§ 2009cc–1. Purposes

The purposes of the Rural Business Investment Program established under this subchapter are—

• (1) to promote economic development and the creation of wealth and job opportunities in rural areas and among individuals living in those areas by encouraging developmental capital investments in smaller enterprises primarily located in rural areas; and
• (2) to establish a developmental capital program, with the mission of addressing the unmet equity investment needs of small enterprises located in rural areas, by authorizing the Secretary—
  • (A) to enter into participation agreements with rural business investment companies;
  • (B) to guarantee debentures of rural business investment companies to enable each rural business investment company to make developmental capital investments in smaller enterprises in rural areas; and
  • (C) to make grants to rural business investment companies, and to other entities, for the purpose of providing operational assistance to smaller enterprises financed, or expected to be financed, by rural business investment companies.

§ 2009bb–1a. Interstate cooperation for economic opportunity and efficiency

• (a) The Authority shall provide assistance to States in developing regional plans to address multistate economic issues, including plans—
  • (1) to develop a regional transmission system for movement of renewable energy to markets outside the region;
  • (2) to address regional transportation concerns, including the establishment of a Northern Great Plains Regional Transportation Working Group;
  • (3) to encourage and support interstate collaboration on federally-funded research that is in the national interest; and
  • (4) to establish a Regional Working Group on Agriculture Development and Transportation.
• (b) The multistate economic issues referred to in subsection (a) shall include—
  • (1) renewable energy development and transmission;
  • (2) transportation planning and economic development;
  • (3) information technology;
  • (4) movement of freight and individuals within the region;
  • (5) federally-funded research at institutions of higher education; and
  • (6) conservation land management.

§ 2009cc–2. Establishment

In accordance with this subchapter, the Secretary shall establish a Rural Business Investment Program, under which the Secretary may—

• (1) enter into participation agreements with companies granted final approval under section 2009cc–3(e) of this title for the purposes set forth in section 2009cc–1 of this title ;
• (2) guarantee the debentures issued by rural business investment companies as provided in section 2009cc–4 of this title ; and
• (3) make grants to rural business investment companies, and to other entities, under section 2009cc–7 of this title .

§ 2009cc–4. Debentures

• (a) The Secretary may guarantee the timely payment of principal and interest, as scheduled, on debentures issued by any rural business investment company.
• (b) The Secretary may make guarantees under this section on such terms and conditions as the Secretary considers appropriate, except that the term of any debenture guaranteed under this section shall not exceed 15 years.
• (c) Section 2009g(i) of this title shall apply to any guarantee under this section.
• (d) Under this section, the Secretary may—
  • (1) guarantee the debentures issued by a rural business investment company only to the extent that the total face amount of outstanding guaranteed debentures of the rural business investment company does not exceed the lesser of—
    • (A) 300 percent of the private capital of the rural business investment company; or
    • (B) $105,000,000; and
  • (2) provide for the use of discounted debentures.

§ 2009cc–5. Issuance and guarantee of trust certificates

• (a) The Secretary may issue trust certificates representing ownership of all or a fractional part of debentures issued by a rural business investment company and guaranteed by the Secretary under this subchapter, if the certificates are based on and backed by a trust or pool approved by the Secretary and composed solely of guaranteed debentures.
• (b)
  • (1) The Secretary may, under such terms and conditions as the Secretary considers appropriate, guarantee the timely payment of the principal of and interest on trust certificates issued by the Secretary or agents of the Secretary for purposes of this section.
  • (2) Each guarantee under this subsection shall be limited to the extent of principal and interest on the guaranteed debentures that compose the trust or pool.
  • (3)
    • (A)
      • (i) A debenture may be prepaid at any time without penalty.
      • (ii) Subject to clause (i), if a debenture in a trust or pool is prepaid, or in the event of default of such a debenture, the guarantee of timely payment of principal and interest on the trust certificates shall be reduced in proportion to the amount of principal and interest the prepaid debenture represents in the trust or pool.
    • (B) Interest on prepaid or defaulted debentures shall accrue and be guaranteed by the Secretary only through the date of payment of the guarantee.
    • (C) At any time during its term, a trust certificate may be called for redemption due to prepayment or default of all debentures.
• (c) Section 2009g(i) of this title shall apply to any guarantee of a trust certificate issued by the Secretary under this section.
• (d)
  • (1) If the Secretary pays a claim under a guarantee issued under this section, the claim shall be subrogated fully to the rights satisfied by the payment.
  • (2) No Federal, State, or local law shall preclude or limit the exercise by the Secretary of the ownership rights of the Secretary in a debenture residing in a trust or pool against which 1 or more trust certificates are issued under this section.
• (e)
  • (1) The Secretary shall provide for a central registration of all trust certificates issued under this section.
  • (2) The Secretary may—
    • (A) maintain such commercial bank accounts or investments in obligations of the United States as may be necessary to facilitate the creation of trusts or pools backed by debentures guaranteed under this subchapter; and
    • (B) issue trust certificates to facilitate the creation of those trusts or pools.
  • (3) Any agent performing functions on behalf of the Secretary under this paragraph shall provide a fidelity bond or insurance in such amount as the Secretary considers to be necessary to fully protect the interests of the United States.
  • (4) The Secretary may regulate brokers and dealers in trust certificates issued under this section.
  • (5) Nothing in this subsection prohibits the use of a book-entry or other electronic form of registration for trust certificates issued under this section.

