subsection. The preceding sentence shall not preclude the Secretary from collecting a fee for the functions described in paragraph (3).

(E) Within 30 days after a borrower of a guaranteed loan is in default of any principal or interest payment due for 60 days or more, the Secretary shall—

(i) purchase the pool certificates representing ownership of the guaranteed portion of the loan; and

(ii) pay the registered holder of the certificates an amount equal to the guaranteed portion of the loan represented by the certificate.

(F)(i) If the Secretary pays a claim under a guarantee issued under this subsection, the claim shall be subrogated fully to the rights satisfied by such payment, as may be provided by the Secretary.

(ii) No State or local law, and no Federal law, shall preclude or limit the exercise by the Secretary of the Secretary's ownership rights in the portions of loans constituting the pool against which the certificates are issued.

(3) On the adoption of final rules and regulations, the Secretary shall do the following:

(A) Provide for the central collection of registration information from all participating market makers for all loans and pool certificates sold under paragraphs (1) and (2). Such information shall include, with respect to each original sale and any subsequent sale, identification of the interest rate paid by the borrower to the lender, the lender's servicing fee, whether interest on the loan is at a fixed or variable rate, identification of each purchaser of a pool certificate, the interest rate paid on the certificate, and such other information as the Secretary deems appropriate.

(B) Before any sale, require the seller to disclose to each prospective purchaser of the portion of a loan guaranteed under this chapter and to each prospective purchaser of a pool certificate issued under paragraph (2), information on the terms, conditions, and yield of such instrument. As used in this subparagraph, if the instrument being sold is a loan, the term "seller" does not include (i) the person who made the loan or (ii) any person who sells three or fewer guaranteed loans per year.

(C) Provide for adequate custody of any pooled guaranteed loans.

(D) Take such actions as are necessary, in restructuring pools of the guaranteed portion of loans, to minimize the estimated costs of paying claims under guarantees issued under this subsection.

(E) Require each market maker—

(i) to service all pools formed, and participations sold, by the market maker; and

(ii) to provide the Secretary with information relating to the collection and disbursement of all periodic payments, prepayments, and default funds from lenders, to or from the reserve fund that the Secretary shall establish to enable the timely payment guarantee to be self-funding, and from all beneficial holders.

(F) Regulate market makers in pool certificates sold under this subsection.

(4)(A) Not later than March 31 of each year, the Secretary shall transmit to the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Agriculture of the House of Representatives a report on the secondary market operations under this subsection during the preceding calendar year.

(B) Each report under subparagraph (A) shall include—

(i) the number and the total dollar amount of loans sold in the secondary market and the distribution of such loans by size of loan, size of lender, geographic location of lender, interest rate, maturity, lender servicing fees, whether the interest rate is fixed or variable, and premium paid;

(ii) the number and dollar amount of loans resold in the secondary market and the distribution of such loans by size of loan, interest rate, and premiums;

(iii) the number and total dollar amount of pools formed;

(iv) the number and total dollar amount of loans in each pool;

(v) the dollar amount, interest rate, and terms on each loan in each pool, and whether the interest rate is fixed or variable;

(vi) the number, face value, interest rate, and terms of the pool certificates issued for each pool;

(vii) to the maximum extent possible, the use by the lender of the proceeds of sales of loans in the secondary market for additional lending to farmers; and

(viii) an analysis of the information reported in clauses (i) through (vii) to assess farmers' access to capital at reasonable rates and terms as a result of secondary market operations.

(5) The Secretary may contract for goods and services to be used for the purposes of this subsection without regard to the provisions of titles 5, 40, and 41, and any regulations issued thereunder.

(Pub. L. 87 128, title III, §338, Aug. 8, 1961, 75 Stat. 316; Pub. L. 89 429, §5, May 24, 1966, 80 Stat. 167; Pub. L. 100 233, title VII, §711(a), Jan. 6, 1988, 101 Stat. 1707; Pub. L. 100 399, title VI, §605, Aug. 17, 1988, 102 Stat. 1006; Pub. L. 101 624, title XXIII, §2303(d), Nov. 28, 1990, 104 Stat. 3981.)

References in Text

For definition of "this chapter", referred to in subsecs. (a), (b), (c), (e), and (f), see note set out under section 1921 of this title.

Titles I, II, and IV of the Bankhead-Jones Farm Tenant Act, as amended, referred to in subsec. (c)(1), refer to titles I, II, and IV of act July 22, 1937, ch. 517, 50 Stat. 522, as amended, which were formerly classified to sections 1001 to 1005, 1005a to 1005d, 1006, 1006c to 1006e, 1007, 1008, 1009; and 1014 to 1025, 1026, 1027 to 1029 of this title, respectively, were repealed by section 341(a) of Pub. L. 87 128, and are covered by this chapter.

The Farmers Home Administration Act of 1946, as amended, referred to in subsec. (c)(2), refers to act Aug. 14, 1946, ch. 964, 60 Stat. 1062, as amended, which was classified to sections 1001 to 1005, 1005a to 1005d, 1007, 1008, 1009, 1015 to 1029, 1030, and 1031 of this title; section 371 of Title 12, Banks and Banking; and section 82h of Title 31, Money and Finance, and in so far as it amended provisions of titles I, II, and IV of the Bankhead-Jones Farm Tenant Act, was repealed by section 341(a) of Pub. L. 87 128, and is covered by this chapter.

Act of August 28, 1937 (50 Stat. 869), as amended, referred to in subsec. (c)(3), was formerly classified to sections 590r to 590x 4 of Title 16, Conservation, was repealed by section 341(a) of Pub. L. 87 128, and is covered by this chapter.

Act of June 25, 1948 (62 Stat. 1038), referred to in subsec. (c)(4), refers to a provision of the Second Deficiency Appropriation Act, 1948 (act June 25, 1948, ch. 658, 62 Stat. 1027), which provision was not classified to the Code.

Act of May 24, 1949 (63 Stat. 82), referred to in subsec. (c)(5), refers to a provision of the First Deficiency Appropriation Act, 1949 (act May 24, 1949, ch. 138, 63 Stat. 76), which provision was not classified to the Code.

Act of September 6, 1950 (64 Stat. 769), referred to in subsec. (c)(6), is classified to sections 1033, 1033 note, 1034, 1035, 1036, and 1037 to 1039 of this title.

Act of July 11, 1956 (70 Stat. 525), referred to in subsec. (c)(7), refers to a provision transferring certain responsibilities of the Secretary of the Interior to the Secretary of Agriculture, among other provisions (act July 11, 1956, ch. 565, 70 Stat. 525), which provision was not classified to the Code.

Codification

In subsec. (b), "chapter 31 of title 31" and "such chapter" substituted for "the Second Liberty Bond Act, as amended" and "such Act, as amended," respectively, on authority of Pub. L. 97 258, §4(b), Sept. 13, 1982, 96 Stat. 1067, the first section of which enacted Title 31, Money and Finance.

Amendments

1990—Subsec. (a). Pub. L. 101 624 inserted "or the Rural Development Administration" after "Farmers Home Administration".

1988—Subsec. (f)(5). Pub. L. 100 399 added par. (5).

Subsec. (f). Pub. L. 100 233 added subsec. (f).

1966—Subsec. (c). Pub. L. 89 429 inserted references to section 8 of the Watershed Protection and Flood Prevention Act, as amended, and section 32(e) of the Bankhead-Jones Farm Tenant Act, as amended.

Effective Date of 1988 Amendment

Amendment by Pub. L. 100 399 effective as if enacted immediately after enactment of Pub. L. 100 233, which was approved Jan. 6, 1988, see section 1001(a) of Pub. L. 100 399, set out as a note under section 2002 of Title 12, Banks and Banking.

Regulations

Section 711(b) of Pub. L. 100 233 provided that: "Within 180 days after the date of the enactment of this Act [Jan. 6, 1988], the Secretary shall develop and promulgate final regulations to implement this section and the amendment made by this section [amending this section and enacting provisions set out below]."

Pool Certificates Not To Be Issued Until Final Regulations Take Effect

Section 711(c) of Pub. L. 100 233 provided that: "The Secretary of Agriculture shall not implement paragraph (2) of section 338(f) of the Consolidated Farm and Rural Development Act [7 U.S.C. 1988(f)], as added by subsection (a), until the final regulations governing the administration of such paragraph take effect."

Abolition of Farmers Home Administration Direct Loan Account

The Farmers Home Administration direct loan account, created by subsec. (c) of this section, was abolished and its assets and liabilities transferred to the Agricultural Credit Insurance Fund by section 1929 of this title.

Loans to Indians

Authority of the Secretary of Agriculture to make loans to Indian tribes and tribal corporations to acquire land within reservations, see sections 488 to 492 of Title 25, Indians.

Section Referred to in Other Sections

This section is referred to in sections 1929, 1991 of this title; title 25 section 488.

§1989. Rules and regulations

(a) In general

The Secretary is authorized to make such rules and regulations, prescribe the terms and conditions for making or insuring loans, security instruments and agreements, except as otherwise specified herein, and make such delegations of authority as he deems necessary to carry out this chapter.

(b) Debt service margin requirements

Notwithstanding subsection (a) of this section, in providing farmer program loan guarantees under this chapter, the Secretary shall consider the income of the borrower adequate if the income is equal to or greater than the income necessary—

(1) to make principal and interest payments on all debt obligations of the borrower, in a timely manner;

(2) to cover the necessary living expenses of the family of the borrower; and

(3) to pay all other obligations and expenses of the borrower not financed through debt obligations referred to in paragraph (1), including expenses of replacing capital items (determined after taking into account depreciation of the items).

(c) Certified Lenders Program

(1) In general

The Secretary shall establish a program under which the Secretary shall guarantee loans for any purpose specified in subchapter II of this chapter that are made by lending institutions certified by the Secretary.

(2) Certification requirements

The Secretary shall certify a lending institution that meets such criteria as the Secretary may prescribe in regulations, including the ability of the institution to properly make, service, and liquidate the loans of the institution.

(3) Condition of certification

As a condition of the certification, the Secretary shall require the institution to undertake to service the loans guaranteed by the Secretary under this subsection, using standards that are not less stringent than generally accepted banking standards concerning loan servicing employed by prudent commercial or cooperative lenders. The Secretary shall, at least annually, monitor the performance of each certified lender to ensure that the conditions of the certification are being met.

(4) Effect of certification

Notwithstanding any other provision of law:

(A) The Secretary shall guarantee 80 percent of a loan made under this subsection by a certified lending institution as described in paragraph (1), subject to county committee certification that the borrower of the loan meets the eligibility requirements and such other criteria as may be applicable to loans guaranteed by the Secretary under other provisions of this chapter.

(B) With respect to loans to be guaranteed by the Secretary under this subsection, the Secretary shall permit certified lending institutions to make appropriate certifications (as provided by regulations issued by the Secretary)—

(i) relating to issues such as creditworthiness, repayment ability, adequacy of collateral, and feasibility of farm operation; and

(ii) that the borrower is in compliance with all requirements of law, including regulations issued by the Secretary.

(C) The Secretary shall approve or disapprove a guarantee not later than 14 calendar days after the date that the lending institution applied to the Secretary for the guarantee. If the Secretary rejects the loan application within the 14-day period, the Secretary shall state, in writing, all of the reasons the application was rejected.

(5) Relationship to other requirements

Neither this subsection nor subsection (d) of this section shall affect the responsibility of the Secretary to certify eligibility, review financial information, and otherwise assess an application.

(d) Preferred Certified Lenders Program

(1) In general

Commencing not later than two years after October 28, 1992, the Secretary shall establish a Preferred Certified Lenders Program for lenders who establish their—

(A) knowledge of, and experience under, the program established under subsection (c) of this section;

(B) knowledge of the regulations concerning the guaranteed loan program; and

(C) proficiency related to the certified lender program requirements.

The Secretary shall certify any lending institution as a Preferred Certified Lender that meets such criteria as the Secretary may prescribe by regulation.

(2) Revocation of designation

The designation of a lender as a Preferred Certified Lender shall be revoked at any time that the Secretary determines that such lender is not adhering to the rules and regulations applicable to the program or if the loss experiences of a Preferred Certified Lender are excessive as compared to other Preferred Certified Lenders, except that such suspension or revocation shall not affect any outstanding guarantee.

(3) Condition of certification

As a condition of such preferred certification, the Secretary shall require the institution to undertake to service the loans guaranteed by the Secretary under this subsection using generally accepted banking standards concerning loan servicing employed by prudent commercial or cooperative lenders. The Secretary shall, at least annually, monitor the performance of each preferred certified lender to ensure that the conditions of such certification are being met.

(4) Effect of preferred lender certification

Notwithstanding any other provision of law, the Secretary shall—

(A) guarantee 80 percent of an approved loan made by a certified lending institution as described in this subsection, subject to county committee certification that the borrower meets the eligibility requirements or such other criteria as may be applicable to loans guaranteed by the Secretary under other provisions of this chapter;

(B) permit certified lending institutions to make all decisions, with respect to loans to be guaranteed by the Secretary under this subsection relating to credit worthiness, the closing, monitoring, collection and liquidation of loans, and to accept appropriate certifications, as provided by regulations issued by the Secretary, that the borrower is in compliance with all requirements of law or regulations promulgated by the Secretary; and

(C) be deemed to have guaranteed 80 percent of a loan made by a preferred certified lending institution as described in paragraph (1), if the Secretary fails to approve or reject the application of such institution within 14 calendar days after the date that the lending institution presented the application to the Secretary. If the Secretary rejects the application within the 14-day period, the Secretary shall state, in writing, the reasons the application was rejected.

(Pub. L. 87 128, title III, §339, Aug. 8, 1961, 75 Stat. 318; Pub. L. 102 554, §18, Oct. 28, 1992, 106 Stat. 4155.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

Amendments

1992—Pub. L. 102 554, inserted section catchline, designated existing provisions as subsec. (a), inserted heading, and added subsecs. (b) to (d).

Regulations

Section 23 of Pub. L. 102 554 provided that:

"(a) Interim Regulations.—Not later than 180 days after the date of enactment of this Act [Oct. 28, 1992], the Secretary of Agriculture shall issue such interim regulations as are necessary to implement this Act [see Short Title of 1992 Amendment note set out under section 1921 of this title] and the amendments made by this Act.

"(b) Final Regulations.—Not later than October 1, 1993, the Secretary of Agriculture shall issue such final regulations as are necessary to implement this Act and the amendments made by this Act."

Pub. L. 100 233, title VI, §624, Jan. 6, 1988, 101 Stat. 1685, provided that: "Within 150 days after the date of the enactment of this title [Jan. 6, 1988], and after considering public comment obtained under section 553 of title 5, United States Code, the Secretary shall issue final regulations to carry out the amendments made by this title [enacting sections 1981d, 1981e, 1983c, and 2001 to 2005 of this title, amending sections 1927, 1927a, 1981, 1982, 1983b, 1985, 1991, 1997, 1999, and 2000 of this title, and amending provisions set out as a note under section 1999 of this title]."

Study and Report to Congress Before Issuance of Certain Final Regulations

Pub. L. 100 233, title VI, §621, Jan. 6, 1988, 101 Stat. 1684, provided that: "Not later than 60 days before the Secretary of Agriculture issues final regulations providing for the use of ratios and standards as part of loan applications or preapplications, for determining the degree of potential loan risk on loans insured or guaranteed under the Consolidated Farm and Rural Development Act [7 U.S.C. 1921 et seq.], the Secretary shall complete a study and report to the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Agriculture of the House of Representatives on the effects of such regulations on a representative sample of persons who, as of the date of the enactment of this Act [Jan. 6, 1988], are borrowers or potential borrowers of such loans, and shall demonstrate in such study that the implementation of such final regulations will not result in a portfolio of borrowers that is inconsistent with the purposes of the Consolidated Farm and Rural Development Act."

Availability of Funds for Continuing Assistance to Delinquent Borrowers; Prohibition on Use of Funds

Pub. L. 100 71, title I, July 11, 1987, 101 Stat. 429, provided in part that:

"Hereafter, funds appropriated or available to the Farmers Home Administration under this or any other Act to make or to service farm loans shall be available for continuing assistance to delinquent borrowers on the basis of the policies contained in Farmers Home Administration Announcement Number 1113 1960, dated November 30, 1984.

"Hereafter, none of the funds appropriated or made available by this or any other Act, or otherwise made available to the Secretary of Agriculture or the Farmers Home Administration, may be used to implement section 1944.16(c)(1) of title 7, Code of Federal Regulations, as published in 52 Federal Register 11983 (April 14, 1987) or any other regulation that would have the same effect as such regulation."

Coordinated Financial Statements; Use of Submission Requirement Prohibited

Pub. L. 99 198, title XIII, §1325, Dec. 23, 1985, 99 Stat. 1540, provided that: "The Secretary of Agriculture shall not use or require the submission of the coordinated financial statement referred to in the proposed regulations of the Farmers Home Administration published in the Federal Register of November 8, 1983 (48 F.R. 51312 51317) in connection with an application submitted on or after the date of the enactment of this Act [Dec. 23, 1985] for any loan under any program of the Department of Agriculture carried out by the Farmers Home Administration."

Section Referred to in Other Sections

This section is referred to in section 1983a of this title.

§1990. Transfer of lands to Secretary

The President may at any time in his discretion transfer to the Secretary any right, interest, or title held by the United States in any lands acquired in the program of national defense and no longer needed therefor, which the President shall find suitable for the purposes of this chapter, and the Secretary shall dispose of such lands in the manner and subject to the terms and conditions of the chapter.

(Pub. L. 87 128, title III, §340, Aug. 8, 1961, 75 Stat. 318.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

Delegation of Functions

Authority of President under this section in his discretion to transfer to Secretary of Agriculture any right, interest or title held by United States in any lands acquired in program of national defense and no longer needed for that program, and to determine suitability of lands to be transferred, for purposes referred to in this section, delegated to Administrator of General Services, provided, that exercise by Administrator of authority delegated to him herein shall require concurrence of Secretary of Defense as to absence of further need of lands for national defense program, see section 1(15) of Ex. Ord. No. 11609, July 22, 1971, 36 F.R. 13747, set out as a note under section 301 of Title 3, The President.

Section Referred to in Other Sections

This section is referred to in title 25 section 492.

§1991. Definitions

(a) As used in this chapter:

(1) The term "farmer" includes a person who is engaged in, or who, with assistance afforded under this chapter, intends to engage in, fish farming.

(2) The term "farming" shall be deemed to include fish farming.

(3) The term "owner-operator" shall include in the State of Hawaii the lessee-operator of real property in any case in which the Secretary determines that such real property cannot be acquired in fee simple by such lessee-operator, that adequate security is provided for the loan with respect to such real property for which such lessee-operator applies under this chapter, and that there is a reasonable probability of accomplishing the objectives and repayment of such loan.

(4) The word "insure" as used in this chapter includes guarantee, which means to guarantee the payment of a loan originated, held, and serviced by a private financial agency or other lender approved by the Secretary.

(5) The term "contract of insurance" includes a contract of guarantee.

(6) The terms "United States" and "State" shall include each of the several States, the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and, to the extent the Secretary determines it to be feasible and appropriate, the Trust Territory of the Pacific Islands.

(7) The term "joint operation" means a joint farming operation in which two or more farmers work together sharing equally or unequally land, labor, equipment, expenses, and income.

(8) The term "beginning farmer or rancher" means such term as defined by the Secretary.

(9) The term "direct loan" means a loan made or insured from funds in the account created by section 1929 of this title.

(10) The term "farmer program loan" means a farm ownership loan (FO) under section 1923 of this title, operating loan (OL) under section 1942 of this title, soil and water loan (SW) under section 1924 of this title, recreation loan (RL) under section 1924 of this title,¹ emergency loan (EM) under section 1961 of this title, economic emergency loan (EE) under section 202 of the Emergency Agricultural Credit Adjustment Act (title II of Public Law 95-334), economic opportunity loan (EO) under the Economic Opportunity Act of 1961 (42 U.S.C. 2942), softwood timber loan (ST) under section 1254 of the Food Security Act of 1985, or rural housing loan for farm service buildings (RHF) under section 1472 of title 42.

(11) The term "qualified beginning farmer or rancher" means an applicant—

(A) who is eligible for assistance under this chapter;

(B) who has not operated a farm or ranch, or who has operated a farm or ranch for not more than 10 years;

(C) in the case of a cooperative, corporation, partnership, or joint operation, who has members, stockholders, partners, or joint operators who are all related to one another by blood or marriage;

(D)(i) in the case of an owner and operator of a farm or ranch, who—

(I) in the case of a loan made to an individual, individually or with the immediate family of the applicant—

(aa) materially and substantially participates in the operation of the farm or ranch; and

(bb) provides substantial day-to-day labor and management of the farm or ranch, consistent with the practices in the State or county in which the farm or ranch is located; or

(II)(aa) in the case of a loan made to a cooperative, corporation, partnership, or joint operation, has members, stockholders, partners, or joint operators, materially and substantially participate in the operation of the farm or ranch; and

(bb) in the case of a loan made to a corporation, has stockholders, all of whom are qualified beginning farmers or ranchers; and

(ii) in the case of an applicant seeking to own and operate a farm or ranch, who—

(I) in the case of a loan made to an individual, individually or with the immediate family of the applicant, will—

(aa) materially and substantially participate in the operation of the farm or ranch; and

(bb) provide substantial day-to-day labor and management of the farm or ranch, consistent with the practices in the State or county in which the farm or ranch is located; or

(II)(aa) in the case of a loan made to a cooperative, corporation, partnership, or joint operation, will have members, stockholders, partners, or joint operators, materially and substantially participate in the operation of the farm or ranch; and

(bb) in the case of a loan made to a corporation, has stockholders, all of whom are qualified beginning farmers or ranchers;

(E) who agrees to participate in such loan assessment, borrower training, and financial management programs as the Secretary may require;

(F) who does not own land or who, directly or through interests in family farm corporations, owns land, the aggregate acreage of which does not exceed 15 percent of the median acreage of the farms or ranches, as the case may be, in the county in which the farm or ranch operations of the applicant are located, as reported in the most recent census of agriculture taken under section 142 of title 13; and

(G) who demonstrates that the available resources of the applicant and spouse (if any) of the applicant are not sufficient to enable the applicant to continue farming or ranching on a viable scale.