§ 2009cc–6. Fees

• (a) The Secretary may charge such fees as the Secretary considers appropriate, so long as those fees are proportionally equal for each rural business investment company, with respect to any guarantee or grant issued under this subchapter.
• (b) Notwithstanding subsection (a), the Secretary shall not collect a fee for any guarantee of a trust certificate under section 2009cc–5 of this title , except that any agent of the Secretary may collect such fees as the Secretary considers appropriate, so long as those fees are proportionally equal for each rural business investment company, for the functions described in section 2009cc–5(e)(2) of this title .
• (c)
  • (1) Except as provided in paragraph (3), the Secretary may prescribe fees to be paid by each applicant for a license to operate as a rural business investment company under this subchapter.
  • (2) Fees collected under this subsection—
    • (A) shall be deposited in the account for salaries and expenses of the Secretary;
    • (B) are authorized to be appropriated as the Secretary considers appropriate; and
    • (C) shall be in such amounts as the Secretary considers appropriate.
  • (3) In the case of a license described in paragraph (1) that was approved before July 1, 2007 , the Secretary shall not collect any fees due on or after the date of enactment of this paragraph.

§ 2009cc–8. Rural business investment companies

• (a) For the purpose of this subchapter, a rural business investment company shall—
  • (1) be an incorporated body, a limited liability company, or a limited partnership organized and chartered or otherwise existing under State law solely for the purpose of performing the functions and conducting the activities authorized by this subchapter;
  • (2)
    • (A) if incorporated, have succession for a period of not less than 30 years unless earlier dissolved by the shareholders of the rural business investment company; and
    • (B) if a limited partnership or a limited liability company, have succession for a period of not less than 10 years; and
  • (3) possess the powers reasonably necessary to perform the functions and conduct the activities.
• (b) The articles of any rural business investment company—
  • (1) shall specify in general terms—
    • (A) the purposes for which the rural business investment company is formed;
    • (B) the name of the rural business investment company;
    • (C) the area or areas in which the operations of the rural business investment company are to be carried out;
    • (D) the place where the principal office of the rural business investment company is to be located; and
    • (E) the amount and classes of the shares of capital stock of the rural business investment company;
  • (2) may contain any other provisions consistent with this subchapter that the rural business investment company may determine appropriate to adopt for the regulation of the business of the rural business investment company and the conduct of the affairs of the rural business investment company; and
  • (3) shall be subject to the approval of the Secretary.
• (c)
  • (1) Except as provided in paragraph (2), the private capital of each rural business investment company shall be not less than—
    • (A) $5,000,000; or
    • (B) $10,000,000, with respect to each rural business investment company authorized or seeking authority to issue participating securities to be purchased or guaranteed by the Secretary under this subchapter.
  • (2) The Secretary may, in the discretion of the Secretary and based on a showing of special circumstances and good cause, permit the private capital of a rural business investment company described in paragraph (1)(B) to be less than $10,000,000, but not less than $5,000,000, if the Secretary determines that the action would not create or otherwise contribute to an unreasonable risk of default or loss to the Federal Government.
  • (3) Each rural business investment company shall have a period of 2 years to meet the capital requirements of this subsection.
  • (4) In addition to the requirements of paragraph (1), the Secretary shall—
    • (A) determine whether the private capital of each rural business investment company is adequate to ensure a reasonable prospect that the rural business investment company will be operated soundly and profitably, and managed actively and prudently in accordance with the articles of the rural business investment company;
    • (B) determine that the rural business investment company will be able to comply with the requirements of this subchapter;
    • (C) require that at least 75 percent of the capital of each rural business investment company is invested in rural business concerns and not more than 10 percent of the investments shall be made in an area containing a city of over 150,000 in the last decennial census and the Census Bureau defined urbanized area containing or adjacent to that city;
    • (D) ensure that the rural business investment company is designed primarily to meet equity capital needs of the businesses in which the rural business investment company invests and not to compete with traditional small business financing by commercial lenders; and
    • (E) require that the rural business investment company makes short-term non-equity investments of less than 5 years only to the extent necessary to preserve an existing investment.
• (d) The Secretary shall ensure that the management of each rural business investment company licensed after May 13, 2002 , is sufficiently diversified from and unaffiliated with the ownership of the rural business investment company so as to ensure independence and objectivity in the financial management and oversight of the investments and operations of the rural business investment company.

§ 2009cc–9. Financial institution investments

• (a)
  • (1) Except as otherwise provided in this section and notwithstanding any other provision of law, the following banks, associations, and institutions are eligible both to establish and invest in any rural business investment company or in any entity established to invest solely in rural business investment companies:
    • (A) Any bank or savings association the deposits of which are insured under the Federal Deposit Insurance Act ( 12 U.S.C. 1811 et seq.), including an investment pool created entirely by such bank or savings association.
    • (B) Any Farm Credit System institution described in section 1.2(a) of the Farm Credit Act of 1971 ( 12 U.S.C. 2002(a) ).
  • (2) The Secretary may not require that an entity described in paragraph (1) provide investment or capital that is not required of other companies eligible to apply to operate as a rural business investment company under section 2009cc–3(a) of this title .
• (b) No bank, association, or institution described in subsection (a) may make investments described in subsection (a) that are greater than 5 percent of the capital and surplus of the bank, association, or institution.
• (c) If a Farm Credit System institution described in section 1.2(a) of the Farm Credit Act of 1971 ( 12 U.S.C. 2002(a) ) holds more than 50 percent of the shares of a rural business investment company, either alone or in conjunction with other System institutions (or affiliates), the rural business investment company shall not provide equity investments in, or provide other financial assistance to, entities that are not otherwise eligible to receive financing from the Farm Credit System under that Act ( 12 U.S.C. 2001 et seq.).

§ 2009cc–10. Reporting requirements

• (a) Each rural business investment company that participates in the program established under this subchapter shall provide to the Secretary such information as the Secretary may require, including—
  • (1) information relating to the measurement criteria that the rural business investment company proposed in the program application of the rural business investment company; and
  • (2) in each case in which the rural business investment company under this subchapter makes an investment in, or a loan or grant to, a business that is not located in a rural area, a report on the number and percentage of employees of the business who reside in those areas.
• (b)
  • (1) The Secretary shall prepare and make available to the public an annual report on the program established under this subchapter, including detailed information on—
    • (A) the number of rural business investment companies licensed by the Secretary during the previous fiscal year;
    • (B) the aggregate amount of leverage that rural business investment companies have received from the Federal Government during the previous fiscal year;
    • (C) the aggregate number of each type of leveraged instruments used by rural business investment companies during the previous fiscal year and how each number compares to previous fiscal years;
    • (D) the number of rural business investment company licenses surrendered and the number of rural business investment companies placed in liquidation during the previous fiscal year, identifying the amount of leverage each rural business investment company has received from the Federal Government and the type of leverage instruments each rural business investment company has used;
    • (E) the amount of losses sustained by the Federal Government as a result of operations under this subchapter during the previous fiscal year and an estimate of the total losses that the Federal Government can reasonably expect to incur as a result of the operations during the current fiscal year;
    • (F) actions taken by the Secretary to maximize recoupment of funds of the Federal Government expended to implement and administer the Rural Business Investment Program under this subchapter during the previous fiscal year and to ensure compliance with the requirements of this subchapter (including regulations);
    • (G) the amount of Federal Government leverage that each licensee received in the previous fiscal year and the types of leverage instruments each licensee used;
    • (H) for each type of financing instrument, the sizes, types of geographic locations, and other characteristics of the small business investment companies using the instrument during the previous fiscal year, including the extent to which the investment companies have used the leverage from each instrument to make loans or equity investments in rural areas; and
    • (I) the actions of the Secretary to carry out this subchapter.
  • (2) In compiling the report required under paragraph (1), the Secretary may not—
    • (A) compile the report in a manner that permits identification of any particular type of investment by an individual rural business investment company or small business concern in which a rural business investment company invests; and
    • (B) may not release any information that is prohibited under section 1905 of title 18 .

§ 2009cc–11. Examinations

• (a) Each rural business investment company that participates in the program established under this subchapter shall be subject to examinations made at the direction of the Secretary in accordance with this section.
• (b) An examination under this section may be conducted with the assistance of a private sector entity that has the qualifications and the expertise necessary to conduct such an examination.
• (c)
  • (1) The Secretary may assess the cost of an examination under this section, including compensation of the examiners, against the rural business investment company examined.
  • (2) Any rural business investment company against which the Secretary assesses costs under this paragraph shall pay the costs.
• (d) Funds collected under this section shall—
  • (1) be deposited in the account that incurred the costs for carrying out this section;
  • (2) be made available to the Secretary to carry out this section, without further appropriation; and
  • (3) remain available until expended.

§ 2009cc–12. Injunctions and other orders

• (a)
  • (1) Whenever, in the judgment of the Secretary, a rural business investment company or any other person has engaged or is about to engage in any act or practice that constitutes or will constitute a violation of a provision of this subchapter (including any rule, regulation, order, or participation agreement under this subchapter), the Secretary may apply to the appropriate district court of the United States for an order enjoining the act or practice, or for an order enforcing compliance with the provision, rule, regulation, order, or participation agreement.
  • (2) The court shall have jurisdiction over the action and, on a showing by the Secretary that the rural business investment company or other person has engaged or is about to engage in an act or practice described in paragraph (1), a permanent or temporary injunction, restraining order, or other order, shall be granted without bond.
• (b)
  • (1) In any proceeding under subsection (a), the court as a court of equity may, to such extent as the court considers necessary, take exclusive jurisdiction over the rural business investment company and the assets of the rural business investment company, wherever located.
  • (2) The court shall have jurisdiction in any proceeding described in paragraph (1) to appoint a trustee or receiver to hold or administer the assets.
• (c)
  • (1) The Secretary may act as trustee or receiver of a rural business investment company.
  • (2) On the request of the Secretary, the court shall appoint the Secretary to act as a trustee or receiver of a rural business investment company unless the court considers the appointment inequitable or otherwise inappropriate by reason of any special circumstances involved.