(b) As used in sections 1927(e), 1981d, 1985(e) and (f), 1988(f), 1999(h), 2000(b) and (c), 2001, and 2005 of this title:

(1) The term "borrower" means any farm borrower who has outstanding obligations to the Secretary under any farmer program loan, without regard to whether the loan has been accelerated, but does not include any farm borrower all of whose loans and accounts have been foreclosed on or liquidated, voluntarily or otherwise.

(2) The term "loan service program" means, with respect to a farmer program borrower, a primary loan service program or a preservation loan service program.

(3) The term "primary loan service program" means—

(A) loan consolidation, rescheduling, or reamortization;

(B) interest rate reduction, including the use of the limited resource program;

(C) loan restructuring, including deferral, set aside, or writing down of the principal or accumulated interest charges, or both, of the loan; or

(D) any combination of actions described in subparagraphs (A), (B), and (C).

(4) The term "preservation loan service program" means—

(A) homestead retention as authorized under section 2000 of this title; and

(B) a leaseback or buyback of farmland authorized under section 1985 of this title.

(Pub. L. 87 128, title III, §343, as added Pub. L. 87 703, title IV, §401(5), Sept. 27, 1962, 76 Stat. 632; amended Pub. L. 89 586, Sept. 19, 1966, 80 Stat. 809; Pub. L. 92 419, title I, §128(a), Aug. 30, 1972, 86 Stat. 666; Pub. L. 95 334, title I, §124, Aug. 4, 1978, 92 Stat. 428; Pub. L. 96 438, §2(2), Oct. 13, 1980, 94 Stat. 1872; Pub. L. 99 198, title XIII, §1301(b), Dec. 23, 1985, 99 Stat. 1519; Pub. L. 100 233, title VI, §602, Jan. 6, 1988, 101 Stat. 1665; Pub. L. 101 624, title XVIII, §1814, title XXIII, §2388(h), Nov. 28, 1990, 104 Stat. 3824, 4053; Pub. L. 102 237, title VII, §702(h)(1), Dec. 13, 1991, 105 Stat. 1880; Pub. L. 102 554, §19, Oct. 28, 1992, 106 Stat. 4158.)

References in Text

For definition of "this chapter", referred to in subsec. (a), see note set out under section 1921 of this title.

Recreation loan (RL) under section 1924 of this title, referred to in subsec. (a)(10), is a reference to former subsec. (a) of section 1924 of this title which was repealed by Pub. L. 102 237, title V, §501(a)(1), Dec. 13, 1991, 105 Stat. 1866.

Section 202 of the Emergency Agricultural Credit Adjustment Act, referred to in subsec. (a)(10), is section 202 of Pub. L. 95 334, title II, Aug. 4, 1978, 92 Stat. 429, as amended, which was set out in a note preceding section 1961 of this title prior to repeal by Pub. L. 101 624, title XVIII, §1851, Nov. 28, 1990, 104 Stat. 3837.

The Economic Opportunity Act of 1961, referred to in subsec. (a)(10), probably means the Economic Opportunity Act of 1964, Pub. L. 88 452, Aug. 20, 1964, 78 Stat. 508, as amended, which was classified generally to chapter 34 (§2701 et seq.) of Title 42, The Public Health and Welfare, prior to repeal, except for titles VIII and X, by Pub. L. 97 35, title VI, §683(a), Aug. 13, 1981, 95 Stat. 519. Titles VIII and X of the Act are classified generally to subchapters VIII (§2991 et seq.) and X (§2996 et seq.) of chapter 34 of Title 42. For complete classification of this Act to the Code, see Tables.

Section 1254 of the Food Security Act of 1985, referred to in subsec. (a)(10), is section 1254 of Pub. L. 99 198, title XII, Dec. 23, 1985, 99 Stat. 1517, which amended Pub. L. 98 258, §608, set out as a note under section 1981 of this title.

Amendments

1992—Subsec. (a). Pub. L. 102 554 substituted "this chapter:" and par. (1) for "this chapter (1) the term 'farmers' shall be deemed to include persons who are engaged in, or who, with assistance afforded under this chapter, intend to engage in, fish farming,", in pars. (2) to (8), realigned margins and substituted "The" for "the" first place appearing in each par. and a period for a comma at end of each par., in par. (9), realigned margin and substituted "The" for "the" first place appearing and a period for ", and" at end, in par. (10), realigned margin and substituted "The" for "the" first place appearing, and added par. (11).

1991—Subsec. (a)(1), (3). Pub. L. 102 237, §702(h)(1)(A), (B), made technical amendment to directory language of Pub. L. 101 624, §2388(h)(1), (2). See 1990 Amendment note below.

Subsec. (a)(5). Pub. L. 102 237, §702(h)(1)(C), repealed Pub. L. 101 624, §2388(h)(3). See 1990 Amendment note below.

1990—Subsec. (a)(1), (3). Pub. L. 101 624, §2388(h)(1), (2), as amended by Pub. L. 102 237, §702(h)(1)(A), (B), struck out "and" after "fish farming," in par. (1), and "and" after "such loan," in par. (3).

Subsec. (a)(5). Pub. L. 101 624, §2388(h)(3), which directed substitution of "'contract of insurance'" for "contract of insurance", was repealed by Pub. L. 102 237, §702(h)(1)(C). See Construction of 1990 Amendment note below.

Subsec. (a)(8) to (10). Pub. L. 101 624, §1814, added pars. (8) to (10).

1988—Pub. L. 100 233 designated existing provisions as subsec. (a) and added subsec. (b).

1985—Pub. L. 99 198 added cl. (7).

1980—Pub. L. 96 438 added cl. (3). For termination of former cl. (3) as added by Pub. L. 89 586, see Effective and Termination Date of 1966 Amendment note below.

1978—Pub. L. 95 334 added cl. (6).

1972—Pub. L. 92 419 added cls. (4) and (5).

1966—Pub. L. 89 586 struck out "and" before "(2)" and inserted cl. (3) defining "owner-operator". See Effective and Termination Date of 1966 Amendment note below.

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(7) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective and Termination Date of 1966 Amendment

Pub. L. 89 586, as amended by Pub. L. 90 426, July 26, 1968, 82 Stat. 445, provided in part that the amendment made by Pub. L. 89 586 is effective only for the period of time commencing with Sept. 19, 1966, and ending on June 30, 1970.

Construction of 1990 Amendment

Section 702(h)(2) of Pub. L. 102 237, as amended by Pub. L. 102 552, title V, §516(k), Oct. 28, 1992, 106 Stat. 4139, provided that: "The Consolidated Farm and Rural Development Act [see Short Title note set out under section 1921 of this title] shall be applied and administered as if the amendment made by section 2388(h)(3) of the Food, Agriculture, Conservation, and Trade Act of 1990 [Pub. L. 101 624, amending this section] had never been enacted."

Termination of Trust Territory of the Pacific Islands

For termination of Trust Territory of the Pacific Islands, see note set out preceding section 1681 of Title 48, Territories and Insular Possessions.

Section Referred to in Other Sections

This section is referred to in section 1985 of this title; title 25 section 492.

¹See References in Text note below.

§1992. Loan limitations

No loan (other than one to a public body or nonprofit association (including Indian tribes on Federal and State reservations or other federally recognized Indian tribal groups) for community facilities or one of a type authorized by section 1926(a)(1) of this title prior to its amendment by the Rural Development Act of 1972) shall be made by the Secretary either for sale as an insured loan or otherwise under sections 1924(b), 1926(a)(1), 1932, 1942(b), or 1942(c) of this title unless the Secretary shall have determined that no other lender is willing to make such loan and assume 10 per centum of any loss sustained thereon. No contract guaranteeing any such loan by such other lender shall require the Secretary to guarantee more than 90 per centum of the principal and interest on such loan.

(Pub. L. 87 128, title III, §344, as added Pub. L. 92 419, title I, §129, Aug. 30, 1972, 86 Stat. 666; amended Pub. L. 94 35, §2, June 16, 1975, 89 Stat. 214.)

References in Text

For statutory changes to section 1926(a)(1) of this title by the Rural Development Act of 1972, referred to in text, see 1972 Amendment note for section 104 of Pub. L. 92 419, set out under section 1926 of this title. For complete classification of Rural Development Act of 1972 to the Code, see Short Title of 1972 Amendment note set out under section 1921 of this title and Tables.

Amendments

1975—Pub. L. 94 35 substituted "guaranteed more than 90 per centum of the principal and interest on such loan" for "participate in more than 90 per centum of any loss sustained thereon".

§1993. Testimony before Congressional committees

On or before February 15 of each calendar year beginning with calendar year 1976, or such other date as may be specified by the appropriate Committee, the Secretary of Agriculture shall testify before the Senate Committee on Agriculture, Nutrition, and Forestry and the House Committee on Agriculture and provide justification in detail of the amount requested in the budget to be appropriated for the next fiscal year for the purposes authorized in this chapter and of the amounts estimated to be utilized during such fiscal year from the Agricultural Credit Insurance Fund and the Rural Development Insurance Fund.

(Pub. L. 87 128, title III, §345, as added Pub. L. 94 68, §9, Aug. 5, 1975, 89 Stat. 382; amended Pub. L. 103 437, §4(a)(7), Nov. 2, 1994, 108 Stat. 4582.)

References in Text

This chapter, referred to in text, was in the original "the Consolidated Farm and Rural Development Act, as amended", which is title III of Pub. L. 87 128, as amended. For complete classification of this Act to the Code, see Short Title note set out under section 1921 of this title and Tables.

Amendments

1994—Pub. L. 103 437 substituted "Committee on Agriculture, Nutrition, and Forestry" for "Committee on Agriculture and Forestry".

§1994. Maximum amounts for loans authorized; long-term cost projections

(a) Maximum aggregate principal amounts for loans authorized

Effective October 1, 1979, the aggregate principal amount of loans under the programs authorized under each subchapter of this chapter during each three-year period thereafter shall not exceed such amounts as may be authorized by law after August 4, 1978. There shall be two amounts so established for each of such programs and for any maximum levels provided in appropriation Acts for the programs authorized under this chapter, one against which direct and insured loans shall be charged and the other against which guaranteed loans shall be charged, with or without authority for the Secretary to transfer amounts between such categories within a given program for more effective administration.

(b) Maximum amounts for loans under Agricultural Credit Insurance Fund for fiscal years 1991 through 1995

(1) For each of the fiscal years 1991 through 1995, real estate and operating loans may be insured, made to be sold and insured, or guaranteed in accordance with subchapters I and II of this chapter, respectively, from the Agricultural Credit Insurance Fund established under section 1929 of this title in amounts equal to the following levels:

(A) For fiscal year 1991, $4,175,000,000, of which not less than $827,000,000 shall be for farm ownership loans under subchapter I of this chapter.

(B) For fiscal year 1992, $4,343,000,000, of which not less than $861,000,000 shall be for farm ownership loans under subchapter I of this chapter.

(C) For fiscal year 1993, $4,516,000,000, of which not less than $895,000,000 shall be for farm ownership loans under subchapter I of this chapter.

(D) For fiscal year 1994, $4,697,000,000, of which not less than $931,000,000 shall be for farm ownership loans under subchapter I of this chapter.

(E) For fiscal year 1995, $4,885,000,000, of which not less than $968,000,000 shall be for farm ownership loans under subchapter I of this chapter.

(2) Subject to paragraph (3), such amounts set forth in paragraph (1) shall be apportioned as follows:

(A) For fiscal year 1991—

(i) $1,019,000,000 for insured loans, of which not less than $83,000,000 shall be for farm ownership loans; and

(ii) $3,156,000,000 for guaranteed loans, of which not less than $744,000,000 shall be for guarantees of farm ownership loans.

(B) For fiscal year 1992—

(i) $1,060,000,000 for insured loans, of which not less than $87,000,000 shall be for farm ownership loans; and

(ii) $3,283,000,000 for guaranteed loans, of which not less than $774,000,000 shall be for guarantees of farm ownership loans.

(C) For fiscal year 1993—

(i) $1,102,000,000 for insured loans, of which not less than $90,000,000 shall be for farm ownership loans; and

(ii) $3,414,000,000 for guaranteed loans, of which not less than $805,000,000 shall be for guarantees of farm ownership loans.

(D) For fiscal year 1994—

(i) $1,147,000,000 for insured loans, of which not less than $94,000,000 shall be for farm ownership loans; and

(ii) $3,550,000,000 for guaranteed loans, of which not less than $837,000,000 shall be for guarantees of farm ownership loans.

(E) For fiscal year 1995—

(i) $1,192,000,000 for insured loans, of which not less than $97,000,000 shall be for farm ownership loans; and

(ii) $3,693,000,000 for guaranteed loans, of which not less than $871,000,000 shall be for guarantees of farm ownership loans.

Not less than 25 percent of the amounts appropriated for guarantees of farm ownership loans for each of the fiscal years 1994, 1995, 1996, and 1997 shall be reserved by the Secretary during the first 6 months of the respective fiscal year for guarantees of farm ownership loans to beginning farmers or ranchers.

(3) Notwithstanding any other provision of law:

(A) The Secretary shall—

(i) reduce the amounts otherwise made available for insured loans by—

(I) $482,000,000, for fiscal year 1991;

(II) $614,000,000, for fiscal year 1992;

(III) $760,000,000, for fiscal year 1993;

(IV) $859,000,000, for fiscal year 1994; and

(V) $907,000,000, for fiscal year 1995; and

(ii) use the funds made available from such reductions in each fiscal year to guarantee loans under section 1999 of this title.

(B) The total amount of insured loans shall bear the same ratio to the amount of insured farm ownership loans as the dollar amount specified in paragraph (2)(A)(i) for insured loans bears to the dollar amount specified therein for insured farm ownership loans.

(C) If more than 70 percent of the number of loans guaranteed under section 1999 of this title in a fiscal year have been guaranteed to persons to whom the Secretary had not previously made an insured loan under this chapter, in lieu of the dollar amounts specified in subparagraph (A) for the immediately succeeding fiscal year, the dollar amounts which shall apply shall each be the product obtained by multiplying—

(i) such dollar amount; by

(ii) the quotient of—

(I) the number of persons provided with guaranteed loans under section 1999 of this title in the fiscal year to whom the Secretary had not previously made an insured or a guaranteed loan under this chapter; divided by

(II) the total number of persons provided with guaranteed loans under section 1999 of this title in the fiscal year.

(D) To the extent that it is not inconsistent with an exercise of authority under section 2003 of this title, in expending funds available for insured farm ownership loans—

(i) during fiscal year 1994, the Secretary shall reserve not less than 55 percent of the funds available for the fiscal year to make insured farm ownership loans to qualified beginning farmers or ranchers;

(ii) during fiscal year 1995, the Secretary shall reserve not more than 65 percent of the funds available for the fiscal year to make insured farm ownership loans to qualified beginning farmers or ranchers; and

(iii) during each of fiscal years 1996 and thereafter, the Secretary may reserve not less than 65 percent and not more than 70 percent of the funds available for the fiscal year to make insured farm ownership loans to qualified beginning farmers or ranchers.

(E) To the extent that it is not inconsistent with an exercise of authority under section 2003 of this title, the Secretary shall reserve not less than 60 percent of the amounts reserved for qualified beginning farmers or ranchers under subparagraph (D) for any fiscal year for down payment loans under section 1935 of this title.

(F) To the extent that it is not inconsistent with an exercise of authority under section 2003 of this title, to the maximum extent practicable, any funds reserved for down payment loans under section 1935 of this title for a fiscal year by reason of subparagraph (E) that are not obligated by the end of the second quarter of the fiscal year shall be available during the third quarter of the fiscal year for any type of insured farm ownership loans to beginning farmers and ranchers.

(G) Not less than 40 percent of the amounts available for the interest rate reduction program under section 1999 of this title shall be reserved for the first 6 months of each fiscal year for assistance to beginning farmers or ranchers.

(4) Notwithstanding subsection (a) of this section, the Secretary shall, as soon as practicable after November 5, 1990, make, insure, or guarantee loans at the levels authorized by this subsection for each of the fiscal years 1991 through 1995.

(5)(A) In expending funds available for insured operating loans under subchapter II of this chapter, including loans made under section 1948 of this title—

(i) during the first 6 months of fiscal year 1994, the Secretary shall reserve not less than 30 percent of the funds available for the fiscal year to make insured operating loans to qualified beginning farmers or ranchers;

(ii) during the first 6 months of each of fiscal years 1995 and 1996, the Secretary shall reserve not less than 40 percent of the funds available for the fiscal year to make insured operating loans to qualified beginning farmers or ranchers; and

(iii) during the first 6 months of each of fiscal years 1997 and thereafter, the Secretary may reserve not more than 50 percent of the funds available for the fiscal year to make insured operating loans to qualified beginning farmers or ranchers.

(B) In each fiscal year described in subparagraph (A), with regard to the funds not reserved under subparagraph (A), a qualified beginning farmer or rancher may apply for insured operating loans, but shall not receive any preference as a result of status as a qualified beginning farmer or rancher.

(6) Notwithstanding any other provision of this chapter, at the end of the third quarter of each fiscal year, the Secretary shall transfer, and use to carry out section 1935 of this title, 75 percent of the amount that would otherwise be available for guaranteed operating loans.

(c) Development of long-term cost projections for loan program authorizations

The Secretary shall develop long-term cost projections for loan program authorizations required under subsection (a) of this section. Each such projection shall include analyses of (1) the long-term costs of the lending levels that the Secretary requests to be authorized under subsection (a) of this section and (2) the long-term costs for increases in lending levels beyond those requested to be authorized, based on increments of $10,000,000 or such other levels as the Secretary deems appropriate. Long-term cost projections for the three-year period beginning with fiscal year 1983 and each three-year period thereafter shall be submitted to the House Committee on Agriculture, the House Committee on Appropriations, the Senate Committee on Agriculture, Nutrition, and Forestry, and the Senate Committee on Appropriations at the time the requests for authorizations for those periods are submitted to Congress. Not later than fifteen days after October 13, 1980, the Secretary shall submit to such committees long-term cost projections covering authorized lending levels for the loan programs for fiscal years 1981 and 1982.

(d) Low-income, limited-resource borrowers

(1) Notwithstanding any other provision of law, not less than 25 per centum of the loans for farm ownership purposes under subchapter I of this chapter, and not less than 25 per centum of the loans for farm operating purposes under subchapter II of this chapter, authorized to be insured, or made to be sold and insured, from the Agricultural Credit Insurance Fund during each fiscal year shall be for low-income, limited-resource borrowers.

(2) The Secretary shall provide notification to farm borrowers under this chapter, as soon as practicable after April 10, 1984, and in the normal course of loan making and loan servicing operations, of the provisions of this chapter relating to low-income, limited-resource borrowers and the procedures by which persons may apply for loans under the low-income, limited-resource borrower program.

(Pub. L. 87 128, title III, §346, as added Pub. L. 95 334, title I, §125, Aug. 4, 1978, 92 Stat. 428; amended Pub. L. 96 438, §4, Oct. 13, 1980, 94 Stat. 1876; Pub. L. 97 35, title I, §164, Aug. 13, 1981, 95 Stat. 379; Pub. L. 98 258, title VI, §607, Apr. 10, 1984, 98 Stat. 140; Pub. L. 99 198, title XIII, §1317, Dec. 23, 1985, 99 Stat. 1529; Pub. L. 101 508, title I, §1202(a), Nov. 5, 1990, 104 Stat. 1388 9; Pub. L. 101 624, title XXIII, §2388(i), Nov. 28, 1990, 104 Stat. 4053; Pub. L. 102 237, title VII, §§701(h)(1)(F), 702(i), Dec. 13, 1991, 105 Stat. 1880, 1881; Pub. L. 102 554, §20, Oct. 28, 1992, 106 Stat. 4159.)

References in Text

For definition of "this chapter", referred to in subsecs. (a), (b)(3)(C), (6), and (d)(2), see note set out under section 1921 of this title.

Codification

November 5, 1990, referred to in subsec. (b)(4), was in the original "the date of enactment of this subsection", which was translated as meaning the date of enactment of Pub. L. 101 508, which amended subsec. (b) generally, to reflect the probable intent of Congress.

Amendments

1992—Subsec. (b)(2). Pub. L. 102 554, §20(b), inserted sentence at end.

Subsec. (b)(3)(D) to (G). Pub. L. 102 554, §20(c), (d), added subpars. (D) to (G).

Subsec. (b)(5), (6). Pub. L. 102 554, §20(a), (e), added pars. (5) and (6).

1991—Subsec. (b). Pub. L. 102 237, §702(i), repealed Pub. L. 101 624, §2388(i). See 1990 Amendment note below.

Subsec. (b)(3)(C). Pub. L. 102 237, §701(h)(1)(F), substituted "this chapter" for "this Act" in two places.

1990—Subsec. (b). Pub. L. 101 624, §2388(i), which amended subsec. (b), in par. (1)(B), by striking "subparagraph (C)" and inserting "paragraph (3)"; in par. (1)(C), by striking "subparagraph (A)" and inserting "paragraph (1)"; by redesignating pars. (1)(A), (B), (C), (D)(i), and (E) as (1), (2), (3), (4), and (5), respectively; in par. (2), by redesignating cls. (i), (ii), and (iii) as subpars. (A), (B), and (C), respectively; in subpars. (A) to (C) of par. (2), by redesignating subcls. (I) and (II) as cls. (i) and (ii), respectively; and in par. (5), by redesignating cls. (i), (ii), and (iii) as subpars. (A), (B), and (C), respectively, was repealed by Pub. L. 102 237, §702(i). See Construction of 1990 Amendment note below.

Pub. L. 101 508, §1202(a), amended subsec. (b) generally, substituting present provisions for provisions relating to maximum amounts for loans under the Agricultural Credit Insurance Fund and the Rural Development Insurance Fund for fiscal years 1986 through 1988.

1985—Subsec. (b). Pub. L. 99 198, §1317(a), amended subsec. (b) generally, substituting provisions setting maximum amounts for loans under the Agricultural Credit Insurance Fund and the Rural Development Insurance Fund for each of fiscal years ending September 30, 1986, through September 30, 1988, for provisions setting such amounts for each of fiscal years 1980, 1981, and 1982.

Subsecs. (d), (e). Pub. L. 99 198, §1317, struck out subsec. (d) which authorized special amounts for fiscal year 1982, redesignated subsec. (e) as (d), and in par. (1) substituted "25 per centum" for "20 per centum" wherever appearing and "each fiscal year" for "fiscal year 1984".

1984—Subsec. (e). Pub. L. 98 258 added subsec. (e).