§ 2009cc–13. Additional penalties for noncompliance

• (a) With respect to any rural business investment company that violates or fails to comply with this subchapter (including any rule, regulation, order, or participation agreement under this subchapter), the Secretary may, in accordance with this section—
  • (1) void the participation agreement between the Secretary and the rural business investment company; and
  • (2) cause the rural business investment company to forfeit all of the rights and privileges derived by the rural business investment company under this subchapter.
• (b)
  • (1) Before the Secretary may cause a rural business investment company to forfeit rights or privileges under subsection (a), a court of the United States of competent jurisdiction must find that the rural business investment company committed a violation, or failed to comply, in a cause of action brought for that purpose in the district, territory, or other place subject to the jurisdiction of the United States, in which the principal office of the rural business investment company is located.
  • (2) Each cause of action brought by the United States under this subsection shall be brought by the Secretary or by the Attorney General.

§ 2009cc–14. Unlawful acts and omissions; breach of fiduciary duty

• (a) Whenever any rural business investment company violates this subchapter (including any rule, regulation, order, or participation agreement under this subchapter), by reason of the failure of the rural business investment company to comply with this subchapter or by reason of its engaging in any act or practice that constitutes or will constitute a violation of this subchapter, the violation shall also be deemed to be a violation and an unlawful act committed by any person that, directly or indirectly, authorizes, orders, participates in, causes, brings about, counsels, aids, or abets in the commission of any acts, practices, or transactions that constitute or will constitute, in whole or in part, the violation.
• (b) It shall be unlawful for any officer, director, employee, agent, or other participant in the management or conduct of the affairs of a rural business investment company to engage in any act or practice, or to omit any act or practice, in breach of the fiduciary duty of the officer, director, employee, agent, or participant if, as a result of the act or practice, the rural business investment company suffers or is in imminent danger of suffering financial loss or other damage.
• (c) Except with the written consent of the Secretary, it shall be unlawful—
  • (1) for any person to take office as an officer, director, or employee of any rural business investment company, or to become an agent or participant in the conduct of the affairs or management of a rural business investment company, if the person—
    • (A) has been convicted of a felony, or any other criminal offense involving dishonesty or breach of trust; or
    • (B) has been found liable in a civil action for damages, or has been permanently or temporarily enjoined by an order, judgment, or decree of a court of competent jurisdiction, by reason of any act or practice involving fraud or breach of trust; and
  • (2) for any person to continue to serve in any of the capacities described in paragraph (1), if—
    • (A) the person is convicted of a felony or any other criminal offense involving dishonesty or breach of trust; or
    • (B) the person is found liable in a civil action for damages, or is permanently or temporarily enjoined by an order, judgment, or decree of a court of competent jurisdiction, by reason of any act or practice involving fraud or breach of trust.

§ 2009cc–15. Removal or suspension of directors or officers

Using the procedures established by the Secretary for removing or suspending a director or an officer of a rural business investment company, the Secretary may remove or suspend any director or officer of any rural business investment company.

§ 2009cc–17. Regulations

The Secretary may promulgate such regulations as the Secretary considers necessary to carry out this subchapter.

§ 2009cc–18. Authorization of appropriations

There is authorized to be appropriated to carry out this subchapter $20,000,000 for each of fiscal years 2014 through 2023.

§ 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.