1981—Subsec. (d). Pub. L. 97 35 added subsec. (d).

1980—Pub. L. 96 438 designated existing provisions as subsec. (a) and added subsecs. (b) and (c).

Effective Date of 1991 Amendment

Amendment by section 701(h)(1)(F) of Pub. L. 102 237 to any provision specified therein effective as if included in act that added provision so specified at the time such act became law, and amendment by section 702(i) of Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(7), (c) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective Date of 1990 Amendment

Amendment by Pub. L. 101 508 effective Nov. 29, 1990, see section 1301 of Pub. L. 101 508, set out as a note under section 511r of this title.

Construction of 1990 Amendment

Section 702(i) of Pub. L. 102 237 provided that: "Subsection (i) of section 2388 of the Food, Agriculture, Conservation, and Trade Act of 1990 (104 Stat. 4053) [Pub. L. 101 624, amending this section] is hereby repealed and the Consolidated Farm and Rural Development Act [see Short Title note set out under section 1921 of this title] shall be applied and administered as if the amendments made by such subsection had never been enacted."

§1995. Participation and financial and technical assistance by other Federal departments, etc., to program participants

Notwithstanding any other provision of law, other departments, agencies, and executive establishments of the Federal Government may participate and provide financial and technical assistance jointly with the Secretary to any applicant to whom assistance is being provided under any program administered by the Farmers Home Administration. Participation by any other department, agency, or executive establishment shall be only to the extent authorized for, and subject to the authorities of, such other department, agency, or executive establishment, except that any limitation on joint participation is superseded by this section.

(Pub. L. 87 128, title III, §347, as added Pub. L. 95 334, title I, §125, Aug. 4, 1978, 92 Stat. 429.)

§1996. Loans to resident aliens

Notwithstanding the provisions of this chapter limiting the making and insuring of loans to citizens of the United States, the Secretary may make and insure loans under this chapter to aliens lawfully admitted to the United States for permanent residence under the Immigration and Nationality Act [8 U.S.C. 1101 et seq.]: Provided, That no loans may be made or insured under this chapter to such aliens until the Secretary issues regulations establishing the terms and conditions under which such aliens may receive loans: Provided further, That the Secretary shall submit the regulations to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate at least thirty days prior to the date the regulations are published in the Federal Register.

(Pub. L. 87 128, title III, §348, as added Pub. L. 96 438, §2(3), Oct. 13, 1980, 94 Stat. 1872.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

The Immigration and Nationality Act, referred to in text, is act June 27, 1952, ch. 477, 66 Stat. 163, as amended, which is classified principally to chapter 12 (§1101 et seq.) of Title 8, Aliens and Nationality. For complete classification of this Act to the Code, see Short Title note set out under section 1101 of Title 8 and Tables.

§1997. Conservation easements

(a) Definitions

For purposes of this section:

(1) The term "governmental entity" means any agency of the United States, a State, or a unit of local government of a State.

(2) The terms "highly erodible land" and "wetland" have the meanings, respectively, that such terms are given in section 3801 of title 16.

(3) The term "wildlife" means fish or wildlife as defined in section 3371(a) of title 16.

(4) The term "recreational purposes" includes hunting.

(b) Duration; purposes

Subject to subsection (c) of this section, the Secretary may acquire and retain an easement in real property, for a term of not less than 50 years, for conservation, recreational, and wildlife purposes.

(c) Property requirements

Such easement may be acquired or retained for real property if—

(1) such property is wetland, upland, or highly erodible land;

(2) such property is determined by the Secretary to be suitable for the purposes involved;

(3)(A)(i) such property secures any loan made under any law administered by the Farmers Home Administration and held by the Secretary; and

(ii) such easement better enables a qualified borrower to repay the loan in a timely manner, as determined by the Secretary; or

(B) such property is administered under this chapter by the Secretary; and

(4) such property was (except in the case of wetland and other wildlife habitat) row cropped each year of the 3-year period ending on December 23, 1985.

(d) Terms and conditions

The terms and conditions specified in each such easement shall—

(1) specify the purposes for which such real property may be used;

(2) identify the conservation measures to be taken, and the recreational and wildlife uses to be allowed, with respect to such real property; and

(3) require such owner to permit the Secretary, and any person or governmental entity designated by the Secretary, to have access to such real property for the purpose of monitoring compliance with such easement.

(e) Purchase; limitation upon cancellation or prepayment

(1) Subject to paragraph (2), the Secretary may purchase any such easement from the borrower—

(A) in the case of a borrower to whom the Secretary has made one or more outstanding loans under laws administered by the Farmers Home Administration, by canceling that part of the aggregate amount of such outstanding loans that bears the same ratio to such aggregate amount as the number of acres of the real property of the borrower that are subject to the easement bears to the aggregate number of acres securing such loans; or

(B) in any other case, by treating as prepaid that part of the principal amount of a new loan to the borrower issued and held by the Secretary under a law administered by the Farmers Home Administration that bears the same ratio to such principal amount as the number of acres of the real property of the borrower that are subject to the easement bears to the aggregate number of acres securing the new loan.

(2) The amount so canceled or treated as prepaid pursuant to paragraph (1) shall not exceed—

(A) in the case of a delinquent loan, the value of the land on which the easement is acquired or the difference between the amount of the outstanding loan secured by the land and the value of the land, whichever is greater; or

(B) in the case of a nondelinquent loan, 33 percent of the amount of the loan secured by the land.

(f) Consultations with Director of Fish and Wildlife Service

If the Secretary elects to use the authority provided by this section, the Secretary shall consult with the Director of the Fish and Wildlife Service for purposes of—

(1) selecting real property in which the Secretary may acquire easements under this section;

(2) formulating the terms and conditions of such easements; and

(3) enforcing such easements.

(g) Enforcement

The Secretary, and any person or governmental entity designated by the Secretary, may enforce an easement acquired by the Secretary under this section.

(Pub. L. 87 128, title III, §349, as added Pub. L. 99 198, title XIII, §1318(a), Dec. 23, 1985, 99 Stat. 1530; amended Pub. L. 100 233, title VI, §612, Jan. 6, 1988, 101 Stat. 1674; Pub. L. 101 624, title XVIII, §1815, title XXIII, §2388(j), Nov. 28, 1990, 104 Stat. 3825, 4053.)

References in Text

For definition of "this chapter", referred to in subsec. (c)(3)(B), see note set out under section 1921 of this title.

Amendments

1990—Subsec. (a)(4), (5). Pub. L. 101 624, §2388(j), redesignated par. (5) as (4).

Subsec. (c). Pub. L. 101 624, §1815(1)(A) (D), (F), (G), in introductory provision, struck out "such property" after "real property if", and inserted "such property" after par. (1), (2), (3)(A)(i), (3)(B), and (4) designations.

Subsec. (c)(3)(A)(ii). Pub. L. 101 624, §1815(1)(E), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: "the borrower of such loan is unable, as determined by the Secretary, to repay such loan in a timely manner; or".

Subsec. (e). Pub. L. 101 624, §1815(2), amended subsec. (e) generally. Prior to amendment, subsec. (e) read as follows: "Any such easement acquired by the Secretary shall be purchased from the borrower involved by canceling that part of the aggregate amount of such outstanding loans of the borrower held by the Secretary under laws administered by the Farmers Home Administration that bears the same ratio to the aggregate amount of the outstanding loans of such borrower held by the Secretary under all such laws as the number of acres of the real property of such borrower that are subject to such easement bears to the aggregate number of acres securing such loans. In no case shall the amount so cancelled exceed the value of the land on which the easement is acquired or the difference between the amount of the outstanding loan secured by the land and the current value of the land, whichever is greater."

Subsec. (h). Pub. L. 101 624, §1815(9), struck out subsec. (h) which read as follows: "This section shall not apply with respect to the cancellation of any part of any loan that was made after December 25, 1985."

1988—Subsec. (c)(4). Pub. L. 100 233, §612(1), inserted "and other wildlife habitat" after "wetland".

Subsec. (e). Pub. L. 100 233, §612(2), inserted "or the difference between the amount of the outstanding loan secured by the land and the current value of the land, whichever is greater" at end of second sentence.

Section Referred to in Other Sections

This section is referred to in section 1985 of this title.

§1998. Guaranteed farm loan programs

Notwithstanding any other provision of this chapter, the Secretary shall ensure that farm loan guarantee programs carried out under this chapter are designed so as to be responsive to borrower and lender needs and to include provisions under reasonable terms and conditions for advances, before completion of the liquidation process, of guarantee proceeds on loans in default.

(Pub. L. 87 128, title III, §350, as added Pub. L. 99 198, title XIII, §1319, Dec. 23, 1985, 99 Stat. 1531.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

§1999. Interest rate reduction program

(a) Establishment and execution

The Secretary shall establish and carry out in accordance with this section an interest rate reduction program for loans guaranteed under this chapter.

(b) Contracts with lenders

Under such program, the Secretary shall enter into a contract with, and make payments to, a legally organized institution to reduce during the term of such contract the interest rate paid by a borrower on a guaranteed loan made by such institution if—

(1) the borrower—

(A) is unable to obtain sufficient credit elsewhere to finance the actual needs of the borrower at reasonable rates and terms, taking into consideration private and cooperative rates and terms for a loan for a similar purpose and period of time in the community in or near which the borrower resides;

(B) is otherwise unable to make payments on such loan in a timely manner; and

(C) has a total estimated cash income during the 24-month period beginning on the date such contract is entered into (including all farm and nonfarm income) that will equal or exceed the total estimated cash expenses to be incurred by the borrower during such period (including all farm and nonfarm expenses); and

(2) the lender reduces during the term of such contract the annual rate of interest payable on such loan by a minimum percentage specified in such contract.

(c) Payments to lenders

In return for a contract entered into by a lender under subsection (b) of this section for the reduction of the interest rate paid on a loan, the Secretary shall make payments to the lender in an amount equal to not more than 100 percent of the cost of reducing the annual rate of interest payable on such loan, except that such payments may not exceed the cost of reducing such rate by more than 4 percent.

(d) Duration of contracts

The term of a contract entered into under this section to reduce the interest rate on a guaranteed loan may not exceed the outstanding term of such loan.

(e) Agricultural Credit Insurance Fund use limitation

(1) Notwithstanding any other provision of this chapter, the Agricultural Credit Insurance Fund established under section 1929 of this title may be used by the Secretary to carry out this section.

(2) The total amount of funds used by the Secretary to carry out this section may not exceed $490,000,000.

(f) List of approved lender participants in guaranteed loan program

Each Farmers Home Administration county supervisor shall make available to farmers, on request, a list of approved lenders in the area that participate in the Farmers Home Administration guaranteed farm loan programs and other lenders in the area that express a desire to participate in such programs and that request inclusion in the list.

(g) Foreclosure action provision in farm loan guarantees

Notwithstanding any other provision of law, each contract of guarantee on a farm loan entered into under this chapter after January 6, 1988, shall contain a condition that the lender of the guaranteed loan may not initiate foreclosure action on the loan until 60 days after a determination is made with respect to the eligibility of the borrower thereof to participate in the program under this section.

(h) Demonstration project for purchase of System land

(1) During the 4-year period beginning on January 6, 1988, the Secretary shall establish and carry out a demonstration project in accordance with this subsection under which the Secretary may issue certificates of eligibility to Farmers Home Administration eligible borrowers to reduce the interest rate paid by the borrowers on loans obtained from legally organized lending institutions and Farm Credit System institutions to purchase acquired properties owned by institutions of the Farm Credit System certified to issue preferred stock under section 2278b 7 of title 12.

(2) To be eligible to participate in the project, a borrower must—

(A) meet the requirements of subsection (b)(1) of this section;

(B) provide a down payment to purchase the land, using personal funds of the borrower, equal to at least 15 percent of the purchase price of the land; and

(C) meet all conservation requirements for the land that are imposed on borrowers of guaranteed farm ownership loans under this chapter.

(3) A certificate of eligibility issued under this subsection may be used to reduce the interest rate payable by an eligible borrower on a guaranteed loan by not more than 4 percent.

(4) A certificate of eligibility issued under this subsection shall reduce the interest rate on a guaranteed loan for a term equal to the outstanding term of such loan, or 5 years, whichever is less.

(5) Notwithstanding any other provision of law, if the lender of a guaranteed loan assisted under this subsection reduces the interest rate payable on the loan by at least 1 full percentage point, the Secretary may guarantee the repayment of 95 percent of the principal and interest due on the loan.

(6) In carrying out this subsection, the Secretary may—

(A) certify the eligibility of borrowers to participate in the demonstration project;

(B) process applications for participation in the project;

(C) provide certificate of eligibility to eligible borrowers on a timely basis consistent with the availability of acquired property owned by institutions of the Farm Credit System certified to issue preferred stock under section 2278b 7 of this title; and

(D) set aside the largest practicable portion of funds made available to guarantee farm ownership loans under this chapter (including unobligated funds) to carry out this subsection.

(7) To carry out this subsection, the Secretary may transfer such amounts as may be necessary from farm operating guaranteed loans to farm ownership guaranteed loans.

(8) In carrying out this subsection, Farm Credit System institutions shall—

(A) sell land to eligible borrowers under this subsection at fair market value;

(B) to the extent practicable, set aside each fiscal year land acquired or owned by such institutions of the Farm Credit System in an aggregate amount not to exceed $250,000,000 at fair market value, for purchase by eligible borrowers in accordance with this subsection; and

(C) if necessary, subdivide tracts of land made available under this subsection into parcels that permit eligible borrowers to purchase the parcels consistent with limits placed on the size of loans made, insured, or guaranteed under this chapter.

(9) Not later than 60 days after January 6, 1988, the Secretary and the Farm Credit Administration shall develop a joint memorandum of understanding governing the implementation of this subsection.

(Pub. L. 87 128, title III, §351, as added Pub. L. 99 198, title XIII, §1320, Dec. 23, 1985, 99 Stat. 1532; amended Pub. L. 100 233, title VI, §613(b), (c), Jan. 6, 1988, 101 Stat. 1674; Pub. L. 101 508, title I, §1202(b)(1), (c), Nov. 5, 1990, 104 Stat. 1388 10, 1388 11.)

Termination of Section

For termination of section by section 1320 of Pub. L. 99 198, see Effective and Termination Dates note below.

References in Text

For definition of "this chapter", referred to in subsecs. (a), (e)(1), (g), and (h)(2)(C), (6)(D), (8)(C), see note set out under section 1921 of this title.

Amendments

1990—Subsec. (c). Pub. L. 101 508, §1202(b)(1)(A), substituted "100 percent" for "50 percent" and "4 percent" for "2 percent".

Subsec. (d). Pub. L. 101 508, §1202(b)(1)(B), struck out ", or 3 years, whichever is less" after "term of such loan".

Subsec. (h)(1). Pub. L. 101 508, §1202(c), substituted "4-year" for "3-year".

1988—Subsec. (b)(1)(C). Pub. L. 100 233, §613(b)(1), substituted "24-month" for "12-month".

Subsecs. (f), (g). Pub. L. 100 233, §613(b)(2), added subsecs. (f) and (g).

Subsec. (h). Pub. L. 100 233, §613(c), added subsec. (h).

Effective Date of 1990 Amendment

Amendment by Pub. L. 101 508 effective Nov. 29, 1990, see section 1301 of Pub. L. 101 508, set out as a note under section 511r of this title.

Effective and Termination Dates

Section 1320 of Pub. L. 99 198, as amended by Pub. L. 100 233, title VI, §613(a), Jan. 6, 1988, 101 Stat. 1674; Pub. L. 101 508, title I, §1202(b)(2), Nov. 5, 1990, 104 Stat. 1388 11, provided in part that this section is effective only for the period beginning Dec. 23, 1985, and ending Sept. 30, 1995.

Section Referred to in Other Sections

This section is referred to in sections 1948, 1983a, 1991, 1994 of this title.

§2000. Homestead protection

(a) Definitions

As used in this section:

(1) The term "Administrator" means the Administrator of the Small Business Administration.

(2) The term "borrower-owner" means—

(A) a borrower of a loan made or insured by the Secretary or the Administrator who meets the eligibility requirements of subsection (c)(1) of this section; or

(B) in any case in which an owner of homestead property pledged the property to secure the loan and the owner is different than the borrower, the owner.

(3) The term "farm program loan" means any loan made by the Administrator under the Small Business Act (15 U.S.C. 631 et seq.) for any of the purposes authorized for loans under subchapters¹ I or II of this chapter.

(4) The term "homestead property" means the principal residence and adjoining property possessed and occupied by a borrower-owner specified in paragraph (2) of this subsection, including a reasonable number of farm outbuildings located on the adjoining land that are useful to the occupants of the homestead, and no more than 10 acres of adjoining land that is used to maintain the family of the individual.

(5) The term "Secretary" means the Secretary of Agriculture.

(b) Occupancy of homestead upon foreclosure, bankruptcy, or liquidation; appraisal; period of occupancy

(1) The Secretary or the Administrator shall, on application by a borrower-owner who meets the eligibility requirements of subsection (c)(1) of this section, permit the borrower-owner to retain possession and occupancy of homestead property under the terms set forth, and until the action described in this section has been completed, if—

(A) the Secretary forecloses, holds in inventory on January 6, 1988, or takes into inventory, property securing a loan made or insured under this chapter;

(B) the Administrator forecloses, holds in inventory on January 6, 1988, or takes into inventory, property securing a farm program loan made under the Small Business Act (15 U.S.C. 631 et seq.); or

(C) the borrower-owner of a loan made or insured by the Secretary or the Administrator files a petition in bankruptcy that results in the conveyance of the homestead property to the Secretary or the Administrator, or agrees to voluntarily liquidate or convey such property in whole or in part.

(2) The value of the homestead property shall be determined insofar as possible by an independent appraisal made within six months from the date of the borrower-owner's application to retain possession and occupancy of the homestead property.

(3) The period of occupancy of homestead property under this subsection may not exceed five years, but in no case shall the Secretary or the Administrator grant a period of occupancy less than three years, subject to compliance with the requirements of subsection (c) of this section.

(c) Terms and conditions

(1) To be eligible to occupy homestead property, a borrower-owner of a loan made or insured by the Secretary or the Administrator shall—

(A) apply for such occupancy not later than 90 days after the property is acquired by the Secretary or Administrator, or for property in inventory on January 6, 1988, the borrower-owner shall apply for occupancy not later than 90 days after January 6, 1988;

(B) have received from farming or ranching operations gross farm income reasonably commensurate with—

(i) the size and location of the farming unit of the borrower-owner; and

(ii) local agricultural conditions (including natural and economic conditions), in at least 2 calendar years during the 6-year period preceding the calendar year in which the application is made;

(C) have received from farming or ranching operations at least 60 percent of the gross annual income of the borrower-owner and any spouse of the borrower-owner in at least 2 calendar years during any 6-year period described in subparagraph (B);

(D) have continuously occupied the homestead property during the 6-year period described in subparagraph (B), except that such requirement may be waived if a borrower-owner has, due to circumstances beyond the control of the borrower-owner, had to leave the homestead property for a period of time not to exceed 12 months during the 6-year period;

(E) during the period of the occupancy of the homestead property, pay a reasonable sum as rent for such property to the Secretary or the Administrator in an amount substantially equivalent to rents charged for similar residential properties in the area in which the homestead property is located;

(F) during the period of the occupancy of the homestead property, maintain the property in good condition; and

(G) meet such other reasonable and necessary terms and conditions as the Secretary may require consistent with this section.

(2) For purposes of subparagraphs (B) and (C) of paragraph (1), the term "farming or ranching operations" shall include rent paid by lessees of agricultural land during any period in which the borrower-owner, due to circumstances beyond the control of the borrower-owner, is unable to actively farm such land.

(3) For the purposes of paragraph (1)(E), the failure of the borrower-owner to make timely rental payments shall constitute cause for the termination of all rights of such borrower-owner to possession and occupancy of the homestead property under this section. In effecting any such termination, the Secretary shall afford the borrower-owner or lessee the notice and hearing procedural rights described in section 1983b² of this title and shall comply with all applicable State and local laws governing eviction from residential property.

(4)(A) The period of occupancy allowed the prior owner of homestead property under this section shall be the period requested in writing by the prior owner, except that such period shall not exceed 5 years.

(B) At any time during the period of occupancy, the borrower-owner shall have a right of first refusal to reacquire the homestead property on such terms and conditions as the Secretary shall determine, except that the Secretary may not demand a payment for the homestead property that is in excess of the current market value of the homestead property as established by an independent appraisal. The independent appraisal shall be conducted by an appraiser selected by the borrower-owner from a list of three appraisers approved by the county supervisor.

(5) No rights of a borrower-owner under this section, and no agreement entered into between the borrower-owner and the Secretary for occupancy of the homestead property, shall be transferable or assignable by the borrower-owner or by operation of any law, except that in the case of death or incompetency of such borrower-owner, such rights and agreements shall be transferable to the spouse of the borrower-owner if the spouse agrees to comply with the terms and conditions thereof.

(6) Within 30 days of the acquisition of the homestead property securing a loan made or insured under this chapter, the Secretary shall notify the borrower-owner from whom the property was acquired of the availability of homestead protection rights under this section. For property in inventory on January 6, 1988, the Secretary shall make a good faith effort to notify the borrower-owner of the availability of homestead protection rights under this section within 60 days after January 6, 1988.

(d) First right of refusal of reacquisition

At the end of the period of occupancy described in subsection (c) of this section, the Secretary or the Administrator shall grant to the borrower-owner a first right of refusal to reacquire the homestead property on such terms and conditions (which may include payment of principal in installments) as the Secretary or the Administrator shall determine. Such terms and conditions shall not be less favorable than those intended to be offered to any other buyer.

(e) Value as measure of reacquisition payment of principal

At the time any reacquisition agreement is entered into, the Secretary or the Administrator may not demand a total payment of principal that is in excess of the value of the homestead property as established under subsection (b)(2) of this section.

(f) Contract authority

The Secretary may enter into contracts authorized by this section before the Secretary acquires title to the homestead property.

(g) Conflict between Federal and State law

In the event of any conflict between this section and any provision of the law of any State relating to the right of a borrower-owner to designate for separate sale or redeem part or all of the real property securing a loan foreclosed on by the lender thereof, such provision of State law shall prevail.

(Pub. L. 87 128, title III, §352, as added Pub. L. 99 198, title XIII, §1321, Dec. 23, 1985, 99 Stat. 1532; amended Pub. L. 100 233, title VI, §614, Jan. 6, 1988, 101 Stat. 1675; Pub. L. 102 237, title V, §501(g), title VII, §701(h)(2), Dec. 13, 1991, 105 Stat. 1867, 1880; Pub. L. 102 552, title V, §516(i), (j)(1), Oct. 28, 1992, 106 Stat. 4138.)

References in Text

The Small Business Act, referred to in subsecs. (a)(3) and (b)(1)(B), is Pub. L. 85 536, July 18, 1958, 72 Stat. 384, as amended, which is classified generally to chapter 14A (§631 et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see Short Title note set out under section 631 of Title 15 and Tables.

For definition of "this chapter", referred to in subsecs. (b)(1)(A) and (c)(6), see note set out under section 1921 of this title.

Section 1983b of this title, referred to in subsec. (c)(3), was repealed by Pub. L. 103 354, title II, §281(c), Oct. 13, 1994, 108 Stat. 3233.

Amendments

1992—Subsec. (a)(4), (5). Pub. L. 102 552, §516(i), redesignated par. (4), defining "Secretary", as (5).

Subsec. (b)(2). Pub. L. 102 552, §516(j)(1), substituted "borrower-owner's" for "borrower's".

1991—Subsec. (a)(2) to (4). Pub. L. 102 237, §501(g), added par. (2), redesignated former pars. (2) and (3) as (3) and (4), respectively, and substituted "borrower-owner" for "borrower" in redesignated par. (4).

Subsec. (b)(1). Pub. L. 102 237, §501(g)(2), substituted "borrower-owner" for "borrower" wherever appearing.

Subsec. (b)(3). Pub. L. 102 237, §701(h)(2), struck out "be" after "shall".

Subsecs. (c), (d), (g). Pub. L. 102 237, §501(g)(2), substituted "borrower-owner" for "borrower" wherever appearing.

1988—Subsec. (a)(3). Pub. L. 100 233, §614(1), inserted ", including a reasonable number of farm outbuildings located on the adjoining land that are useful to the occupants of the homestead, and no more than 10 acres of adjoining land that is used to maintain the family of the individual".

Subsec. (b)(1). Pub. L. 100 233, §614(2), added par. (1) and struck out former par. (1) which read as follows: "If the Secretary forecloses a loan made or insured under this chapter, the Administrator forecloses a farm program loan made under the Small Business Act (15 U.S.C. 631 et seq.), or a borrower of a loan made or insured by either agency declares bankruptcy or goes into voluntary liquidation to avoid foreclosure or bankruptcy, the Secretary or Administrator may upon application by the borrower, permit the borrower to retain possession and occupancy of any principal residence of the borrower, and a reasonable amount of adjoining land for the purpose of family maintenance."

Subsec. (c). Pub. L. 100 233, §614(3), completely revised and restated subsec. (c), substituting pars. (1) to (6) for former pars. (1) to (8).

Subsec. (d). Pub. L. 100 233, §614(3), inserted at end "Such terms and conditions shall not be less favorable than those intended to be offered to any other buyer."

Subsecs. (f), (g). Pub. L. 100 233, §614(4), added subsecs. (f) and (g).

Effective Date of 1992 Amendment

Section 516(j)(2) of Pub. L. 102 552 provided that: "The amendment made by paragraph (1) of this subsection [amending this section] shall take effect at the same time as the amendments made by section 501(f) of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Public Law 102 237; 105 Stat. 1867) [amending section 1985 of this title] took effect."

Effective Date of 1991 Amendment

Amendment by section 701(h)(2) of Pub. L. 102 237 to any provision specified therein effective as if included in act that added provision so specified at the time such act became law, see section 1101(c) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Section Referred to in Other Sections

This section is referred to in section 1991 of this title.

¹So in original. Probably should be "subchapter".

²See References in Text note below.

§2001. Debt restructuring and loan servicing

(a) In general

The Secretary shall modify delinquent farmer program loans made or insured under this chapter, or purchased from the lender or the Federal Deposit Insurance Corporation under section 1929b of this title, to the maximum extent possible—

(1) to avoid losses to the Secretary on such loans, with priority consideration being placed on writing-down the loan principal and interest (subject to subsections (d) and (e) of this section), and debt set-aside (subject to subsection (e) of this section), whenever these procedures would facilitate keeping the borrower on the farm or ranch, or otherwise through the use of primary loan service programs as provided in this section; and

(2) to ensure that borrowers are able to continue farming or ranching operations.

(b) Eligibility

To be eligible to obtain assistance under subsection (a) of this section—

(1) the delinquency must be due to circumstances beyond the control of the borrower, as defined in regulations issued by the Secretary, except that the regulations shall require that, if the value of the assets calculated under subsection (c)(2)(A)(ii) of this section that may be realized through liquidation or other methods would produce enough income to make the delinquent loan current, the borrower shall not be eligible for assistance under subsection (a) of this section;

(2) the borrower must have acted in good faith with the Secretary in connection with the loan as defined in regulations issued by the Secretary;

(3) the borrower must present a preliminary plan to the Secretary that contains reasonable assumptions that demonstrate that the borrower will be able to—

(A) meet the necessary family living and farm operating expenses; and

(B) service all debts, including those of the loans restructured; and

(4) the loan, if restructured, must result in a net recovery to the Federal Government, during the term of the loan as restructured, that would be more than or equal to the net recovery to the Federal Government from an involuntary liquidation or foreclosure on the property securing the loan.

(c) Restructuring determinations

(1) Determination of net recovery

In determining the net recovery from the involuntary liquidation of a loan under this section, the Secretary shall calculate—

(A) the recovery value of the collateral securing the loan, in accordance with paragraph (2); and

(B) the value of the restructured loan, in accordance with paragraph (3).

(2) Recovery value

For the purpose of paragraph (1), the recovery value of the collateral securing the loan shall be based on—

(A)(i) the amount of the current appraised value of the interests of the borrower in the property securing the loan; plus

(ii) the value of the interests of the borrower in all other assets that are—

(I) not essential for necessary family living expenses;

(II) not essential to the operation of the farm; and

(III) not exempt from judgment creditors or in a bankruptcy action under Federal or State law; less

(B) the estimated administrative, legal, and other expenses associated with the liquidation and disposition of the loan and collateral, including—

(i) the payment of prior liens;

(ii) taxes and assessments, depreciation, management costs, the yearly percentage decrease or increase in the value of the property, and lost interest income, each calculated for the average holding period for the type of property involved;

(iii) resale expenses, such as repairs, commissions, and advertising; and

(iv) other administrative and attorney's costs; plus

(C) the value, as determined by the Secretary, of any property not included in subparagraph (A)(i) if the property is specified in any security agreement with respect to such loan and the Secretary determines that the value of such property should be included for purposes of this section.

(3) Value of the restructured loan

(A) In general

For the purpose of paragraph (1), the value of the restructured loan shall be based on the present value of payments that the borrower would make to the Federal Government if the terms of such loan were modified under any combination of primary loan service programs to ensure that the borrower is able to meet such obligations and continue farming operations.

(B) Present value

For the purpose of calculating the present value referred to in subparagraph (A), the Secretary shall use a discount rate of not more than the current rate on 90-day Treasury bills.

(C) Debt service margin

(i) Assumption

For the purpose of assessing under subparagraph (A) the ability of a borrower to meet debt obligations and continue farming operations, the Secretary shall assume that the borrower needs up to 105 percent of the amount indicated for payment of debt obligations.

(ii) Available income

If an amount up to 105 percent of the debt payments of the borrower has been earmarked for such payments, the Secretary shall consider the income of the borrower to be adequate to meet the debt obligations of the borrower.

(4) Notification

Within 90 days after receipt of a written request for restructuring from the borrower, the Secretary shall—

(A) make the calculations specified in paragraphs (2) and (3);

(B) notify the borrower in writing of the results of such calculations; and

(C) provide documentation for the calculations.

(5) Restructuring of loans

If the value of the restructured loan is greater than or equal to the recovery value, the Secretary shall, within 45 days after notifying the borrower of such calculations, offer to restructure the loan obligations of the borrower under this chapter through primary loan service programs that would enable the borrower to meet the obligations (as modified) under the loan and to continue the farming operations of the borrower. If the borrower accepts such offer, within 45 days after receipt of notice of acceptance, the Secretary shall restructure the loan accordingly.

(6) Termination of loan obligations

(A) Required conditions

(i) In general

Except as provided in subparagraph (B), the obligations of a borrower to the Secretary under a restructured loan shall terminate if—

(I) the borrower satisfies the requirements of paragraphs (1) and (2) of subsection (b) of this section;

(II) the value of the restructured loan is less than the recovery value; and

(III) within 90 days after receipt of the notification described in paragraph (4)(B), the borrower pays (or obtains third-party financing to pay) the Secretary an amount equal to the recovery value.

(ii) Limited applicability of good faith requirement

Clause (i)(I) shall not apply to any offer of net recovery buyout made by the Secretary under this section before November 28, 1990, unless the Secretary, before such date, determined that the borrower involved did not act in good faith with respect to the loan.

(B) Recapture

(i) Authority to require borrower to enter into agreement before terminating loan obligations

(I) In general

The Secretary may require, as a condition of the termination of loan obligations under this paragraph, that the borrower enter into an agreement with the Secretary providing that if the borrower sells or otherwise conveys the real property used to secure such loan within 10 years after the date of such agreement, and realizes a gain on such sale or conveyance over the amount of the recovery value of the loan, then the Secretary may recapture part or all of the difference between the recovery value of the loan and the fair market value (on the date of such sale or conveyance) of the property securing the loan.

(II) Limitation on recapture amount

The agreement described in subclause (I) shall not provide for recapture of an amount that exceeds the difference between such recovery value and the outstanding balance of principal and interest owed on the loan immediately prior to the termination of any loan obligations under this paragraph.

(ii) Treatment of intrafamily transfers

For purposes of clause (i)(I), transfer of title to a property, on the death or retirement of the borrower, to a spouse or child of the borrower who is actively engaged in farming on the property shall not be treated as a sale or conveyance.

(7) Negotiation of appraisal

(A) In general

In making a determination concerning restructuring under this subsection, the Secretary, at the request of the borrower, shall enter into negotiations concerning appraisals required under this subsection with the borrower.

(B) Independent appraisal

If the borrower, based on a separate current appraisal, objects to the decision of the Secretary regarding an appraisal, the borrower and the Secretary shall mutually agree, to the extent practicable, on an independent appraiser who shall conduct another appraisal of the borrower's property. The average of the two appraisals that are closest in value shall become the final appraisal under this paragraph. The borrower and the Secretary shall each pay one-half of the cost of the independent appraisal.

(d) Principal and interest write-down

(1) In general

(A) Priority consideration

In selecting the restructuring alternatives to be used in the case of a borrower who has requested restructuring under this section, the Secretary shall give priority consideration to the use of principal and interest write-down, except that this procedure shall not be given first priority in the case of a borrower unless other creditors of such borrower (other than those creditors who are fully collateralized) representing a substantial portion of the total debt of the borrower held by such creditors, agree to participate in the development of the restructuring plan or agree to participate in a State mediation program.

(B) Failure of creditors to agree

Failure of creditors to agree to participate in the restructuring plan or mediation program shall not preclude the use of principal and interest write-down by the Secretary if the Secretary determines that this restructuring alternative results in the least cost to the Secretary.

(2) Participation of creditors

Before eliminating the option to use debt write-down in the case of a borrower, the Secretary shall make a reasonable effort to contact the creditors of such borrower, either directly or through the borrower, and encourage such creditors to participate with the Secretary in the development of a restructuring plan for the borrower.

(e) Shared appreciation arrangements

(1) In general

As a condition of restructuring a loan in accordance with this section, the borrower of the loan may be required to enter into a shared appreciation arrangement that requires the repayment of amounts written off or set aside.

(2) Terms

Shared appreciation agreements shall have a term not to exceed 10 years, and shall provide for recapture based on the difference between the appraised values of the real security property at the time of restructuring and at the time of recapture.

(3) Percentage of recapture

The amount of the appreciation to be recaptured by the Secretary shall be 75 percent of the appreciation in the value of such real security property if the recapture occurs within 4 years of the restructuring, and 50 percent if the recapture occurs during the remainder of the term of the agreement.

(4) Time of recapture

Recapture shall take place at the end of the term of the agreement, or sooner—

(A) on the conveyance of the real security property;

(B) on the repayment of the loans; or

(C) if the borrower ceases farming operations.

(5) Transfer of title

Transfer of title to the spouse of a borrower on the death of such borrower shall not be treated as a conveyance for the purpose of paragraph (4).

(f) Determination to restructure

If the appeal process results in a determination that a loan is eligible for restructuring, the Secretary shall restructure the loan in the manner consistent with this section, taking into consideration the restructuring recommendations, if any, of the appeals officer.

(g) Prerequisites to foreclosure or liquidation

No foreclosure or other similar actions shall be taken to liquidate any loan determined to be ineligible for restructuring by the Secretary under this section—

(1) until the borrower has been given the opportunity to appeal such decision; and

(2) if the borrower appeals, the appeals process has been completed, and a determination has been made that the loan is ineligible for restructuring.

(h) Time limits for restructuring

Once an appeal has been filed under section 1983b¹ of this title, a decision shall be made at each level in the appeals process within 45 days after the receipt of the appeal or request for further review.

(i) Notice of ineligibility for restructuring

(1) In general

A notice of ineligibility for restructuring shall be sent to the borrower by registered or certified mail within 15 days after such determination.

(2) Contents

The notice required under paragraph (1) shall contain—

(A) the determination and the reasons for the determination;

(B) the computations used to make the determination, including the calculation of the recovery value of the collateral securing the loan; and

(C) a statement of the right of the borrower to appeal the decision to the appeals division, and to appear before a hearing officer.

(j) Independent appraisals

An appeal filed with the appeals division under section 1983b of this title may include a request by the borrower for an independent appraisal of any property securing the loan. On such request, the appeals division shall present the borrower with a list of three appraisers approved by the county supervisor, from which the borrower shall select an appraiser to conduct the appraisal, the cost of which shall be borne by the borrower. The results of such appraisal shall be considered in any final determination concerning the loan. A copy of any appraisal made under this paragraph shall be provided to the borrower.

(k) Future creditworthiness of borrower determined without regard to restructuring

The creditworthiness of, or the adequacy of collateral offered by, any borrower whose loan obligations are restructured under this section shall be determined without regard to such restructuring.

(l) Partial liquidations

If partial liquidations are performed (with the prior consent of the Secretary) as part of loan servicing by a guaranteed lender under this chapter, the Secretary shall not require full liquidation of a delinquent loan in order for the lender to be eligible to receive payment on losses.

(m) Disposition of normal income security

For purposes of subsection (b)(2) of this section, and subparagraphs (A)(i) and (C)(i) of section 1985(e)(1) of this title, if a borrower—

(1) disposed of normal income security prior to October 14, 1988, without the consent of the Secretary; and

(2) demonstrates that—

(A) the proceeds were utilized to pay essential household and farm operating expenses; and

(B) the borrower would have been entitled to a release of income proceeds by the Secretary if the regulations in effect on November 28, 1990, had been in effect at the time of the disposition,

the Secretary shall not consider the borrower to have acted without good faith to the extent of the disposition.

(n) Only 1 write-down or net recovery buy-out per borrower for loan made after January 6, 1988

(1) In general

The Secretary may provide for any one borrower not more than 1 write-down or net recovery buy-out under this section with respect to all loans made to the borrower after January 6, 1988.

(2) Special rule

For purposes of paragraph (1), the Secretary shall treat any loan made on or before January 6, 1988, with respect to which a restructuring, write-down, or net recovery buy-out is provided under this section after such date, as a loan made after such date.

(o) Liquidation of assets

The Secretary may not use the authority provided by this section to reduce or terminate any portion of the debt of the borrower that the borrower could pay through the liquidation of assets (or through the payment of the loan value of the assets, if the loan value is greater than the liquidation value) described in subsection (c)(2)(A)(ii) of this section.

(p) Lifetime limitation on debt forgiveness per borrower

The Secretary may provide not more than $300,000 in principal and interest forgiveness under this section per borrower.

(Pub. L. 87 128, title III, §353, as added Pub. L. 100 233, title VI, §615(a), Jan. 6, 1988, 101 Stat. 1678; amended Pub. L. 101 624, title XVIII, §1816(a) (d), (f) (h), Nov. 28, 1990, 104 Stat. 3826 3828; Pub. L. 102 237, title V, §501(h), Dec. 13, 1991, 105 Stat. 1868.)

References in Text

For definition of "this chapter", referred to in subsecs. (a), (c)(5), and (l), see note set out under section 1921 of this title.

Section 1983b of this title, referred to in subsec. (h), was repealed by Pub. L. 103 354, title II, §281(c), Oct. 13, 1994, 108 Stat. 3233.

Amendments

1991—Subsec. (c)(6)(A)(ii). Pub. L. 102 237, §501(h)(1), substituted "November 28, 1990" for "the date of enactment of this paragraph".

Subsec. (m). Pub. L. 102 237, §501(h)(2), substituted "section 1985(e)(1)" for "section 1985(e)(1)(A)".

1990—Subsec. (b)(1). Pub. L. 101 624, §1816(a), inserted before semicolon at end ", except that the regulations shall require that, if the value of the assets calculated under subsection (c)(2)(A)(ii) of this section that may be realized through liquidation or other methods would produce enough income to make the delinquent loan current, the borrower shall not be eligible for assistance under subsection (a) of this section".

Subsec. (c)(2)(A). Pub. L. 101 624, §1816(b)(1), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: "the amount of the current appraised value of the property securing the loan; less".

Subsec. (c)(2)(B)(iv). Pub. L. 101 624, §1816(b)(2)(A), substituted "costs; plus" for "costs."

Subsec. (c)(2)(C). Pub. L. 101 624, §1816(b)(2)(B), added subpar. (C).

Subsec. (c)(3)(C). Pub. L. 101 624, §1816(c), added subpar. (C).

Subsec. (c)(4). Pub. L. 101 624, §1816(d), substituted "90" for "60" in introductory provisions.

Subsec. (c)(6). Pub. L. 101 624, §1816(f), amended par. (6) generally. Prior to amendment, par. (6) read as follows: "If the value of the restructured loan is less than the recovery value and if, within 45 days after receipt of the notification described in paragraph (4)(B), the borrower pays (or obtains third-party financing to pay) the Secretary an amount equal to the recovery value, the obligations of the borrower to the Secretary under the loan shall terminate, except that the Secretary may require, as a condition of such termination of loan obligations, that the borrower enter into an agreement with the Secretary if the borrower sells or otherwise conveys the real property used to secure such loan within 2 years after the date of such agreement. Any such agreement shall provide for the recapture of part or all of the difference between the recovery value of the loan and the fair market value (on the date of such agreement) of the property securing the loan if the borrower realizes a gain on the sale or conveyance over the amount of the recovery value of the loan. In no event shall any such agreement provide for recapture of an amount that exceeds the difference between such recovery value and the fair market value of the property securing the loan on the date of such agreement."

Subsec. (c)(7). Pub. L. 101 624, §1816(g), added par. (7).

Subsecs. (l) to (p). Pub. L. 101 624, §1816(h), added subsecs. (l) to (p).

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(3) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective Date of 1990 Amendment

Section 1861 of title XVIII of Pub. L. 101 624 provided that:

"(a) In General.—Except as otherwise provided in this title, this title and the amendments made by this title [enacting sections 1981f and 2006a to 2006e of this title, section 2076a of Title 12, Banks and Banking, and section 494 of Title 25, Indians, amending this section, sections 1924, 1927, 1933, 1934, 1942, 1946, 1981, 1981d, 1982, 1983, 1983a, 1983b, 1985, 1991, 1997, 2003, and 5106 of this title, section 3132 of Title 5, Government Organization and Employees, sections 2019, 2075, 2077, 2218, 2252, 2254, 2277a 5, 2277a 9, 2277a 10, 2277a 14, 2278a 6, 2279aa, and 2279aa 11 of Title 12, and section 492 of Title 25, enacting provisions set out as notes under section 1981f of this title and section 2001 of Title 12, amending provisions set out as a note under section 1985 of this title, and repealing provisions set out as a note preceding section 1961 of this title] shall become effective on the date of enactment of this Act [Nov. 28, 1990].

"(b) Notice of Debt Settlement Programs.—The amendment made by section 1807(1) of this Act [amending section 1981d(b)(1) of this title] shall become effective 120 days after the date of enactment of this Act [Nov. 28, 1990].

"(c) Debt Restructuring and Loan Servicing.—

"(1) In general.—Except as provided in section 353(c)(6)(A)(ii) of the Consolidated Farm and Rural Development Act [7 U.S.C. 2001(c)(6)(A)(iii)] (as added by section 1816(f) of this Act) and in paragraph (3) of this subsection, section 1816 of this Act and the amendments made by such section 1816 [amending this section and section 1985 of this title] shall apply to new applications submitted under section 353 of the Consolidated Farm and Rural Development Act (7 U.S.C. 2001) on or after the date of enactment of this Act [Nov. 28, 1990].

"(2) Definition of new application.—As used in paragraph (1), the term 'new application' means an application submitted by a borrower to initiate a debt restructuring consideration and not an application reconsidered after an appeal or revision of the original application.

"(3) Liquidation of assets.—Section 353(o) of the Consolidated Farm and Rural Development Act [7 U.S.C. 2001(o)] (as added by section 1816(h) of this Act) shall not apply until the Secretary of Agriculture has issued final regulations to carry out such section 353(o).

"(d) Restoration of First Lien on Stock.—The amendment made by section 1833 of this Act [enacting section 2076a of Title 12 and amending section 2077 of Title 12] shall be effective as of January 7, 1988.