§ 1922. Persons eligible for real estate loans

• (a)
  • (1) The Secretary may make and insure loans under this subchapter to farmers and ranchers in the United States, and to farm cooperatives and private domestic corporations, partnerships, joint operations, trusts, limited liability companies, and such other legal entities as the Secretary considers appropriate, 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, joint operations, trusts, limited liability companies, and such other legal entities, individuals holding a majority interest in such entity, must (A) be citizens of the United States, (B) for direct loans only, have either training or farming experience that the Secretary determines is sufficient to assure reasonable prospects of success in the proposed farming operations, taking into consideration all farming experience of the applicant, without regard to any lapse between farming experiences, (C) be or will become owner-operators of not larger than family farms (or in the case of cooperatives, corporations, partnerships, joint operations, trusts, limited liability companies, and such other legal entities 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 (D) 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, joint operations, trusts, limited liability companies, and such other legal entities, the family farm requirement of subparagraph (C) 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 subparagraph (D) of the preceding sentence shall apply as well to the entity in the case of cooperatives, corporations, partnerships, joint operations, trusts, limited liability companies, and such other legal entities.
  • (2)
    • (A) An entity that is or will become only the operator of a family farm shall be considered to meet the owner-operator requirements of paragraph (1) if the individuals that are the owners of the family farm own more than 50 percent (or such other percentage as the Secretary determines is appropriate) of the entity.
    • (B) An entity that is an owner-operator described in paragraph (1), or an operator described in subparagraph (A) of this paragraph that is owned, in whole or in part, by other entities, shall be considered to meet the direct ownership requirement imposed under paragraph (1) if at least 75 percent of the ownership interests of each embedded entity of the entity is owned directly or indirectly by the individuals that own the family farm.
• (b)
  • (1) Subject to paragraph (3), the Secretary may make a direct loan under this subchapter only to a farmer or rancher who has participated in the business operations of a farm or ranch for not less than 3 years or has other acceptable experience for a period of time, as determined by the Secretary, and—
    • (A) is a qualified beginning farmer or rancher;
    • (B) has not received a previous direct farm ownership loan made under this subchapter; or
    • (C) has not received a direct farm ownership loan under this subchapter more than 10 years before the date the new loan would be made.
  • (2) The operation of an enterprise by a youth under section 1941(b) of this title shall not be considered the operation of a farm or ranch for purposes of paragraph (1).
  • (3)
    • (A) Subject to subparagraphs (B) and (C), the Secretary may make a direct loan under this subchapter to a farmer or rancher who has a direct loan outstanding under this subchapter on April 4, 1996 .
    • (B) If, as of April 4, 1996 , a farmer or rancher has had a direct loan outstanding under this subchapter for less than 5 years, the Secretary shall not make a loan to the farmer or rancher under subparagraph (A) after the date that is 10 years after April 4, 1996 .
    • (C) If, as of April 4, 1996 , a farmer or rancher has had a direct loan outstanding under this subchapter for 5 years or more, the Secretary shall not make a loan to the farmer or rancher under subparagraph (A) after the date that is 5 years after April 4, 1996 .
    • (D) Beginning with fiscal year 2000 not later than 12 months before a borrower will become ineligible for direct loans under this subchapter by reason of this paragraph, the Secretary shall notify the borrower of such impending ineligibility.
  • (4) In the case of a qualified beginning farmer or rancher, the Secretary may—
    • (A) reduce the 3-year requirement in paragraph (1) to 1 or 2 years, if the farmer or rancher has—
      • (i) not less than 16 credit hours of post-secondary education in a field related to agriculture;
      • (ii) successfully completed a farm management curriculum offered by a cooperative extension service, a community college, an adult vocational agriculture program, a nonprofit organization, or a land-grant college or university;
      • (iii) at least 1 year of experience as hired farm labor with substantial management responsibilities;
      • (iv) successfully completed a farm mentorship, apprenticeship, or internship program with an emphasis on management requirements and day-to-day farm management decisions;
      • (v) significant business management experience;
      • (vi) been honorably discharged from the armed forces of the United States;
      • (vii) successfully repaid a youth loan made under section 1941(b) of this title ; or
      • (viii) an established relationship with an individual who has experience in farming or ranching, or is a retired farmer or rancher, and is participating as a counselor in a Service Corps of Retired Executives program authorized under section 637(b)(1)(B) of title 15 , or with a local farm or ranch operator or organization, approved by the Secretary, that is committed to mentoring the farmer or rancher; or
    • (B) waive the 3-year requirement in paragraph (1) if the farmer or rancher meets the requirements of clauses (iii) and (viii) of subparagraph (A).

§ 1923. Purposes of loans

• (a)
  • (1) A farmer or rancher may use a direct loan made under this subchapter only for—
    • (A) acquiring or enlarging a farm or ranch;
    • (B) making capital improvements to a farm or ranch;
    • (C) paying loan closing costs related to acquiring, enlarging, or improving a farm or ranch;
    • (D) paying for activities to promote soil and water conservation and protection described in section 1924 of this title on a farm or ranch; or
    • (E) refinancing a temporary bridge loan made by a commercial or cooperative lender to a farmer or rancher for the acquisition of land for a farm or ranch, if—
      • (i) the Secretary approved an application for a direct farm ownership loan to the farmer or rancher for acquisition of the land; and
      • (ii) funds for direct farm ownership loans under section 1994(b) of this title were not available at the time at which the application was approved.
  • (2) A farmer or rancher may use a loan guaranteed under this subchapter only for—
    • (A) acquiring or enlarging a farm or ranch;
    • (B) making capital improvements to a farm or ranch;
    • (C) paying loan closing costs related to acquiring, enlarging, or improving a farm or ranch;
    • (D) paying for activities to promote soil and water conservation and protection described in section 1924 of this title on a farm or ranch; or
    • (E) refinancing indebtedness.
• (b) In making or guaranteeing a loan under this subchapter for purchase of a farm or ranch, the Secretary shall give preference to a person who—
  • (1) has a dependent family;
  • (2) to the extent practicable, is able to make an initial down payment on the farm or ranch; or
  • (3) is an owner of livestock or farm or ranch equipment that is necessary to successfully carry out farming or ranching operations.
• (c)
  • (1) After the Secretary makes the determination required by paragraph (2), the Secretary may not make a loan to a farmer or rancher under this subchapter unless the farmer or rancher has, or agrees to obtain, hazard insurance on any real property to be acquired or improved with the loan.
  • (2) Not later than 180 days after April 4, 1996 , the Secretary shall determine the appropriate level of insurance to be required under paragraph (1).