"(e) Regulations.—As soon as practicable after the date of enactment of this Act [Nov. 28, 1990]—

"(1) the Secretary of Agriculture shall issue such regulations as are necessary to carry out subtitles A and C of this Act [probably means subtitles A (§§1801 1824) and C (§§1851 1854) of title XVIII of Pub. L. 101 624, enacting sections 1981f and 2006a to 2006e of this title and section 494 of Title 25, amending this section, sections 1924, 1927, 1933, 1934, 1942, 1946, 1981, 1981d, 1982, 1983, 1983a, 1983b, 1985, 1991, 1997, 2003, and 5106 of this title and section 492 of Title 25, enacting provisions set out as a note under section 1981f of this title, amending provisions set out as a note under section 1985 of this title, and repealing provisions set out as a note preceding section 1961 of this title] and the amendments made by such subtitles; and

"(2) the Farm Credit Administration shall issue such regulations as are necessary to carry out subtitle B of this Act [probably means subtitle B (§§1831 1843) of title XVIII of Pub. L. 101 624, enacting section 2076a of Title 12, amending section 3132 of Title 5 and sections 2019, 2075, 2077, 2218, 2252, 2254, 2277a 5, 2277a 9, 2277a 10, 2277a 14, 2278a 6, 2279aa, and 2279aa 11 of Title 12, and enacting provisions set out as a note under section 2001 of Title 12] and the amendments made by such subtitle."

Suspension of Collection Activities During Transition Period

Section 615(d) of Pub. L. 100 233 provided that: "The Secretary of Agriculture shall not initiate any acceleration, foreclosure, or liquidation in connection with any delinquent farmer program loan before the date the Secretary has issued final regulations to carry out the amendments made by this section [enacting section 2001 of this title and amending sections 1927a and 1981 of this title]. The preceding sentence shall not prohibit the Secretary from taking any action with respect to waste, fraud, or abuse by the borrower."

Section Referred to in Other Sections

This section is referred to in sections 1985, 1991, 2001a, 2005 of this title.

¹See References in Text note below.

§2001a. Debt restructuring and loan servicing for community facility loans

The Secretary shall establish and implement a program that is similar to the program established under section 2001 of this title, except that the debt restructuring and loan servicing procedures shall apply to delinquent community facility program loans (rather than delinquent farmer program loans) made by the Farmers Home Administration to a hospital or health care facility under section 1926(a) of this title.

(Pub. L. 87 128, title III, §353A, as added Pub. L. 101 624, title XXIII, §2384(a), Nov. 28, 1990, 104 Stat. 4050.)

Regulations

Section 2384(b) of Pub. L. 101 624 provided that: "Not later than 120 days after the date of enactment of this Act [Nov. 28, 1990], the Secretary shall promulgate regulations, modeled after those promulgated under such section 353 [7 U.S.C. 2001], that implement the program established under section 353A of the Consolidated Farm and Rural Development Act [7 U.S.C. 2001a]."

§2002. Transfer of inventory lands

The Secretary, without reimbursement, may transfer to any Federal or State agency, for conservation purposes any real property, or interest therein, administered by the Secretary under this Act—

(1) with respect to which the rights of all prior owners and operators have expired;

(2) that is determined by the Secretary to be suitable or surplus; and

(3) that—

(A) has marginal value for agricultural production;

(B) is environmentally sensitive; or

(C) has special management importance.

(Pub. L. 87 128, title III, §354, as added Pub. L. 100 233, title VI, §616, Jan. 6, 1988, 101 Stat. 1682.)

References in Text

This Act, referred to in text, refers to the Agricultural Act of 1961, Pub. L. 87 128, Aug. 8, 1961, 75 Stat. 294, as amended. For classification of this Act to the Code, see Short Title note set out under section 1911 of this title and Tables. However, the reference was probably intended to be "this title" meaning the Consolidated Farm and Rural Development Act, title III of Pub. L. 87 128, as amended, which is classified principally to this chapter. For classification of this title to the Code, see Short Title note set out under section 1921 of this title and Tables.

§2003. Target participation rates

(a) Establishment

(1) In general

The Secretary shall establish annual target participation rates, on a county wide basis, that shall ensure that members of socially disadvantaged groups will receive loans made or insured under subchapter I of this chapter and will have the opportunity to purchase or lease inventory farmland.

(2) Group population

Except as provided in paragraph (3), in establishing such target rates the Secretary shall take into consideration the portion of the population of the county made up of such groups, and the availability of inventory farmland in such county.

(3) Gender

With respect to gender, target participation rates shall take into consideration the number of current and potential socially disadvantaged farmers and ranchers in a State in proportion to the total number of farmers and ranchers in the State.

(b) Reservation and allocation

(1) Reservation

The Secretary shall, to the greatest extent practicable, reserve sufficient loan funds made available under subchapter I of this chapter, for use by members of socially disadvantaged groups identified under target participation rates established under subsection (a) of this section.

(2) Allocation

The Secretary shall allocate such loans on the basis of the proportion of members of socially disadvantaged groups in a county and the availability of inventory farmland, with the greatest amount of loan funds being distributed in the county with the greatest proportion of socially disadvantaged group members and the greatest amount of available inventory farmland.

(3) Indian reservations

In distributing loan funds in counties within the boundaries of an Indian reservation, the Secretary shall allocate the funds on a reservation-wide basis.

(c) Operating loans

(1) Establishment

The Secretary shall establish annual target participation rates, that shall ensure that socially disadvantaged farmers or ranchers will receive loans made or insured under subchapter II of this chapter. In establishing such target rates, the Secretary shall consider the number of socially disadvantaged farmers and ranchers in a State in proportion to the total number of farmers and ranchers in that State.

(2) Reservation and allocation

The Secretary shall, to the greatest extent practicable, reserve and allocate the proportion of each State's loan funds made available under subchapter II of this chapter that is equal to that State's target participation rate for use by the socially disadvantaged farmers or ranchers in that State. The Secretary shall, to the extent practicable, distribute the total so derived on a county by county basis according to the number of socially disadvantaged farmers or ranchers in the county. Any funds reserved and allocated for purposes of this paragraph, but not used shall be reallocated within such State.

(d) Report

The Secretary shall prepare and submit, to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate, a report that describes the annual target participation rates and the success in meeting such rates.

(e) Definitions

(1) Socially disadvantaged group

As used in this section, the term "socially disadvantaged group" means a group whose members have been subjected to racial, ethnic, or gender prejudice because of their identity as members of a group without regard to their individual qualities.

(2) Socially disadvantaged farmer or rancher

As used in this section, the term "socially disadvantaged farmer or rancher" means a farmer or rancher who is a member of a socially disadvantaged group.

(Pub. L. 87 128, title III, §355, as added Pub. L. 100 233, title VI, §617, Jan. 6, 1988, 101 Stat. 1682; amended Pub. L. 101 624, title XVIII, §1817, title XXV, §2501(f), Nov. 28, 1990, 104 Stat. 3829, 4065; Pub. L. 102 554, §21(a), (b), Oct. 28, 1992, 106 Stat. 4161.)

Amendments

1992—Subsec. (a)(2). Pub. L. 102 554, §21(a)(1), substituted "Except as provided in paragraph (3), in establishing" for "In establishing".

Subsec. (a)(3). Pub. L. 102 554, §21(a)(2), added par. (3).

Subsec. (e)(1). Pub. L. 102 554, §21(b), substituted ", ethnic, or gener" for "or ethnic".

1990—Subsec. (b)(3). Pub. L. 101 624, §1817, added par. (3).

Subsecs. (c), (d). Pub. L. 101 624, §2501(f)(1) (3), added subsec. (c), redesignated former subsec. (c) as (d), and struck out former subsec. (d) which read as follows: "As used in this section, the term 'socially disadvantaged group' means a group whose members have been subjected to racial or ethnic prejudice because of their identity as members of a group without regard to their individual qualities."

Subsec. (e). Pub. L. 101 624, §2501(f)(4), added subsec. (e).

Section Referred to in Other Sections

This section is referred to in sections 1994, 2279 of this title; title 16 section 590h.

§2004. Expedited clearing of title to inventory property

The Farmers Home Administration may employ local attorneys, on a case-by-case basis, to process all legal procedures necessary to clear the title to foreclosed properties in the inventory of the Farmers Home Administration. Such attorneys shall be compensated at not more than their usual and customary charges for such work.

(Pub. L. 87 128, title III, §356, as added Pub. L. 100 233, title VI, §618, Jan. 6, 1988, 101 Stat. 1683.)

§2005. Payment of losses on guaranteed loans

(a) Payments to lenders

(1) Requirement

Within 3 months after a court of competent jurisdiction confirms a plan of reorganization under chapter 12 of title 11, for any borrower to whom a lender has made a loan guaranteed under this chapter, the Secretary shall pay the lender an amount estimated by the Secretary to be equal to the loss incurred by the lender for purposes of the guarantee.

(2) Payment toward loan guarantee

Any amount paid to a lender under this subsection with respect to a loan guaranteed under this chapter shall be treated as payment towards satisfaction of the loan guarantee.

(b) Administration

(1) Loss by lender

If the lender of a guaranteed farmer program loan takes any action described in section 1981(b)(4) of this title with respect to the loan and the Secretary approves such action, then, for purposes of the guarantee, the lender shall be treated as having sustained a loss equal to the amount by which—

(A) the outstanding balance of the loan immediately before such action, exceeds

(B) the outstanding balance of the loan immediately after such action.

(2) Net present value of loan

The Secretary shall approve the taking of an action described in section 1981(b)(4) of this title by the lender of a guaranteed farmer program loan with respect to the loan if such action reduces the net present value of the loan to an amount equal to not less than the greater of—

(A) the greatest net present value of a loan the borrower could reasonably be expected to repay; and

(B) the greatest amount that the lender of the loan could reasonably expect to recover from the borrower through bankruptcy, or liquidation of the property securing the loan, less all reasonable and necessary costs and expenses that the lender of the loan could reasonably expect to incur to preserve or dispose of such property (including all associated legal and property management costs) in the course of such a bankruptcy or liquidation.

(3) Construction of subsection

This subsection shall not be construed to limit the authority of the Secretary to enter into a shared appreciation arrangement with a borrower, or the terms and conditions which shall be required of a borrower, under section 2001(e) of this title.

(Pub. L. 87 128, title III, §357, as added Pub. L. 100 233, title VI, §619, Jan. 6, 1988, 101 Stat. 1683; amended Pub. L. 101 624, title XXIII, §2388(d)(2), Nov. 28, 1990, 104 Stat. 4053.)

References in Text

For definition of "this chapter", referred to in subsec. (a), see note set out under section 1921 of this title.

Amendments

1990—Subsec. (b)(1), (2). Pub. L. 101 624 substituted "1981(b)(4)" for "1981(d)".

Section Referred to in Other Sections

This section is referred to in section 1991 of this title.

§2006. Waiver of mediation rights by borrowers

The Secretary may not make, insure, or guarantee any farmer program loan to a farm borrower on the condition that the borrower waive any right under the mediation program of any State.

(Pub. L. 87 128, title III, §358, as added Pub. L. 100 233, title V, §512, Jan. 6, 1988, 101 Stat. 1664; amended Pub. L. 103 354, title II, §282(f)(3), Oct. 13, 1994, 108 Stat. 3235.)

Amendments

1994—Pub. L. 103 354 struck out "agricultural loan" before "mediation program".

§2006a. Borrower training

(a) In general

The Secretary shall enter into contracts to provide educational training to all borrowers of farmer program direct and guaranteed loans made under this chapter in financial and farm management concepts associated with commercial farming.

(b) Contract

(1) In general

The Secretary may contract with State or private providers of farm management and credit counseling services (including a community college, the extension service of a State, a State department of agriculture, or a nonprofit organization) to carry out this section.

(2) Consultation

The Secretary may consult with the chief executive officer of a State concerning the identity of the contracting organization and the process for contracting.

(c) Eligibility for loans

(1) In general

Subject to paragraph (2), to be eligible to obtain a direct or guaranteed loan under this chapter, a borrower must obtain management assistance under this section, appropriate to the management ability of the borrower (as determined by the appropriate county committee established pursuant to section 1982¹ of this title, during the determination of eligibility for the loan).

(2) Loan conditions

The need of a borrower who satisfies the criteria set out in section 1922(a)(2) or 1941(a)(2) of this title for management assistance under this section shall not be cause for denial of eligibility of the borrower for a direct or guaranteed loan under this chapter.

(d) Guidelines and curriculum

The Secretary shall issue regulations establishing guidelines and curriculum for the borrower training program established under this section.

(e) Payment

A borrower shall pay for training received under this section, and may use funds from operating loans made under subchapter II of this chapter to pay for the training.

(f) Waivers

The Secretary may waive the requirements of this section for an individual borrower on a determination by the county committee that the borrower demonstrates adequate knowledge in areas described in this section.

(Pub. L. 87 128, title III, §359, as added Pub. L. 101 624, title XVIII, §1818(a), Nov. 28, 1990, 104 Stat. 3829.)

References in Text

For definition of "this chapter", referred to in subsecs. (a) and (c), see note set out under section 1921 of this title.

Section 1982 of this title, referred to in subsec. (c)(1), was repealed by Pub. L. 103 354, title II, §227(b)(1), Oct. 13, 1994, 108 Stat. 3218.

Section Referred to in Other Sections

This section is referred to in sections 1942, 1948, 1949, 1981, 2006b of this title.

¹See References in Text note below.

§2006b. Loan assessments

(a) In general

After an applicant is determined eligible for assistance under this chapter by the appropriate county committee established pursuant to section 1982¹ of this title, the Secretary shall evaluate, in accordance with regulations issued by the Secretary, the farming plan and financial situation of each qualified farmer or rancher applicant.

(b) Determinations

In evaluating the farming plan and financial situation of an applicant under this section, the Secretary shall determine—

(1) the amount that the applicant will need to borrow to carry out the proposed farming plan;

(2) the rate of interest that the applicant would need to be able to cover expenses and build an adequate equity base;

(3) the goals of the proposed farming plan of the applicant;

(4) the financial viability of the plan and any changes that are necessary to make the plan viable; and

(5) whether assistance is necessary under this chapter and, if so, the amount of the assistance.

(c) Contract

The Secretary may contract with a third party (including those entities eligible to provide borrower training under section 2006a(b) of this title) to conduct loan assessments under this section.

(d) Review of loans

(1) In general

Loan assessments conducted under this section shall include biannual review of direct loans, and periodic review (as determined necessary by the Secretary) of guaranteed loans, made under this chapter to assess the progress of a borrower in meeting the goals for the farm or ranch operation.

(2) Contracts

The Secretary may contract with an entity that is eligible to provide borrower training under section 2006a(b) of this title to conduct loan reviews under paragraph (1).

(3) Problem assessments

If a borrower is delinquent in payments on a direct or guaranteed loan made under this chapter, the Secretary or the contracting entity shall determine the cause of, and action necessary to correct, the delinquency.

(e) Guidelines

The Secretary shall issue regulations providing guidelines for loan assessments conducted under this section.

(Pub. L. 87 128, title III, §360, as added Pub. L. 101 624, title XVIII, §1819, Nov. 28, 1990, 104 Stat. 3830.)

References in Text

For definition of "this chapter", referred to in subsecs. (a), (b)(5), and (d)(1), (3), see note set out under section 1921 of this title.

Section 1982 of this title, referred to in subsec. (a), was repealed by Pub. L. 103 354, title II, §227(b)(1), Oct. 13, 1994, 108 Stat. 3218.

Section Referred to in Other Sections

This section is referred to in sections 1935, 1948, 1949, 1983a of this title.

¹See References in Text note below.

§2006c. Supervised credit

The Secretary shall provide adequate training to employees of the Farmers Home Administration on credit analysis and financial and farm management to—

(1) better acquaint the employees with what constitutes adequate financial data on which to base a direct or guaranteed loan approval decision; and

(2) ensure proper supervision of farmer program loans.

(Pub. L. 87 128, title III, §361, as added Pub. L. 101 624, title XVIII, §1820, Nov. 28, 1990, 104 Stat. 3830.)

Section Referred to in Other Sections

This section is referred to in sections 1948, 1949 of this title.

§2006d. Market placement

The Secretary shall establish a market placement program for qualified beginning farmers and ranchers and other borrowers of farmer program loans that the Secretary believes have a reasonable chance of qualifying for commercial credit with a guarantee provided under this chapter.

(Pub. L. 87 128, title III, §362, as added Pub. L. 101 624, title XVIII, §1821, Nov. 28, 1990, 104 Stat. 3831.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

Section Referred to in Other Sections

This section is referred to in sections 1948, 1949, 1983a of this title.

§2006e. Prohibition on use of loans for certain purposes

The Secretary shall not approve any loan under this chapter to drain, dredge, fill, level, or otherwise manipulate a wetland (as defined in section 3801(a)(16) of title 16), or 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, or in the case of such activity that is already commenced before November 28, 1990.

(Pub. L. 87 128, title III, §363, as added Pub. L. 101 624, title XVIII, §1824, Nov. 28, 1990, 104 Stat. 3831; amended Pub. L. 102 237, title V, §501(i), Dec. 13, 1991, 105 Stat. 1868.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

Amendments

1991—Pub. L. 102 237 inserted a closing parenthesis after "3801(a)(16) of title 16" and substituted "before November 28, 1990" for "prior to the date of enactment of this section".

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(3) of Pub. L. 102 237, set out as a note under section 1421 of this title.

§2006f. Repealed. Pub. L. 103 354, title II, §231(f)(3), Oct. 13, 1994, 108 Stat. 3219

Section, Pub. L. 87 128, title III, §364, as added Pub. L. 101 624, title XXIII, §2302(a)(1), Nov. 28, 1990, 104 Stat. 3979; amended Pub. L. 102 237, title VII, §701(d), Dec. 13, 1991, 105 Stat. 1879; Pub. L. 103 129, §4, Nov. 1, 1993, 107 Stat. 1366, established Rural Development Administration in Department of Agriculture and provided for the performance of specified functions. See section 6911 et seq. of this title.

§2007. General provisions

(a) Application for participation

If a State desires to participate in the program established in sections 2007a to 2007e of this title or the program established in sections 2008 and 2008a of this title, the Governor of the State may submit to the Secretary of Agriculture (in this section referred to as the "Secretary") an application therefor.

(b) Selection of States

(1) Rural investment partnerships

The Secretary shall select not more than 5 States to which to make sections 2007a to 2007e of this title applicable during any particular period, to the extent of qualifying applications therefor.

(2) Rural economic development review panels

The Secretary shall select not more than 5 States to which to make sections 2008 and 2008a of this title applicable during any particular period, to the extent of qualifying applications therefor.

(c) Duration of projects

(1) Rural investment partnerships

Sections 2007a to 2007e of this title shall apply to any State selected by the Secretary under subsection (b)(1) of this section until September 30, 1996.

(2) Rural economic development review panels

Chapter 3 shall apply to any State selected by the Secretary under subsection (b)(2) of this section until September 30, 1996.

(d) Effective date

Sections 2007a to 2007e of this title and sections 2008, 2008a, 2008b, and 2008c(b) of this title shall take effect on October 1, 1991.

(Pub. L. 101 624, title XXIII, §2310, Nov. 28, 1990, 104 Stat. 3982.)

References in Text

Chapter 3, referred to in subsec. (c)(2), is chapter 3 (sections 2316 and 2317) of subtitle B of title XXIII of Pub. L. 101 624, Nov. 28, 1990, 104 Stat. 4000, which enacted sections 2008 to 2008c of this title and amended section 1926 of this title. For complete classification of this chapter to the Code, see Tables.

Codification

Section was enacted as part of the Rural Economic Development Act of 1990, and also as part of the Food, Agriculture, Conservation, and Trade Act of 1990, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.

Preservation of Eligibility for Credit Assistance Under Federal Law

Section 2395 of title XXIII of Pub. L. 101 624 provided that: "Notwithstanding any other provision of law, this title [see Short Title of 1990 Amendment note set out under section 1921 of this title] shall not be construed to adversely affect the eligibility, as it existed on the date of enactment of this Act [Nov. 28, 1990], of cooperatives and other entities for any other credit assistance under Federal law."

Regulations

Section 2396 of title XXIII of Pub. L. 101 624 provided that: "Except as otherwise provided in this title [see Short Title of 1990 Amendment note set out under section 1921 of this title], no later than 180 days after the date of the enactment of this Act [Nov. 28, 1990], the Secretary shall promulgate such regulations as may be necessary to carry out this title and the amendments made by this title."

Section Referred to in Other Sections

This section is referred to in sections 2007a, 2007c, 2008 of this title.

§2007a. Definitions

As used in sections 2007a to 2007e of this title:

(1) Approved local business

The term "approved local business" means a local business that is approved to receive assistance from the revolving fund of an eligible entity as provided under the provisions of sections 2007a to 2007e of this title.

(2) Eligible entity

The term "eligible entity" means an entity—

(A) that is—

(i) a nonprofit private corporation or a public entity that is—

(I) the governing body of each public regional organization (such as the governing body of an economic development district) that is chartered or otherwise organized under State law for the purpose of promoting economic development;

(II) the agency of each State that is primarily responsible for rural economic development programs within the State;

(III) the governing body of a county or other political subdivision of a State;

(IV) the governing body of a town or township within a State; or

(V) an incorporated public organization or a nonprofit private community development corporation, or similar nonprofit private organization, that is chartered or otherwise organized under State law for the purpose of promoting economic development; or

(ii) an Indian tribe (as defined in section 450b(e) of title 25), an Indian organization or entity chartered under the Act of June 18, 1934 [25 U.S.C. 461 et seq.], commonly known as the "Indian Reorganization Act", or any tribal organization (as defined in section 450b(l) of title 25); and

(B) that—

(i) possesses the powers reasonably necessary to perform the functions and activities described in sections 2007a to 2007e of this title;

(ii) has a professional staff and management ability (including adequate accounting, legal, and business servicing abilities or experience); and

(iii) meets any other requirements established by the Board to carry out sections 2007a to 2007e of this title.

(3) Investment Board

The terms "Investment Board" and "Board" mean the Rural Partnerships Investment Board established in section 2007b(a) of this title.

(4) Local business

The term "local business" means—

(A) a business concern, located in a rural area, that—

(i) is incorporated or otherwise organized under State law so that financial records and accounts are maintained regarding the business concern separate and apart from records and accounts not related to that business concern; and

(ii) is independently or cooperatively (not including borrowers under the Rural Electrification Act of 1936 [7 U.S.C. 901 et seq.]) owned and operated as defined by the Board; or

(B) an individual who plans to organize and operate an entity of the type described in subparagraph (A),

that meets any additional requirements that are established by the Board to carry out the intent of sections 2007a to 2007e of this title.

(5) Rural area

The term "rural area" means all territory of a State that is not within the outer boundary of any city or town having a population of 20,000 or more based on the latest decennial census of the United States, and any neighboring urbanized area as defined by the Board.

(6) Rural Fund

The terms "Rural Fund" and "Fund" mean the Rural Business Investment Fund established under section 2007c(a) of this title.

(7) Secretary

The term "Secretary" means the Secretary of Agriculture, unless otherwise specified in sections 2007a to 2007e of this title.

(8) State

The term "State" means any State to which the Secretary has made sections 2007a to 2007e of this title applicable under section 2007(b)(1) of this title.

(Pub. L. 101 624, title XXIII, §2311, Nov. 28, 1990, 104 Stat. 3982; Pub. L. 102 237, title VII, §702(b), Dec. 13, 1991, 105 Stat. 1880.)

References in Text

Act of June 18, 1934, referred to in par. (2)(A)(ii), is act June 18, 1934, ch. 576, 48 Stat. 984, as amended, popularly known as the Indian Reorganization Act, which enacted sections 461, 462, 463, 464, 465, 466 to 470, 471, 472, 473, 474, 475, 476 to 478, and 479 of Title 25, Indians. For complete classification of this Act to the Code, see Short Title note set out under section 461 of Title 25 and Tables.

The Rural Electrification Act of 1936, referred to in par. (4)(A)(ii), is act May 20, 1936, ch. 432, 49 Stat. 1363, as amended, which is classified generally to chapter 31 (§901 et seq.) of this title. For complete classification of this Act to the Code, see section 901 of this title and Tables.

Codification

Section was enacted as part of the Rural Economic Development Act of 1990, and also as part of the Food, Agriculture, Conservation, and Trade Act of 1990, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.

Amendments

1991—Par. (2)(A)(ii). Pub. L. 102 237, §702(b)(1), substituted "section 450b(e) of title 25" for "section 450b(b) of title 25" and "section 450b(l) of title 25" for "the section 450b(c) of title 25".

Par. (4). Pub. L. 102 237, §702(b)(2), substituted "sections 2007a to 2007e of this title" for "this Act" in concluding provisions.

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in provision of Pub. L. 101 624 to which it relates, see section 1101(b)(7) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective Date

Section effective Oct. 1, 1991, see section 2007(d) of this title.

Section Referred to in Other Sections

This section is referred to in sections 2007, 2007b, 2007c, 2007d, 2007e of this title.

§2007b. Rural Partnerships Investment Board

(a) Establishment

There is established a "Rural Partnerships Investment Board" to provide lines of credit to eligible entities to enable such entities to establish, maintain, or expand revolving funds that are used to make or guarantee loans, or to make capital investments in new or expanding local businesses in conjunction with loans or investments made by depository institutions (as defined in section 1813(c)(1) of title 12,¹ State owned banks whose deposits are backed by the full faith and credit of the State, or community development credit unions chartered by the National Credit Union Administration under the Federal Credit Union Act (12 U.S.C. 1751 et seq.).

(b) Board of Directors

(1) In general

The Board of Directors of the Investment Board shall consist of—

(A) the Administrator of the Rural Electrification Administration;

(B) the Administrator of the Rural Development Administration;

(C) the Administrator of the Extension Service of the Department of Agriculture; and

(D) two members who shall be—

(i) experienced in rural development and related matters;

(ii) appointed by the President with the advice and consent of the Senate; and

(iii) from different political parties.

(2) Chairperson

The Chairperson of the Board shall be the Administrator of the Rural Development Administration.

(3) Vacancies

Vacancies on the Board shall be filled in the same manner as the vacant position was previously filled.

(4) Chief executive officer

A chief executive officer shall be selected by the Board and shall serve at the pleasure of the Board.

(5) Quorum

A quorum shall consist of three members of the Board. All decisions made by the Board shall require an affirmative vote of a majority of the members.

(6) Compensation

Members of the Board—

(A) specified under subparagraphs (A), (B), and (C) of paragraph (1) shall receive reasonable allowances for necessary expenses of travel, lodging, and subsistence incurred in attending meetings and other activities of the Investment Board, as set forth in the bylaws issued by the Board of Directors, except that such level shall not exceed the maximum fixed by subchapter 1² of chapter 57 of title 5 for officers and employees of the United States; and

(B) appointed under subparagraph (D) of paragraph (1) shall receive compensation for the time devoted to meetings and other activities at a daily rate not to exceed the daily rate of compensation prescribed for level III of the Executive Schedule under section 5314 of title 5, and reasonable allowances for necessary expenses of travel, lodging, and subsistence incurred in attending meetings and other activities of the Investment Board, as set forth in the bylaws issued by the Board of Directors, except that such level shall not exceed the maximum fixed by subchapter 1² of chapter 57 of title 5 for officers and employees of the United States.

(7) Rules and records

The Board shall adopt such rules and procedures as it may consider appropriate for the transaction of the business of the Investment Board, and shall keep permanent and accurate records and minutes of its acts and proceedings.

(c) Powers of Investment Board

The Investment Board shall be a body corporate that shall have the power to—

(1) operate under the direction of its Board;

(2) adopt, alter, and use a corporate seal, which shall be judicially noted;

(3) provide for one or more officers, employees, and agents, as may be necessary, define their duties, and require surety bonds or make other provisions against losses occasioned by acts of such persons;

(4) hire, promote, compensate, and discharge officers and employees of the Investment Board, without regard to title 5, except that no such officer or employee shall receive an annual rate of basic pay in excess of the rate prescribed for level III of the Executive Schedule under section 5314 of title 5;

(5) prescribe by its Board its bylaws, that shall be consistent with law, and that shall provide for the manner in which—

(A) its officers, employees, and agents are to be selected;

(B) its property is to be acquired, held, and transferred;

(C) its general operations are to be conducted; and

(D) the privileges granted by law are to be exercised and enjoyed;

(6) with the consent of any executive department or independent agency, use the information, services, staff, and facilities of such in carrying out sections 2007a to 2007e of this title;

(7) enter into contracts and make advance, progress, or other payments with respect to such contracts;

(8) sue and be sued in its corporate name, and complain and defend in courts of competent jurisdiction;

(9) acquire, hold, lease, mortgage, or dispose of, at public or private sale, real and personal property, and otherwise exercise all the usual incidents of ownership of property necessary and convenient to its operations;

(10) modify or consent to the modification of any contract or agreement to which it is a party or in which it has an interest under sections 2007a to 2007e of this title;

(11) make such rules and regulations as the Board determines necessary and appropriate to carry out the authority vested in the Board under sections 2007a to 2007e of this title;

(12) procure the temporary (not in excess of 2 years) or intermittent services of experts or consultants or organizations thereof, without regard to the civil service and classification laws and without regard to section 5 of title 41, at rates not to exceed the daily equivalent of the highest rate payable under section 5332 of title 5, including traveltime, and while such individual is away from the home or regular place of business of such individual, travel expenses as authorized under section 5703 of title 5; and

(13) exercise other powers as set forth in sections 2007a to 2007e of this title, and such other incidental powers as are necessary to carry out its powers, duties, and functions in accordance with sections 2007a to 2007e of this title.

(Pub. L. 101 624, title XXIII, §2312, Nov. 28, 1990, 104 Stat. 3984.)

References in Text

The Federal Credit Union Act, referred to in subsec. (a), is act June 26, 1934, ch. 750, 48 Stat. 1216, as amended, which is classified generally to chapter 14 (§1751 et seq.) of Title 12, Banks and Banking. For complete classification of this Act to the Code, see section 1751 of Title 12 and Tables.

The civil service laws, referred to in subsec. (c)(12), are set forth in Title 5, Government Organization and Employees. See, particularly, section 3301 et seq. of Title 5.

The classification laws, referred to in subsec. (c)(12), are classified to chapter 51 (§5101 et seq.) and subchapter III (§5331 et seq.) of chapter 53 of Title 5.

Codification

Section was enacted as part of the Rural Economic Development Act of 1990, and also as part of the Food, Agriculture, Conservation, and Trade Act of 1990, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.

Effective Date

Section effective Oct. 1, 1991, see section 2007(d) of this title.

Section Referred to in Other Sections

This section is referred to in sections 2007, 2007a, 2007c, 2007d, 2007e of this title.

¹So in original. A closing parenthesis probably should precede the comma.

²So in original. Probably should be subchapter "I".

§2007c. Establishment of investment fund

(a) Establishment

(1) In general

There is established in the Treasury of the United States a fund for the use of the Board in carrying out the provisions of sections 2007a to 2007e of this title, that shall be known as the "Rural Business Investment Fund".

(2) Availability

The Rural Business Investment Fund shall be available to the Board to provide lines of credit for revolving funds to be operated by approved eligible entities to serve local businesses in rural areas.

(b) Use

(1) Lines of credit

Amounts in the Rural Business Investment Fund shall be used by the Board to provide lines of credit in amounts determined appropriate by the Board, but in no event shall any such line of credit exceed $750,000 annually (up to a total amount of $2,250,000) to an approved eligible entity. Each line of credit shall be made available over a period of time established by the Board for each such entity, but in no event shall any such period of time extend beyond the date on which the Investment Board is terminated under section 2007d(n) of this title.

(2) Exception

Notwithstanding paragraph (1), if the approved eligible entity is the agency of any State that is primarily responsible for the rural economic development programs within such State, the Board may provide a line of credit to such agency in an amount that shall not exceed $1,250,000 annually (up to a total amount of $3,750,000) in the manner described in paragraph (1).

(3) Amounts drawn from line

Amounts drawn from each line of credit by each approved eligible entity shall be used solely as provided under sections 2007a to 2007e of this title and shall be drawn only as needed to provide loans, investments, or to carry out a guarantee.

(c) Applications of eligible entities for lines of credit

(1) Federal Register notices

The Board shall publish notices of solicitations for applications for lines of credit in the Federal Register and such notices shall contain—

(A) the application procedures established by the Board;

(B) the application requirements of paragraph (3);

(C) the deadlines for submission of applications (which shall be not less than 150 days after the publication of the applicable notice);

(D) a copy of all available response forms;

(E) a summary of the functions of the Board regarding applications; and

(F) other information determined appropriate by the Board.

(2) Submission and consideration

An eligible entity that desires to receive a line of credit under sections 2007a to 2007e of this title shall submit an application to the Board at such time, in such form, and containing such information and documentation, including a description of the areas to be served, as the Board shall prescribe under paragraph (1), and the Board shall consider each such application based on the requirements of sections 2007a to 2007e of this title.

(3) Eligible entity

(A) Matching funds or letters of intent

In order for an application to be considered for approval by the Board for a line of credit, each eligible entity that submits an application shall—

(i) certify in writing that the entity shall use such funds as part of a revolving fund to invest in, and make or guarantee loans to, local businesses in accordance with sections 2007a to 2007e of this title; and

(ii)(I) agree to provide matching funds (Federal funds shall not be used to satisfy such matching requirement) in amounts that are at least equal to the amount of the line of credit to be provided by the Board, that shall be in the form of—

(aa) cash or cash equivalents; or

(bb) letters of credit in favor of the eligible entity issued or submitted by depository institutions (as defined in section 1813(c)(1) of title 12), insurance companies, similar Federally regulated financial institutions, State owned banks, local or State government or private philanthrophic¹ foundations, as determined appropriate and acceptable by the Board; or

(II) demonstrate, through procedures determined appropriate and acceptable by the Board, that depository institutions (as so defined) or community development credit unions described in section 2007b(a) of this title, are prepared to participate with the eligible entity in a loan, guarantee, or investment program for the benefit of local businesses, and that the total financial commitment demonstrated by the letters of intent or other documents is at least equal to the value of the line of credit for which the eligible entity is applying.

(B) Exception for certain eligible entities

(i) Low per capita income areas

If the average per capita income level of the identified rural areas served by an eligible entity is less than 70 percent of the national average per capita income for the most recent year for which such information is available, such eligible entity shall only be required to match 50 percent of the funds provided by the Board in the same manner as described in subclause (I) or (II) of subparagraph (A)(ii). A list of the average per capita income and population of each county in the United States that contains rural areas, and the national average per capita income for such year, shall be published in the Federal Register and otherwise made available by the Board to the public.

(ii) Indian tribal council participation

(I) In general

Community or tribal development corporations operated by Federally recognized tribal councils that desire to administer a local revolving fund may participate in the program established under sections 2007a to 2007e of this title if such corporations meet the rules and procedures established under sections 2007a to 2007e of this title that are determined by the Board to be pertinent.

(II) Establishment of special rules and procedures

(aa) In general

Not later than 220 days after November 28, 1990, the Board shall establish rules and procedures to enable such community or tribal development corporations serving rural areas located on Federally recognized reservations (including former reservations in Oklahoma) to participate in the program established under sections 2007a to 2007e of this title through the operation of revolving funds used for investing in, and making or guaranteeing loans to, new or expanding local businesses.

(bb) Contents

Rules and procedures established under item (aa) shall be established to ensure that development corporations that receive Federal lines of credit under sections 2007a to 2007e of this title serve needy reservation areas, including areas that have low per capita income, high unemployment, high poverty rates, depressed or lagging local economies, and other factors determined appropriate by the Board.

(III) Matching requirements

The requirements of subsection (c)(3) of this section and section 2007d(d) of this title concerning the provision of matching funds and the requirement of partnerships for loans, and any related matching requirements, shall not apply to the development corporations receiving assistance under this clause.

(4) Reapplication for lines of credit

(A) In general

An eligible entity that has received a line of credit under this section may reapply in subsequent years for additional lines of credit if the Board makes a determination that—

(i) the applicant has demonstrated that the funds previously allocated under such line of credit have been substantially obligated and that additional demand for lending, investment, or guaranteed funding exists in the service area of the applicant;

(ii) the applicant will meet the matching requirements under subsection (c)(3) of this section; and

(iii) the applicant has administered the revolving fund consistent with sections 2007a to 2007e of this title and has the capacity to administer additional funds in the same manner.

(B) Priority

Eligible entities qualified to receive an initial line of credit or that will serve a service area not served by another entity shall receive priority over any applicant seeking a second or subsequent line of credit.

(5) Monitoring compliance

The Board shall establish procedures to monitor the compliance of each eligible entity participating in the program authorized by sections 2007a to 2007e of this title with the requirements of sections 2007a to 2007e of this title.

(6) Eligible entity revolving fund requirement

To be eligible to receive a line of credit from the Rural Business Investment Fund, the applicant eligible entity shall—

(A) demonstrate its ability or potential capacity to make sound business, lending, and investment decisions and to provide business counseling and technical assistance;

(B) demonstrate its ability to operate consistent with the requirements of sections 2007a to 2007e of this title and to increase the availability of credit in rural areas to promote the creation or expansion of viable businesses in rural areas;

(C) identify the proposed service area and define a strategy for serving that area that should describe such characteristics as similar industrial, labor, or other markets, similar geographic or socioeconomic conditions, or other related considerations, and, to the extent that such area includes any towns or townships, make a commitment to serve such towns or townships in their entirety;

(D) provide an assurance that its service area will consist of—

(i) all rural areas in a county if the median household income of the county is less than the Statewide nonmetropolitan median household income; or

(ii) identified rural areas in a county if—

(I) the median household income of the county is not less than the Statewide nonmetropolitan median household income; and

(II) the median household income of each rural city, town, or township to be served, and of each separate contiguous rural area to be served, is less than the Statewide nonmetropolitan median household income;

(iii) identified rural areas in a State in which the average per capita income is less than 70 percent of the nationwide per capita income; or

(iv) any county where the net migration population loss is at least 5 percent or greater from April 1, 1980, to July 1, 1987, as reported by the Census Bureau of the Department of Commerce; and

(E) provide a notification that an application has been filed with the Board to each county or other local unit of government having jurisdiction over some or all of the proposed service area under procedures developed by the Board.

(7) Factors in approval of applications

In determining which applications to approve, and the maximum amount of funds to be offered in each line of credit, the Board shall grant a preference to eligible entities—

(A) that have experience in serving local credit or equity needs and in making sound business and investment decisions, or that have the ability to serve such needs and make such decisions;

(B) whose boards of directors (or governing bodies if no such board exists) are composed of a cross-section of individuals (such as individuals with backgrounds in business, community development, or regional development, individuals who are State, local, or county government officials, or individuals involved in banking, financial, or other investment activities);

(C) that are likely to stimulate significant job creation or retention and new business creation or business expansion per dollar of funds provided under this section;

(D) that submit applications that demonstrate the ability and willingness to provide to local businesses continuing technical and management assistance, training, financial and business guidance, and planning;

(E) that demonstrate that the activities of the eligible entity are consistent with State, county, or local goals, whichever is applicable, regarding long-term economic growth and community development;

(F) that submit applications containing a comprehensive investment strategy, developed in consultation with the applicable State, regional council or government, and county or other general purpose unit of local government; and

(G) that propose to serve a service area—

(i) whose unemployment or poverty rates exceed the Statewide nonmetropolitan average;

(ii) with special needs arising from actual or threatened severe unemployment arising from economic dislocation; or

(iii) that includes any county in which the net migration population loss is at least 5 percent or greater from April 1, 1980, to July 1, 1987, as reported by the Census Bureau of the Department of Commerce.

(8) Geographic spread

(A) In general

In awarding lines of credit under this section the Board shall attempt, as much as reasonably practicable and consistent with sound financial judgment, to assure that all rural regions of the United States benefit from such awards.

(B) Minimum amount of funds

After considering the availability of qualified applications, and if consistent with good investment practices and the other requirements of sections 2007a to 2007e of this title, the Board shall approve the application of at least one eligible entity in each State selected under section 2007(b)(1) of this title. The Board shall, to the maximum extent practicable and appropriate, ensure that eligible entities that are approved by the Board in any given State receive at least $750,000 (per State) out of the funds provided under subsection (d) of this section. In addition, to the maximum extent practicable the Board shall approve the applications of at least two eligible entities in each State containing an approved eligible entity.

(C) Maximum amount of funds

The total amount of funds provided under sections 2007a to 2007e of this title to eligible entities in any State shall not exceed $10,000,000.

(D) Special program

(i) In general

The Board shall issue regulations to establish a program that targets the benefits of the Federal lines of credit provided under this section to those rural areas and residents with special needs.

(ii) Limits

If consistent with sound investment practices, not less than 5 percent, nor more than 15 percent, of the funds appropriated under subsection (d) of this section shall be issued to eligible entities that will serve—

(I) local businesses located in very distressed rural areas, as defined by the Board, that may include areas with special needs arising from actual or threatened severe unemployment which results from economic dislocation; and

(II) local businesses that provide beneficial services to rural residents such as improved medical, hospital, or health care, licensed day care facilities or centers, improved services for the handicapped, the disabled, the elderly or other needy individuals, improved educational opportunities, improved public transportation services for needy individuals, or other related services as determined appropriate by the Board.

(d) Limitation on authorization of appropriations

To carry out sections 2007a to 2007e of this title, there are authorized to be appropriated to the Rural Fund and the Board $10,000,000 for fiscal year 1992, $8,600,000 for fiscal year 1993, $6,700,000 for fiscal year 1994, and $4,700,000 for each of fiscal years 1995 and 1996. Amounts appropriated under this subsection shall remain available until expended or until the Board is terminated.

(e) Relocation and refinancing

The Board shall establish rules and procedures to prohibit eligible entities from using the assistance received under sections 2007a to 2007e of this title for loans and investments, or for issuing guarantees, that would—

(1) facilitate the relocation of a local business from one community to another;

(2) refinance the existing debt of a local business, except that such refinancing may be undertaken with such assistance if it is undertaken in conjunction with a substantial expansion effort by the local business; or

(3) significantly reduce the viability of a then existing business engaged in substantially the same business activities in the same community.

(Pub. L. 101 624, title XXIII, §2313, Nov. 28, 1990, 104 Stat. 3986; Pub. L. 102 237, title VII, §702(c), Dec. 13, 1991, 105 Stat. 1880.)

Codification

Section was enacted as part of the Rural Economic Development Act of 1990, and also as part of the Food, Agriculture, Conservation, and Trade Act of 1990, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.

Amendments

1991—Subsec. (a)(2). Pub. L. 102 237, §702(c)(1), substituted "Rural Business Investment Fund" for "Fund established under paragraph (1)".

Subsec. (b)(1). Pub. L. 102 237, §702(c)(2), substituted "Rural Business Investment Fund" for "fund established by subsection (a)".

Subsec. (c)(6). Pub. L. 102 237, §702(c)(3), inserted "Business Investment" before "Fund" in introductory provisions.

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(7) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective Date

Section effective Oct. 1, 1991, see section 2007(d) of this title.

Section Referred to in Other Sections

This section is referred to in sections 2007, 2007a, 2007b, 2007d, 2007e of this title.

¹So in original. Probably should be "philanthropic".

§2007d. Local revolving funds

(a) Establishment

(1) In general

Each eligible entity approved by the Board to participate in the program established under sections 2007a to 2007e of this title shall establish a local revolving fund account in which to deposit—

(A)(i) amounts received under sections 2007a to 2007e of this title from the Rural Business Investment Fund;

(ii) any local matching funds described in section 2007c(c)(3)(A) of this title; and

(iii) any profits or income, repayments of loans, proceeds from the sale of equity investments, or other gains or returns on investments or loans, derived from the activities of the revolving fund established under this subsection; less

(B) reasonable operating expenses or losses incurred in administering such fund.

(2) Place of establishment

Each local revolving fund established under this subsection may be established in one or more member banks of the Federal Reserve System, any Federally insured State nonmember bank (as defined in section 1813(b) of title 12), or any State owned bank whose deposits are backed by the full faith and credit of the State, and the funds, except as provided in subsection (b) of this section, shall be held in cash and receive interest or be invested in direct obligations of the United States or in obligations guaranteed by the United States or an agency thereof.

(b) Use of fund

Amounts in a local revolving fund may be used—

(1) to provide loans or equity capital, or loan guarantees, to approved local businesses as authorized in sections 2007a to 2007e of this title, under procedures established by the Board;

(2) to cover the costs of providing training, business or financial planning, or management or technical assistance to approved local businesses in amounts that do not exceed amounts or levels described in standards established by the Board;

(3) if financial investments are made in the eligible entity, in accordance with item (aa) or (bb) of section 2007c(c)(3)(A)(ii)(I) of this title, to provide for a return of capital to non-Federal investors in the revolving fund, except that if such revolving fund experiences capital or other losses the share of returned capital under this paragraph shall be proportionately, or otherwise appropriately reduced to reflect such losses, under procedures established by the Board; or

(4) to cover reasonable operating or capital expenses, losses, or for other charges as prescribed in rules or standards established by the Board.