§ 1924. Conservation loan and loan guarantee program

• (a) The Secretary may make or guarantee qualified conservation loans to eligible borrowers under this section.
• (b) In this section:
  • (1) The term “qualified conservation loan” means a loan, the proceeds of which are used to cover the costs to the borrower of carrying out a qualified conservation project.
  • (2) The term “qualified conservation project” means conservation measures that address provisions of a conservation plan of the eligible borrower.
  • (3) The term “conservation plan” means a plan, approved by the Secretary, that, for a farming or ranching operation, identifies the conservation activities that will be addressed with loan funds provided under this section, including—
    • (A) the installation of conservation structures to address soil, water, and related resources;
    • (B) the establishment of forest cover for sustained yield timber management, erosion control, or shelter belt purposes;
    • (C) the installation of water conservation measures;
    • (D) the installation of waste management systems;
    • (E) the establishment or improvement of permanent pasture;
    • (F) compliance with section 3812 of title 16 ; and
    • (G) other purposes consistent with the plan, including the adoption of any other emerging or existing conservation practices, techniques, or technologies approved by the Secretary.
• (c)
  • (1) The Secretary may make or guarantee loans to farmers or ranchers in the United States, farm cooperatives, private domestic corporations, partnerships, joint operations, trusts, limited liability companies, or such other legal entities as the Secretary considers appropriate that are controlled by farmers or ranchers and engaged primarily and directly in agricultural production in the United States.
  • (2) To be eligible for a loan under this section, applicants shall meet the requirements in subparagraphs (A) and (B) of section 1922(a)(1) of this title .
• (d) In making or guaranteeing loans under this section, the Secretary shall give priority to—
  • (1) qualified beginning farmers or ranchers and socially disadvantaged farmers or ranchers;
  • (2) owners or tenants who use the loans to convert to sustainable or organic agricultural production systems; and
  • (3) producers who use the loans to build conservation structures or establish conservation practices to comply with section 3812 of title 16 .
• (e) The portion of a loan that the Secretary may guarantee under this section shall be—
  • (1) 80 percent of the principal amount of the loan; or
  • (2) in the case of a producer that is a qualified socially disadvantaged farmer or rancher or a beginning farmer or rancher, 90 percent of the principal amount of the loan.
• (f) The Secretary shall ensure, to the maximum extent practicable, that loans made or guaranteed under this section are distributed across diverse geographic regions.
• (g) The provisions of paragraphs (1) and (3) of section 1983 of this title shall not apply to loans made or guaranteed under this section.
• (h) There is authorized to be appropriated to the Secretary to carry out this section $150,000,000 for each of fiscal years 2014 through 2023.

§ 1925. Limitations on amount of farm ownership loans

• (a) 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, $600,000, or, in the case of a loan guaranteed by the Secretary, $1,750,000 (increased, beginning with fiscal year 2019, by the inflation percentage applicable to the fiscal year in which the loan is guaranteed and reduced by the amount of any unpaid indebtedness of the borrower on loans under subchapter II that are guaranteed by the Secretary).
• (b) In determining the value of the farm, the Secretary shall consider appraisals made by competent appraisers under rules established by the Secretary.
• (c) For purposes of this section, the inflation percentage applicable to a fiscal year is the percentage (if any) by which—
  • (1) the average of the Prices Paid By Farmers Index (as compiled by the National Agricultural Statistics Service of the Department of Agriculture) for the 12-month period ending on July 31 of the immediately preceding fiscal year; exceeds
  • (2) the average of such index (as so defined) for the 12-month period that immediately precedes the 12-month period described in paragraph (1).