(c) Decisions concerning funding

Eligible entities that receive a line of credit under section 2007c of this title shall make case-by-case determinations concerning applications submitted by each local business for loans, equity capital, or loan guarantees, under general procedures and requirements established by the Board.

(d) Requirement of partnerships for loans or investments

Funds in each local revolving fund shall be loaned, invested, or used to provide a guarantee, only if one or more depository institutions (as defined in section 1813(c)(1) of title 12¹ or community development credit unions described in section 2007b(a) of this title, under procedures established by the Board, match each investment or loan made by each such revolving fund to each such local business, on at least a dollar-for-dollar basis, or provide the funds for the loans that are guaranteed by such local revolving fund.

(e) Investment size limits

(1) In general

(A) Amount per local business

The amount of Federal funds provided from any revolving fund for use in making loans or investments, or available regarding each guarantee, shall not exceed $250,000 in any given calendar year, to any single approved local business or to other local businesses that are financially connected or otherwise related to such local business as defined by the Board.

(B) Other sources

Sections 2007a to 2007e of this title shall not be construed to limit the total amount of loans, investments, or guarantees that each local business may receive from sources other than eligible entities.

(C) Procedures

In implementing this paragraph the Board shall develop procedures to establish, impute, or determine the amount of Federal funds that shall be considered available in the revolving funds created by approved eligible entities.

(2) Ineligibility

Any local business that employs 100 or more employees shall not be eligible to receive assistance from a local revolving fund that receives assistance under sections 2007a to 2007e of this title.

(f) Subordinated interest of local revolving fund

If a depository institution (as defined in section 1813(c)(1) of title 12¹ or a community development credit union described in section 2007b(a) of this title has made an investment or loan in a local business in conjunction with an investment or loan made out of the revolving fund of an approved eligible entity, the amount invested or loaned by such revolving fund in such local business may be subordinated to any degree and in any manner.

(g) Other investors

A depository institution (as defined in section 1813(c)(1) of title 12¹, community development credit union described in section 2007b(a) of this title, similar Federally regulated financial institution, State owned bank, local or State government, private philanthrophic² foundation, or other entity that contributes capital to an eligible entity that receives Federal assistance under sections 2007a to 2007e of this title may establish contractual arrangements with such eligible entity concerning the return of such investments in the local revolving fund consistent with subsection (b)(3) of this section.

(h) Additional capital

The Board shall promulgate regulations that provide each participating eligible entity with a sufficient amount of time to obtain additional capital, lines of credit, or letters of intent, if any investor, pursuant to the contract with the eligible entity under subsection (g) of this section, withdraws some or all of its investment.

(i) Continuation of line of credit

A line of credit provided to an approved eligible entity under section 2007c of this title for use in a local revolving fund shall be available to be drawn upon until the Investment Board is terminated or until the line of credit is canceled, revoked, or suspended by the Board or the Secretary as described in section 2007e of this title or subsection (l) of this section.

(j) Continuation of business promotion activities

The Federal assistance provided to any eligible entity under sections 2007a to 2007e of this title shall become the property of such entity on the termination of the Investment Board if—

(1) the Board determines that the eligible entity that administers the local revolving fund has operated the fund in a manner that is consistent with sections 2007a to 2007e of this title; and

(2) the eligible entity contracts with the Secretary to continue to provide lending, investment, and guarantee assistance consistent with sections 2007a to 2007e of this title.

(k) Development of monitoring procedures

On and after the date on which the Investment Board is terminated, the Secretary shall act in place of the Board and shall monitor the operations of eligible entities that receive Federal assistance under sections 2007a to 2007e of this title which continue to exist on such date.

(l) Refund of funds

Notwithstanding subsection (j) of this section, and in addition to any actions taken under section 2007e of this title, if the Secretary finds that the purpose of any eligible entity is no longer to promote business development in a manner consistent with sections 2007a to 2007e of this title, the Secretary shall revoke the approval of the eligible entity, obtain a refund in an amount equal to the amount of funds drawn out of the Federal line of credit issued to the eligible entity together with an appropriate amount of interest on such amount, as determined by the Secretary, and succeed to, or acquire the rights, privileges, and assets, investments of, and the payments due from such eligible entity, as described in section 2007e(h) of this title.

(m) Annual reports to Board

(1) In general

Each eligible entity that receives assistance under sections 2007a to 2007e of this title shall annually prepare and submit to the Board, at such time and in such form as the Board may require, a report describing the financial condition of the eligible entity, and the investments, cash revenues, income from investments, loans made, equity positions taken, guarantees issued, losses sustained or taken, any training, business, or technical assistance, or financial planning provided, operating expenses, loss rates, and such other matters as the Board determines appropriate concerning the eligible entity.

(2) Post termination

After the Board terminates under subsection (n) of this section, the reports required under paragraph (1) shall be submitted to the Secretary who shall stand in the same position as the Board.

(n) Termination of Board

The Investment Board established by section 2007b(a) of this title shall terminate on the last day of the 5th calendar year following November 28, 1990, and on and after November 28, 1990, the Secretary shall act in place of such Board.

(Pub. L. 101 624, title XXIII, §2314, Nov. 28, 1990, 104 Stat. 3991; Pub. L. 102 237, title VII, §702(d), Dec. 13, 1991, 105 Stat. 1880.)

Codification

Section was enacted as part of the Rural Economic Development Act of 1990, and also as part of the Food, Agriculture, Conservation, and Trade Act of 1990, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.

Amendments

1991—Subsec. (a)(1)(A)(i). Pub. L. 102 237 substituted "under sections 2007a to 2007e of this title from the Rural Business Investment Fund" for "from the Fund under sections 2007a to 2007e of this title".

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(7) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective Date

Section effective Oct. 1, 1991, see section 2007(d) of this title.

Section Referred to in Other Sections

This section is referred to in sections 2007, 2007a, 2007b, 2007c, 2007e of this title.

¹So in original. Probably should be followed by a closing parenthesis.

²So in original. Probably should be "philanthropic".

§2007e. Compliance and enforcement

(a) Revocation or cancellation of line of credit and refund

(1) Grounds for revocation

The Board shall revoke or suspend a line of credit, and shall request a full or partial refund of the Federal investment, with an appropriate amount of interest—

(A) for false statements knowingly made in any written statement required under sections 2007a to 2007e of this title, or under any regulation or Federal Register notice issued under sections 2007a to 2007e of this title;

(B) if any written statement required under sections 2007a to 2007e of this title, or under any regulation or Federal Register notice issued under sections 2007a to 2007e of this title, fails to state a material fact necessary in order to make the statement not misleading in the light of the circumstances under which the statement was made;

(C) for willful or repeated violation of, or willful or repeated failure to observe, any provision of sections 2007a to 2007e of this title;

(D) for willful or repeated violation of, or willful or repeated failure to observe, any rule or regulation authorized under sections 2007a to 2007e of this title; or

(E) for violation of, or failure to observe, any cease and desist order issued by the Board under this subsection.

(2) Cancellation of line of credit

Notwithstanding any action taken under paragraph (1), the Board may cancel any prospective payments to be made from any approved line of credit under sections 2007a to 2007e of this title if the Board determines that the eligible entity participating in the program established under sections 2007a to 2007e of this title made an investment, or acted in a manner, that was inconsistent with any provision of sections 2007a to 2007e of this title.

(3) Cease and desist orders

If an eligible entity has not complied with any provision of sections 2007a to 2007e of this title, or of any regulation issued pursuant thereto, or is engaging or is about to engage in conduct that constitutes or will constitute a violation of sections 2007a to 2007e of this title or such regulation, the Board may order such entity to cease and desist from such conduct. The Board may further order such entity to take such action or to refrain from such action as the Board determines necessary to ensure compliance with sections 2007a to 2007e of this title and the regulations issued thereunder.

(4) Order to show cause, contents, and hearing

(A) Order

Prior to revoking or suspending a line of credit under paragraph (1) or (2), or issuing a cease and desist order under paragraph (3), the Board shall serve on the eligible entity an order to show cause why an order revoking or suspending the line of credit or a cease and desist order should not be issued.

(B) Contents

An order to show cause under subparagraph (A) shall contain a statement of the matters of fact and law asserted by the Board and the legal authority and jurisdiction under which a hearing is to be held, and shall state that a hearing will be held before the Board at a time and place stated in the order.

(C) Hearing

If, after a hearing under subparagraph (B) or a waiver thereof, the Board determines on the record that an order revoking or suspending the line of credit, or a cease and desist order should be issued, or an order requiring a refund of the Federal investment in addition to reasonable interest thereon should issue, the Board shall promptly issue such order, which shall include a statement of the findings of the Administration and the reasons for such findings and specify the effective date of the order, and shall cause the order to be served on the entity.

(5) Subpoena of persons, books, papers, and documents; fees and mileage; enforcement

(A) Subpoena

The Board may require by subpoena the attendance and testimony of witnesses and the production of all books, papers, and documents relating to the hearing from any place in the United States.

(B) Fees and mileage

Witnesses summoned before the Board shall be paid by the party at whose instance such witnesses were called the same fees and mileage that are paid witnesses in the courts of the United States.

(C) Enforcement

In the case of disobedience to a subpoena under this paragraph, the Board, or any party to a proceeding before the Board, may invoke the aid of any court of the United States in requiring the attendance and testimony of witnesses and the production of books, papers, and documents.

(6) Petition to modify or set aside order; filing, time and place, administration to submit record; action of court; review

(A) In general

An order issued by the Board under this subsection shall be final and conclusive unless not later than 30 days after the service thereof the eligible entity appeals to the United States Court of Appeals for the circuit in which such corporation has its principal place of business by filing with the clerk of such court a petition praying that the order of the Board be set aside or modified in the manner stated in the petition.

(B) Filing

(i) Leave of court

After the expiration of the 30-day period referred to in subparagraph (A), a petition may be filed only by leave of court on a showing of reasonable grounds for failure to file the petition prior to the expiration of such period.

(ii) Certification

The clerk of the court shall, on filing, cause a copy of the petition to be delivered to the Board and the Board shall certify and file in the court a transcript of the record on which the order was entered. If prior to the filing of such record the Board amends or sets aside its order, in whole or in part, the petitioner may amend the petition within such time as the court may determine, after providing notice to the Board.

(C) Stay or suspension of order

The filing of a petition for review under this paragraph shall not of itself stay or suspend the operation of the order of the Board, but the court of appeals in its discretion may restrain or suspend, in whole or in part, the operation of the order pending the final hearing and determination of the petition.

(D) Action by court

The court may affirm, modify, or set aside the order of the Board.

(E) Additional evidence

(i) Determination

If the court determines that the just and proper disposition of the case requires the taking of additional evidence, the court shall order the Board to reopen the hearing for the taking of such evidence, in such manner and on such terms and conditions as the court may consider appropriate.

(ii) Findings

The Board may modify its findings as to the facts, or make new findings, by reason of the additional evidence taken under this subparagraph, and it shall file its modified or new findings and the amendments, if any, of its order, with the records of such additional evidence.

(F) Consideration of objections

The court shall not consider an objection to an order of the Board unless the objection was argued before the Board or, if it were not so argued, unless there were reasonable grounds for failure to do so.

(G) Review

The judgment and decree of the court affirming, modifying, or setting aside any such order of the Board shall be subject only to review by the Supreme Court of the United States on certification or certiorari as provided in section 1254 of title 28.

(7) Enforcement of order

If the entity against which or against whom an order is issued under this subsection fails to obey the order, the Board may apply to the United States Court of Appeals for the circuit where the entity has its principal place of business, for the enforcement of the order, and shall file a transcript of the record on which the order complained of was entered. On the filing of the application, the court shall cause notice thereof to be served on the entity. The evidence to be considered, the procedure to be followed, and the jurisdiction of the court shall be the same as is provided in paragraph (6) for applications to set aside or modify orders.

(b) Investigations and examinations

(1) Authority

(A) In general

The Board may conduct such investigations as the Board considers necessary to determine whether an eligible entity has engaged in any conduct that constitutes or will constitute a violation of any provision of sections 2007a to 2007e of this title, of any regulation issued under sections 2007a to 2007e of this title, or of any order issued under this section.

(B) Filing of statements

The Board shall permit any individual to file a statement with the Board in writing, under oath, or otherwise as the Board shall determine, as to all the facts and circumstances concerning the matter to be investigated.

(C) Subpoena

For the purpose of any investigation under this subsection, the Board may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, and documents that are relevant to the inquiry. Such attendance of witnesses and the production of any such records may be required from any place in the United States.

(D) Refusal to obey

In case of contumacy by, or refusal to obey a subpoena issued to, any individual, including an entity or corporation, the Board may invoke the aid of any court of the United States within the jurisdiction of which such investigation or proceeding is carried on, or where such individual resides or carries on business activity, in requiring the attendance and testimony of witnesses and the production of books, papers, and documents, and such court may issue an order requiring such individual to appear before the Board, to produce records, if so ordered, or to give testimony touching the matter under investigation.

(E) Contempt

A failure to obey an order of the court under this subsection shall be punishable by such court as a contempt thereof. All process in any such case may be served in the judicial district where such individual is an inhabitant or wherever such individual may be found.

(2) Examinations and reports

(A) Examinations

An eligible entity under sections 2007a to 2007e of this title shall be subject to examinations made by the Board through examiners selected or approved by the Board, and the cost of such examinations, including the compensation of the examiners, may in the discretion of the Board be assessed against the entity examined and when so assessed shall be paid by such entity.

(B) Reports

Such entities shall prepare and submit reports to the Board at such times and in such form as the Board may require.

(3) Examinations

Each eligible entity shall be examined and audited at least once every 2 years, under procedures established by the Board, to determine whether or not such entity has been operated in a manner consistent with sections 2007a to 2007e of this title and in an otherwise lawful manner, except that the Board may defer the examination for not more than 1 year if, in its discretion, the Board determines that such a deferral would be appropriate based on the prior operating experience of the entity, the contents and results of the last examination of the entity, and the management expertise of the entity.

(c) Injunctions or other orders

(1) Grounds and jurisdiction of court

If, in the judgment of the Board, an eligible entity has engaged or is about to engage in conduct that constitutes or will constitute a violation of any provision of sections 2007a to 2007e of this title, of any regulation under sections 2007a to 2007e of this title, or of any order issued under this section, the Board may apply to the proper district court of the United States or a United States court located in any jurisdiction subject to the laws of the United States, for an order enjoining such conduct or enforcing compliance with such provision, rule, regulation, or order. Such court shall have jurisdiction over such conduct and, on a showing by the Board that such entity has engaged in or is about to engage in such conduct, may issue a permanent or temporary injunction, restraining order, or other order without bond.

(2) Equity jurisdiction of corporation and assets

In any proceeding under this section, the court as a court of equity may, to such extent as it considers necessary, declare that such court has exclusive jurisdiction over the entity and the assets thereof, wherever located. Such court shall have jurisdiction in any such proceeding to appoint a trustee or receiver to hold or administer under the direction of the court the assets so possessed.

(3) Trusteeship or receivership

The Board shall have authority to act as trustee or receiver of an entity under this section. On request by the Board, the court may appoint the Board to act in such capacity unless the court determines such appointment to be inequitable or otherwise inappropriate because of the special circumstances involved.

(d) Unlawful acts and omissions by officers, directors, employees, or agents

(1) Violation of sections 2007a to 2007e of this title

It shall be unlawful for any eligible entity to violate any provision of sections 2007a to 2007e of this title or any regulation issued under sections 2007a to 2007e of this title, or for any individual, directly or indirectly, to authorize, order, or participate in, or cause, bring about, counsel, aid, or abet conduct that constitutes or will constitute, in whole or in part, such a violation.

(2) Breach of fiduciary duty

It shall be unlawful for any officer, director, employee, agent, or other participant in the management or conduct of the affairs of an eligible entity to breach the fiduciary duty of such individual or such officer, director, employee, agent, or participant, if, as a result thereof, the entity has suffered or is in imminent danger of suffering financial loss or other damage.

(3) Disqualification of officers and employees

Except on the written consent of the Board, it shall be unlawful for any individual to take or continue to hold office as an officer, director, or employee of an eligible entity, or become or continue to be an agent or participate in the conduct of the affairs or management of an eligible entity if such individual has been—

(A) convicted of a felony, or of any other criminal offense involving dishonesty or breach of trust; or

(B) found civilly liable in damages, or has been permanently or temporarily enjoined by an order, judgment, or decree of a court of competent jurisdiction, by reason of any conduct involving fraud or breach of trust.

(e) Penalties and forfeitures

(1) In general

Except as provided in paragraph (2), an eligible entity that violates any regulation or written directive issued by the Board requiring the filing of any regular or special report under sections 2007a to 2007e of this title, shall forfeit and pay to the United States a civil penalty of not more than $100 for each and every day of the continuance of the corporation's failure to file such report, unless the entity demonstrates that such failure is due to reasonable cause and not due to willful neglect. The civil penalties provided for in this subsection shall accrue to the United States and may be recovered in a civil action brought by the Board.

(2) Exemption

At any time before a failure under paragraph (1), and after notice and opportunity for hearing, the Board may through rules and regulations, or on application of an interested party, by order, exempt in whole or in part, any entity from the provisions of paragraph (1), on such terms and conditions and for such period of time as the Board determines necessary and appropriate, if the Board finds that such action is not inconsistent with the public interest or the protection of the Board. The Board may for purposes of this subsection impose any alternative requirements appropriate to the situation.

(f) Jurisdiction and service of process

Any suit or action brought under this section by the Board to enforce any liability or duty created by, or to enjoin any violation of, sections 2007a to 2007e of this title, or any rule, regulation, or order promulgated thereunder, shall be brought in the district in which the eligible entity maintains its principal office, and process in such cases may be served in any district in which the defendant maintains its principal office or transacts business, or wherever the defendant may be found.

(g) Substitution of Secretary

On the termination of the Board, the Secretary shall stand in place of the Board and shall possess all the powers, privileges, and rights regarding compliance and enforcement described in this section and in section 2007d of this title.

(h) Revocation, suspension, or termination

If the approval of any eligible entity to participate in this program is revoked, suspended, or terminated, or if the activities of the eligible entity otherwise end, the Board, or the Secretary, upon the termination of the Board, shall—

(1) possess all the rights and privileges of such eligible entity;

(2) succeed to the assets of such eligible entity to the extent necessary to obtain a refund of any amounts due to the Board or the Secretary;

(3) be entitled to receive any payments due to such eligible entity from any local businesses on any outstanding loans; and

(4) take over any equity investment held by such eligible entity.

(Pub. L. 101 624, title XXIII, §2315, Nov. 28, 1990, 104 Stat. 3994; Pub. L. 102 237, title VII, §702(e), Dec. 13, 1991, 105 Stat. 1880.)

Codification

Section was enacted as part of the Rural Economic Development Act of 1990, and also as part of the Food, Agriculture, Conservation, and Trade Act of 1990, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.

Amendments

1991—Subsec. (d)(2). Pub. L. 102 237 struck out "engage in conduct, in" after "eligible entity to".

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(7) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective Date

Section effective Oct. 1, 1991, see section 2007(d) of this title.

Section Referred to in Other Sections

This section is referred to in sections 2007, 2007a, 2007b, 2007c, 2007d of this title.

§2008. System for delivery of certain rural development programs

(a) In general

(1) Assistance in eligible States

Assistance under each designated rural development program shall be provided in eligible States to qualified projects in accordance with this section.

(2) No assistance in other States

The Secretary shall not provide assistance under any designated rural development program in any State that is not an eligible State.

(b) Definitions

As used in this section and section 2008a of this title:

(1) Area plan

The term "area plan" means, with respect to a local or regional area in a State, the long-range rural development plan developed for the area. Each area plan shall identify the geographical boundaries of the area and include—

(A) an overall development plan for the area with goals, including business development and infrastructure development goals, and time lines based on a realistic assessment of the area, including, but not limited to—

(i) the number and types of businesses in the area that are growing or declining, and a list of the types of businesses that the area could potentially support;

(ii) the outstanding need for water and waste and other public services or facilities in the area;

(iii) the realistic possibilities for industrial recruitment in the area;

(iv) the potential for the development of tourism in the area;

(v) the potential for the generation of employment in the area through the creation of small businesses and the expansion of existing businesses; and

(vi) the potential for the production of value-added agricultural products in the area;

(B) an inventory and assessment of the human resources of the area, including, but not limited to—

(i) a current list of organizations in the area and their special interests;

(ii) the current level of participation of area residents in rural development activities and the level of participation required for successful implementation of the plan;

(iii) the availability of general and specialized job training in the area and the extent to which the needs of the area for such training are not being met;

(iv) a list of area residents with special skills which could be useful in developing and implementing the plan; and

(v) an analysis of the human needs of the area, the resources in the area available to meet those needs, and the manner in which the plan, if implemented, would increase the resources available to meet those needs;

(C) the current degree of intergovernmental cooperation in the area and the degree of such cooperation needed for the successful implementation of the plan;

(D) the ability and willingness of governments and citizens in the area to become involved in developing and implementing the plan;

(E) a description of how the governments in the area will apply budget and fiscal control processes to the plan; and

(F) the extent to which public services and facilities need to be improved to achieve the economic development and quality of life goals of the plan, taking into consideration, at a minimum—

(i) law enforcement;

(ii) fire protection;

(iii) water and solid waste management;

(iv) education;

(v) health care;

(vi) transportation;

(vii) housing;

(viii) communications; and

(ix) the availability of, and capability to generate, electric power.

(2) Designated rural development program

The term "designated rural development program" means a program carried out under section 1924(b), 1926(a), or subsections (a) through (f) and (h) of section 1932 of this title, or under section 1323 of the Food Security Act of 1985, for which funds are available at any time during the fiscal year under such section.

(3) Eligible State

(A) Requirements

The term "eligible State" means, with respect to a fiscal year, a State to which this section is made applicable under section 2007(b)(2) of this title, and with respect to which all of the following apply not later than the first day of the fiscal year:

(i) Established rural economic development review panel

The State has established an advisory rural economic development review panel that meets the requirements of section 2008a of this title.

(ii) Appointed State coordinator

The Governor of the State has appointed an officer or employee of the State government to—

(I) manage, operate, and carry out the instructions of, the panel described in clause (i);

(II) serve as a liaison between the panel and the Federal and State agencies involved in rural development, including transmitting to the Secretary any list transmitted to the State coordinator pursuant to section 2008a(b)(6) of this title;

(III) ensure that all rural residents in the State are informed about the manner in which assistance under designated rural development programs is to be provided to the State pursuant to this section and section 2008a of this title;

(IV) provide information to State residents, on request, about the manner in which assistance under designated rural development programs is to be provided to the State pursuant to this section and section 2008a of this title; and

(V) coordinate the efforts of interested rural residents with the State rural economic development review panel.