§ 1926. Water and waste facility loans and grants

• (a)
  • (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 or insure loans to communities that have been designated as rural empowerment zones or rural enterprise communities pursuant to part I of subchapter U of chapter 1 of title 26, or as rural enterprise communities pursuant to section 766 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999 ( Public Law 105–277 ; 112 Stat. 2681 , 2681–37), to provide for the installation or improvement of essential community facilities including necessary related equipment, 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)
    • (A)
      • (i) The Secretary is authorized to make grants 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.
      • (ii) The amount of any grant made under the authority of this subparagraph 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.
      • (iii) 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.
    • (B)
      • (i) The Secretary may make grants to qualified private, nonprofit entities to capitalize revolving funds for the purpose of providing financing to eligible entities for—
        • (I) predevelopment costs associated with proposed water and wastewater projects or with existing water and wastewater systems; and
        • (II) short-term costs incurred for replacement equipment, small-scale extension services, or other small capital projects that are not part of the regular operations and maintenance activities of existing water and wastewater systems.
      • (ii) To be eligible to obtain financing from a revolving fund under clause (i), an eligible entity must be eligible to obtain a loan, loan guarantee, or grant under paragraph (1) or this paragraph.
      • (iii) The amount of financing made to an eligible entity under this subparagraph shall not exceed—
        • (I) $200,000 for costs described in clause (i)(I); and
        • (II) $200,000 for costs described in clause (i)(II).
      • (iv) The term of financing provided to an eligible entity under this subparagraph shall not exceed 10 years.
      • (v) The Secretary shall limit the amount of grant funds that may be used by a grant recipient for administrative costs incurred under this subparagraph.
      • (vi) A nonprofit entity receiving a grant under this subparagraph shall submit to the Secretary an annual report that describes the number and size of communities served and the type of financing provided.
      • (vii) There are authorized to be appropriated to carry out this subparagraph $15,000,000 for each of fiscal years 2019 through 2023.
    • (C)
      • (i) The Secretary may establish the Special Evaluation Assistance for Rural Communities and Households (SEARCH) program, to make predevelopment planning grants for feasibility studies, design assistance, and technical assistance, to financially distressed communities in rural areas with populations of 2,500 or fewer inhabitants for water and waste disposal projects described in paragraph (1), this paragraph, and paragraph (24).
      • (ii)
        • (I) With respect to grants made under this subparagraph, the Secretary shall require the lowest amount of documentation practicable.
        • (II) Notwithstanding any other provisions in this subsection, the Secretary may fund up to 100 percent of the eligible costs of grants provided under this subparagraph, as determined by the Secretary.
      • (iii) The Secretary may use not more than 4 percent of the total amount of funds made available for a fiscal year for water, waste disposal, and essential community facility activities under this chapter to carry out this subparagraph.
      • (iv) The funds and authorities provided under this subparagraph are in addition to any other funds or authorities the Secretary may have to carry out activities described in clause (i).
  • (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) Not earlier than 60 days before a preliminary application is filed for a loan under paragraph (1) or a grant under paragraph (2) for a water or waste disposal purpose, a notice of the intent of the applicant to apply for the loan or grant shall be published in a general circulation newspaper. The selection of engineers for a project design shall be done by a request for proposals by the applicant.
  • (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) Repealed. Pub. L. 107–171, title VI, § 6020(b)(1) , May 13, 2002 , 116 Stat. 363 .
  • (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 made available under this section for a water system unless the Secretary determines that the water system will make significant progress toward meeting the standards established under title XIV of the Public Health Service Act (commonly known as the “Safe Drinking Water Act”) ( 42 U.S.C. 300f et seq.).
  • (10) No Federal funds shall be made available under this section for a water treatment discharge or waste disposal system unless the Secretary determines that the effluent from the system conforms with applicable Federal and State water pollution control standards.
  • (11) Repealed. Pub. L. 113–79, title VI, § 6012(b) , Feb. 7, 2014 , 128 Stat. 845 .
  • (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 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;
      • (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;
      • (iv) identify options to enhance the long-term sustainability of rural water and waste systems, including operational practices, revenue enhancements, partnerships, consolidation, regionalization, or contract services; and
      • (v) address the contamination of drinking water and surface water supplies by emerging contaminants, including per- and polyfluoroalkyl substances.
    • (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 3 percent and not more than 5 percent of any funds appropriated 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 3 percent of those funds.
  • (15) 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 .
  • (16) 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.
  • (17)
    • (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.
  • (18) 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.
  • (19)
    • (A) The Secretary may make grants, in a total amount not to exceed $10,000,000 for any fiscal year, to associations, units of general local government, nonprofit corporations, Indian Tribes (as defined in section 5304(e) of title 25 ), and federally recognized Indian tribes to provide the Federal share of the cost of developing specific essential community facilities in rural areas.
    • (B)
      • (i) Except as provided in clauses (ii) and (iii), the Secretary shall, by regulation, establish the amount of the Federal share of the cost of the facility under this paragraph.
      • (ii) The amount of a grant provided under this paragraph for a facility shall not exceed 75 percent of the cost of developing the facility.
      • (iii) The Secretary shall provide for a graduated scale for the amount of the Federal share provided under this paragraph, with higher Federal shares for facilities in communities that have lower community population and income levels, as determined by the Secretary.