(iii) Designated agency to provide administrative support to panel

The State has designated an agency to provide the panel and the State coordinator with support for the daily operation of the panel described in clause (i).

(B) Good faith exception

Notwithstanding the requirements of subparagraph (A), the Secretary of Agriculture may determine, no later than the first day of the fiscal year, a State to be an eligible State under this paragraph for the fiscal year if the Secretary determines that the State has made a good faith effort to meet, and has substantially met, such requirements.

(4) Qualified project

The term "qualified project" means any project—

(A) for which the agency described in paragraph (3)(A)(iii) of the State has identified—

(i) the alternative Federal, State, local, or private sources of assistance; and

(ii) the related activities in the State; and

(B) to which the Secretary is required by subsection (c)(4) of this section to provide assistance.

(5) State coordinator

The term "State coordinator" means the individual appointed by the Governor of the State to carry out the activities described in paragraph (3)(A)(ii).

(6) State rural economic development review panel

The term "State rural economic development review panel" or "panel" means an advisory panel that meets the requirements of section 2008a of this title.

(c) Duties of Secretary

The Secretary shall, with respect to each eligible State—

(1) review the list, if any, transmitted pursuant to subsection 2008a(b)(6) of this title by any State coordinator;

(2) determine whether each project described in an application in the list meets the requirements of the rural development program under which the application seeks assistance;

(3) remove from the list any application for a project that does not meet the requirements;

(4) provide assistance, subject to available funds, to the projects in the applications remaining in the list after the list has (if necessary) been modified pursuant to paragraph (3), giving consideration to the order in which the applications for such projects are ranked by the respective State panel, and, if assistance is provided to any project without providing assistance to all projects ranked higher in priority by the panel than such project, report to the panel, the Committee on Agriculture of the House of Representatives, and the Committee on Agriculture, Nutrition, and Forestry of the Senate within ten days of determining to fund such lower ranked project on the reasons for that determination;

(5) within thirty days after the date of the enactment of any Act providing appropriations for any designated rural development program for any fiscal year, notify each State of the amounts to be made available to such State under such program for such fiscal year, and the aggregate for such fiscal year of such amounts under all the designated rural development programs;

(6) pay per diem or otherwise reimburse each full-time officer or employee of the United States who is a member of a State rural economic development review panel for expenses incurred each day (including travel time) during which the officer or employee is engaged in the actual performance of a duty of the panel;

(7) from amounts appropriated for grants under any provision of section 1926(a) of this title, make grants not to exceed $100,000 annually to each eligible State for the administrative costs associated with the State rural economic development review panel meeting the requirements of section 2008a of this title; and

(8) appoint a member to the State rural economic development review panel as provided under section 2008a(c)(1)(P) of this title.

(d) Official information

The Secretary may appoint as nonvoting members, temporarily and for specific purposes, personnel from any department or agency of the United States, with the consent of the head of such department or agency, with expertise not available among the members of any State rural economic development review panel as may be necessary to enable the panel to perform a duty described in section 2008a(b) of this title.

(e) Allocation of appropriated funds

(1) Initial allocation

The Secretary shall allocate the sums appropriated for direct loans, loan guarantees, or grants for any designated rural development program made available to any eligible State under such program for any fiscal year to the projects specified in subsection (c)(4) of this section giving great weight to the order in which the applications for such projects are ranked on the list specified in subsection (c)(1) of this section.

(2) Equitable reallocation of unobligated funds

Notwithstanding paragraph (1), the Secretary shall, on July 15 of each year, and from time to time thereafter during the fiscal year as the Secretary determines appropriate, pool from among the eligible States any unobligated funds appropriated for direct loans, loan guarantees, or grants for each designated rural development program and reallocate such funds among the eligible States according to need, as determined by the Secretary.

(f) Inapplicability of Federal Advisory Committee Act

The Federal Advisory Committee Act shall not apply to any State rural economic development review panel.

(g) No liability of members of State rural economic development review panels

The members of a State rural economic development review panel shall not be liable to any person with respect to any determination made by the panel.

(h) Eligibility for water and waste facility loans

(1) Rural electrification program borrowers

Notwithstanding any other provision of law, a borrower under title III of the Rural Electrification Act of 1936 [7 U.S.C. 930 et seq.] shall be eligible to receive loans and grants under section 1926 of this title on an equal basis with any other applicant for such assistance, and the terms and conditions, rules, criteria and other provisions of section 1926 of this title shall apply to such a borrower. In the case of applications from such a borrower, the Administrator of the Rural Electrification Administration shall provide technical assistance with respect to water and waste facilities and loans and grants for such facilities.

(2) Prohibition on restricting water and waste facility services to electric customers

The Secretary shall establish rules and procedures that prohibit borrowers under title III of the Rural Electrification Act of 1936 [7 U.S.C. 930 et seq.] from conditioning or limiting access to, or the use of, water and waste facility services financed under this chapter if such conditioning or limiting is based on whether individuals or entities in the area served or proposed to be served by such facility receive, or will accept, electric service from such borrower.

(Pub. L. 87 128, title III, §365, as added Pub. L. 101 624, title XXIII, §2316(a), Nov. 28, 1990, 104 Stat. 4000; amended Pub. L. 102 237, title VII, §701(e), Dec. 13, 1991, 105 Stat. 1879.)

References in Text

Section 1323 of the Food Security Act of 1985 [Pub. L. 99 198], referred to in subsec. (b)(2), is set out as a note under section 1932 of this title.

The Federal Advisory Committee Act, referred to in subsec. (f), is Pub. L. 92 463, Oct. 6, 1972, 86 Stat. 770, as amended, which is set out in the Appendix to Title 5, Government Organization and Employees.

The Rural Electrification Act of 1936, referred to in subsec. (h), is act May 20, 1936, ch. 432, 49 Stat. 1363, as amended. Title III of the Act is classified generally to subchapter III (§930 et seq.) of chapter 31 of this title. For complete classification of this Act to the Code, see section 901 of this title and Tables.

This chapter, referred to in subsec. (h)(2), was in the original "the Consolidated Farm and Rural Development Act", which is title III of Pub. L. 87 128, as amended. For complete classification of this Act to the Code, see Short Title note set out under section 1921 of this title and Tables.

Amendments

1991—Subsec. (b)(4)(A), (5). Pub. L. 102 237 substituted "(3)(A)(iii)" for "(3)(C)" in par. (4)(A) and "(3)(A)(ii)" for "(3)(B)" in par. (5).

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(6) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective Date

Section effective Oct. 1, 1991, see section 2007(d) of this title.

Section Referred to in Other Sections

This section is referred to in sections 1932, 2007, 2008a, 2008b, 2008c, 6613, 6943 of this title.

§2008a. State rural economic development review panel

(a) In general

In order for a State to become or remain an eligible State, the State must have a State rural economic development review panel that meets all of the requirements of this section.

(b) Duties

The panel must be required to advise the Secretary on the desirability of funding applications for funding from designated rural development programs, and, in developing such advice, the panel must have the following duties:

(1) Review rural development plans of local areas

To review each area plan submitted by a local or regional area.

(2) Evaluate area plans and applications for assistance

(A) Area plans

To evaluate, pursuant to a written policy and criteria, each area plan submitted by a local or regional area and either—

(i) accept any area plan that is technically and economically adequate, feasible, and likely to succeed in meeting the stated goals of the plan, unless the plan is incompatible with any other area plan for that area that has been accepted by the panel; or

(ii) return any plan that is technically or economically inadequate, infeasible, unlikely to be successful, or incompatible with any other area plan for that area that has been accepted by the panel, with an explanation of the reasons for the return with suggested alternative proposals.

In evaluating area plans under this subparagraph, the panel must give great weight to the area plans or other comments submitted by intergovernmental development councils, or similar organizations made up of local elected officials, charged with the responsibility for rural or regional development.

(B) Applications for assistance

To evaluate each application for assistance to determine whether the project to be carried out in any area is compatible with the area plan for the area in which the project described in the application is proposed, and either—

(i) accept any application that the panel determines to be compatible with such area plan; or

(ii) return to the Rural Development Administration any application that the panel determines to be incompatible with such area plan.

(3) Review and rank applications for assistance under designated rural development programs from areas with accepted area plans

To review applications for assistance, that have been accepted pursuant to paragraph (2)(B), for projects to be carried out in any area the area plan for which has been accepted pursuant to paragraph (2)(A), taking into account the sources of assistance and related activities identified pursuant to section 2008(b)(4)(A) of this title, and to rank such applications, subject to paragraphs (4) and (5), pursuant to a written policy and criteria, in an order that takes into account—

(A) in the case of business projects described in the application—

(i) the extent to which a project would—

(I) stimulate rural development by creating new jobs of a permanent nature or retaining existing jobs by enabling new small businesses to be started, or existing businesses to be expanded by local or regional area residents who own and operate the businesses,

(II) contribute to the enhancement and the diversification of the local or regional area economy,

(III) generate or retain jobs for local or regional area residents,

(IV) be carried out by persons with sufficient managerial capability,

(V) be likely to become financially viable, and

(VI) assist a local or regional area in overcoming severe economic distress;

(ii) the distribution of assistance to projects in as many areas as possible in the State, with sensitivity to geographical distribution;

(iii) the technical aspect of the projects;

(iv) the market potential and marketing arrangements for the projects; and

(v) the potential of such project to promote the growth of a rural community by improving the ability of the community to increase the number of persons residing therein and by improving the quality of life of such persons; and

(B) in the case of infrastructure and community facility projects described in the applications the extent to which a project would—

(i) have the potential to promote the growth of a rural community by improving the quality of life for local or regional area residents;

(ii) affect the health and safety of local or regional area residents;

(iii) affect business productivity and efficiency;

(iv) enhance commercial business activity;

(v) have the potential to promote long-term growth, including by increasing the number of persons residing in a rural community;

(vi) address a severe loss or lack of water quality or quantity;

(vii) bring a community into compliance with Federal or State water or waste water standards; and

(viii) consolidate water and waste systems and utilize management efficiencies in new systems.

(4) Priority ranking for projects addressing health emergencies

To give priority in reviewing and ranking, notwithstanding the criteria established in paragraph (3), to applications for projects designed to address a health emergency declared to be such by the appropriate Federal or State government agency.

(5) Priority based on need

If in ranking applications pursuant to paragraphs (3) and (4), 2 or more applications are determined to have comparable strengths in their feasibility and potential for growth, to give priority to the applications for projects for which there is the greatest need.

(6) Transmit list of ranked applications

To transmit to the State coordinator a list of all applications received and indicate on the list—

(A) for all applications accepted, the rank of such applications in accordance with paragraphs (3), (4) and (5); and

(B) for all applications returned, the fact that the application was returned pursuant to paragraph (2) and instruct the State coordinator to transmit the list to the Secretary.

(7) Availability of list of ranked applications

To make available to the public the list of ranked applications submitted under paragraph (6) and to provide a brief explanation and justification of why the project applications received their prioritization.

(8) Establishment and review of written policy and criteria for evaluating and ranking applications

To establish and annually review the written policy and criteria used by the panel in evaluating and ranking applications in accordance with this subsection to ensure that the policy and criteria are consistent with current rural developmental needs, and to provide for public input during the development of the initial policy and criteria.

(c) Membership

(1) Voting members

The panel must be composed of not more than sixteen voting members who are representatives of rural areas—

(A) one of whom is the Governor of the State or the person designated by the Governor to serve on the panel on behalf of the Governor for that year;

(B) one of whom is the director of the State agency responsible for economic and community development or the person designated by the director to serve on the panel on behalf of the director for that year;

(C) one of whom is appointed by a statewide association of banking organizations;

(D) one of whom is appointed by a statewide association of investor-owned utilities;

(E) one of whom is appointed by a statewide association of rural telephone cooperatives;

(F) one of whom is appointed by a statewide association of noncooperative telephone companies;

(G) one of whom is appointed by a statewide association of rural electric cooperatives;

(H) one of whom is appointed by a statewide association of health care organizations;

(I) one of whom is appointed by a statewide association of existing local government-based planning and development organizations;

(J) one of whom is appointed by the Governor of the State from either a statewide rural development organization or a statewide association of publicly-owned electric utilities, neither of which is described in any of subparagraphs (C) through (I);

(K) one of whom is appointed by a statewide association of counties;

(L) one of whom is appointed by a statewide association of towns and townships, or by a statewide association of municipal leagues, as determined by the Governor;

(M) one of whom is appointed by a statewide association of rural water districts;

(N) the State director of the Federal small business development center (or, if there is no small business development center in place with respect to the State, the director of the State office of the Small Business Administration);

(O) the representative for that State of the Economic Development Administration of the Department of Commerce; and

(P) one of whom is appointed by the Secretary from among the officers and employees of the Federal Government.

(2) Nonvoting members

The panel must have not more than four nonvoting members who must serve in an advisory capacity and are representatives of rural areas—

(A) one of whom is appointed by the Governor, from names submitted by the dean, or the equivalent official, of each school or college of business of the colleges and universities in the State;

(B) one of whom is appointed by the Governor, from names submitted by the dean, or the equivalent official, of each school or college of engineering of the colleges and universities in the State;

(C) one of whom is appointed by the Governor, from names submitted by the dean, or the equivalent official, of each school or college of agriculture of the colleges or universities in the State; and

(D) the director of the State agency responsible for extension services for the State.

(3) Appointment of representatives of statewide organizations by the Governor in certain cases

(A) No statewide organization

If there is no statewide association or organization described in subparagraph (C), (D), (E), (F), (G), (H), (I), (K), (L), or (M) of paragraph (1) of the entities described in such subparagraph, the Governor of the State will appoint an individual to fill the position or positions, as the case may be, described in the applicable subparagraph from among nominations submitted by local groups of such entities.

(B) Multiple statewide organizations

If there is more than one of the statewide associations or organizations described in subparagraph (C), (D), (E), (F), (G), (H), (I), (K), (L), or (M) of paragraph (1) of the entities described in such subparagraph, the Governor must select which organization is to name a member. The Governor must rotate such selection among such associations or organizations such that a representative of the selected association or organization serves no more than two years before another such association or organization is selected by the Governor.

(4) Failure to appoint panel members

The failure of the Governor, the Secretary of Agriculture, or an association or organization described in subparagraph (C), (D), (E), (F), (G), (H), (I), (K), (L), or (M) of paragraph (1) to appoint a member to the panel as required under this subsection shall not prevent a State from being determined to be an eligible State.

(d) Notification

Each statewide organization that selects an individual to represent the organization on the panel must have notified the Governor of the State of the selection.

(e) Qualifications of panel members appointed by Governor

Each individual appointed to the panel by the Governor of the State will be specially qualified to serve on the panel by virtue of the individual's technical expertise in business and community development.

(f) Vacancies

A vacancy on the panel must be filled in the manner in which the original appointment was made.

(g) Chairperson and vice chairperson

The panel must have selected two members of the panel who are not officers or employees of the United States to serve as the chairperson and vice chairperson of the panel for a term of one year.

(h) No compensation for Federal members

Except as provided in section 2008(c)(6) of this title, each member of the panel who is an officer or employee of the Federal Government may not receive any compensation or benefits, in addition to that which such officer or employee receives for performance of such officer's or employee's regular employment, by reason of service on the panel.

(i) Rules governing panel meetings

(1) Quorum

A majority of the members of the panel must constitute a quorum for the purpose of conducting business of the panel.

(2) Frequency of meetings

The panel must meet not less frequently than quarterly.

(3) First meeting

The State coordinator must schedule the first panel meeting.

(4) Records of meetings

The panel must keep records of the minutes of the meetings, deliberations, and evaluations of the panel, in sufficient detail to enable the panel to provide to interested persons the reasons for its actions.

(Pub. L. 87 128, title III, §366, as added Pub. L. 101 624, title XXIII, §2316(a), Nov. 28, 1990, 104 Stat. 4004; amended Pub. L. 102 237, title VII, §701(f), Dec. 13, 1991, 105 Stat. 1879.)

Amendments

1991—Subsec. (h). Pub. L. 102 237 substituted "of such officer's" for "of such officer".

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(6) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective Date

Section effective Oct. 1, 1991, see section 2007(d) of this title.

Section Referred to in Other Sections

This section is referred to in sections 1932, 2007, 2008, 2008b, 2008c, 6943 of this title.

§2008b. Limited transfer authority of loan amounts

(a) Transfer of funds

If the sums appropriated for direct loans for the water and waste or community facility program authorized under section 1926(a) of this title and made available to any eligible State (within the meaning of section 2008(b)(3) of this title) under such program for the fiscal year are insufficient to enable the Secretary to provide the full amount of the assistance requested for a project specified in section 2008(c)(4) of this title, the Secretary may transfer, subject to subsection (b) of this section, to one program from the other such program part or all of the sums appropriated for loans made available to the State for such other program.

(b) Limitation on loan amounts transferred

(1) Amounts transferred within certain States

With regard to each eligible State (within the meaning of section 2008(b)(3) of this title), the amount of direct loan funds transferred from a program under this section shall not exceed the amount for such program left unobligated after obligating to each project in an application ranked higher in priority on the list described in section 2008a(b)(6) of this title the full amount of assistance requested for each such project.

(2) Amounts transferred on national basis

With regard to all such eligible States, the amount of direct loan funds transferred in a fiscal year from a program under this section (after accounting for any offsetting transfers into such program) shall not exceed $9,000,000.

(Pub. L. 87 128, title III, §367, as added Pub. L. 101 624, title XXIII, §2317, Nov. 28, 1990, 104 Stat. 4008; amended Pub. L. 102 237, title VII, §701(g), Dec. 13, 1991, 105 Stat. 1879.)

Amendments

1991—Subsec. (b)(1). Pub. L. 102 237 substituted "section 2008a(b)(6)" for "section 2008(b)(6)".

Effective Date of 1991 Amendment

Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(6) of Pub. L. 102 237, set out as a note under section 1421 of this title.

Effective Date

Section effective Oct. 1, 1991, see section 2007(d) of this title.

Section Referred to in Other Sections

This section is referred to in sections 2007, 6943 of this title.

§2008c. Allocation and transfer of loan guarantee authority

(a) Allocation of loan guarantee authority

The Secretary shall allocate among all States the amounts appropriated for loan guarantees under the water and waste or community facility program authorized under section 1926(a) of this title, and the business and industry loan program authorized under section 1932 of this title, in a manner similar to that used for the allocation of direct loan and grant funds appropriated for such programs, and that the Secretary determines to be fair, reasonable, and appropriate.

(b) Transfer of loan guarantee authority

(1) In general

If the sums appropriated for loan guarantees and made available to any eligible State (within the meaning of section 2008(b)(3) of this title) under a program specified in subsection (a) of this section for the fiscal year are insufficient to enable the Secretary to provide the full amount of the assistance requested for a project specified in section 2008(c)(4) of this title, the Secretary may transfer to the program from the other such programs part or all of the sums appropriated for loan guarantees made available to such eligible State for such other program for such fiscal year.

(2) Limitation on guarantee amounts transferred

With regard to each such eligible State, the amount of loan guarantees transferred from a program under this section shall not exceed the amount for such program left unobligated after obligating to each project in an application ranked higher in priority on the list described in section 2008a(b)(6) of this title the full amount of assistance requested for each such project.

(Pub. L. 87 128, title III, §368, as added Pub. L. 101 624, title XXIII, §2317, Nov. 28, 1990, 104 Stat. 4009.)

Effective Date

Subsection (b) of this section effective Oct. 1, 1991, see section 2007(d) of this title.

Section Referred to in Other Sections

This section is referred to in sections 2007, 6943 of this title.

§2008d. Recordkeeping of loans by borrower's gender

The Secretary shall classify, by gender, records of applicants for loans and loan guarantees under this chapter.

(Pub. L. 87 128, title III, §369, as added Pub. L. 102 554, §21(c), Oct. 28, 1992, 106 Stat. 4161.)

References in Text

For definition of "this chapter", referred to in text, see note set out under section 1921 of this title.

Section Referred to in Other Sections

This section is referred to in section 6943 of this title.

§2008e. Prohibition under rural development programs

(a) Prohibition

Assistance under any rural development program administered by the Rural Development Administration, the Farmers Home Administration, the Rural Electrification Administration, or any other agency of the Department of Agriculture shall not be conditioned on any requirement that the recipient of such assistance accept or receive electric service from any particular utility, supplier, or cooperative.

(b) Ensuring compliance

The Secretary shall establish, by regulation, adequate safeguards to ensure that assistance under such rural development programs is not subject to such a condition. Such safeguards shall include periodic certifications and audits, and appropriate measures and sanctions against any person violating, or attempting to violate, the prohibition in subsection (a) of this section.

(c) Regulations

Not later than 6 months after November 1, 1993, the Secretary shall issue interim final regulations to ensure compliance with subsection (a) of this section.

(Pub. L. 87 128, title III, §370, as added Pub. L. 103 129, §5, Nov. 1, 1993, 107 Stat. 1366.)

§2008f. Crop insurance requirement

(a) In general

As a condition of obtaining any benefit (including a direct loan, loan guarantee, or payment) described in subsection (b) of this section, a borrower must obtain at least catastrophic risk protection insurance coverage under section 1508 of this title for the crop and crop year for which the benefit is sought, if the coverage is offered by the Corporation.

(b) Applicable benefits

Subsection (a) of this section shall apply to—

(1) a farm ownership loan (FO) under section 1923 of this title;

(2) an operating loan (OL) under section 1942 of this title; and

(3) an emergency loan (EM) under section 1961 of this title.

(Pub. L. 87 128, title III, §371, as added Pub. L. 103 354, title I, §119(b), Oct. 13, 1994, 108 Stat. 3208.)

Effective Date

Section effective Oct. 13, 1994, and applicable to provision of crop insurance under Federal Crop Insurance Act (7 U.S.C. 1501 et seq.) beginning with 1995 crop year, with such Act, as in effect on the day before Oct. 13, 1994, to continue to apply with respect to 1994 crop year, see section 120 of Pub. L. 103 354, set out as an Effective Date of 1994 Amendment note under section 1502 of this title.

Section Referred to in Other Sections

This section is referred to in section 1508 of this title.