  • (20)
    • (A) In this paragraph, the term “not employed rate”, with respect to a community, means the percentage of individuals over the age of 18 who reside within the community and who are ready, willing, and able to be employed but are unable to find employment, as determined by the department of labor of the State in which the community is located.
    • (B) The Secretary may make grants to associations, units of general local government, nonprofit corporations, and Indian tribes (as defined in section 5304 of title 25 ) in a State to provide the Federal share of the cost of developing specific essential community facilities in rural communities with respect to which the not employed rate is greater than the lesser of—
      • (i) 500 percent of the average national unemployment rate on November 9, 2000 , as determined by the Bureau of Labor Statistics; or
      • (ii) 200 percent of the average national unemployment rate during the Great Depression, as determined by the Bureau of Labor Statistics.
    • (C) Paragraph (19)(B) shall apply to a grant made under this paragraph.
    • (D) There are authorized to be appropriated to carry out this paragraph $50,000,000 for fiscal year 2001 and such sums as are necessary for each subsequent fiscal year, of which not more than 5 percent of the amount made available for a fiscal year shall be available for community planning and implementation.
    • (E) Notwithstanding subparagraph (C), the Secretary may make grants to State agencies for use by regulatory commissions in states 1 1 So in original. Probably should be capitalized. with rural communities without local broadband service to establish a competitively, technologically neutral grant program to telecommunications carriers or cable operators that establish common carrier facilities and services which, in the commission’s determination, will result in the long-term availability to such communities of affordable broadband services which are used for the provision of high speed Internet access.
  • (21)
    • (A) The Secretary may make grants to associations, units of general local government, nonprofit corporations, and Indian tribes (as defined in section 5304 of title 25 ) in a State to provide the Federal share of the cost of developing specific essential community facilities in any geographic area—
      • (i) that is represented by—
        • (I) any political subdivision of a State;
        • (II) an Indian tribe on a Federal or State reservation; or
        • (III) other federally recognized Indian tribal group;
      • (ii) that is located in a rural area (as defined in section 2009 2 2 See References in Text note below. of this title);
      • (iii) with respect to which, during the most recent 5-year period, the net out-migration of inhabitants, or other population loss, from the area equals or exceeds 5 percent of the population of the area; and
      • (iv) that has a median household income that is less than the nonmetropolitan median household income of the United States.
    • (B) Paragraph (19)(B) shall apply to a grant made under this paragraph.
    • (C) There are authorized to be appropriated to carry out this paragraph $50,000,000 for fiscal year 2001 and such sums as are necessary for each subsequent fiscal year, of which not more than 5 percent of the amount made available for a fiscal year shall be available for community planning and implementation.
  • (22)
    • (A) The Secretary shall continue a national rural water and wastewater circuit rider program that—
      • (i) is consistent with the activities and results of the program conducted before February 7, 2014 , as determined by the Secretary; and
      • (ii) receives funding from the Secretary, acting through the Rural Utilities Service.
    • (B) There is authorized to be appropriated to carry out this paragraph $25,000,000 for each of fiscal years 2019 through 2023.
  • (23) Repealed. Pub. L. 115–334, title VI, § 6601(a)(1)(A) , Dec. 20, 2018 , 132 Stat. 4775 .
  • (24)
    • (A) The Secretary may guarantee a loan made to finance a community facility or water or waste facility project in a rural area, including a loan financed by the net proceeds of a bond described in section 142(a) of title 26 .
    • (B) To be eligible for a loan guarantee under subparagraph (A), an individual or entity offering to purchase the loan shall demonstrate to the Secretary that the person has—
      • (i) the capabilities and resources necessary to service the loan in a manner that ensures the continued performance of the loan, as determined by the Secretary; and
      • (ii) the ability to generate capital to provide borrowers of the loan with the additional credit necessary to properly service the loan.
    • (C) The Secretary shall consider the benefits to communities that result from using loan guarantees in carrying out the community facilities program and, to the maximum extent practicable, use guarantees to enhance community involvement.
    • (D)
      • (i) The Secretary shall prioritize water and waste facility projects under this paragraph in rural areas with a population of not more than 10,000 people.
      • (ii) Of the funds made available to carry out this paragraph for community facility loan guarantees for a fiscal year the following amounts shall be reserved for projects in rural areas with a population of not more than 20,000 inhabitants:
        • (I) 100 percent of the first $200,000,000 so made available;
        • (II) 50 percent of the next $200,000,000 so made available; and
        • (III) 25 percent of all amounts exceeding $400,000,000 so made available,
  • (25)
    • (A) The Secretary may make grants to an entity that is a Tribal College or University (as defined in section 1059c of title 20 ) to provide the Federal share of the cost of developing specific Tribal College or University essential community facilities in rural areas.
    • (B) The Secretary shall establish the maximum percentage of the cost of the facility that may be covered by a grant under this paragraph, except that the Secretary may not require non-Federal financial support in an amount that is greater than 5 percent of the total cost of the facility.
    • (C) There is authorized to be appropriated to carry out this paragraph $10,000,000 for each of fiscal years 2008 through 2023.
  • (26)
    • (A) The Secretary may make grants to public bodies and private nonprofit corporations (such as States, counties, cities, townships, and incorporated towns and villages, boroughs, authorities, districts, and Indian tribes on Federal and State reservations) that will serve rural areas for the purpose of enabling the public bodies and private nonprofit corporations to provide to associations described in paragraph (1) technical assistance and training, with respect to essential community facilities programs authorized under this subsection—
      • (i) to assist communities in identifying and planning for community facility needs;
      • (ii) to identify public and private resources to finance community facility needs;
      • (iii) to prepare reports and surveys necessary to request financial assistance to develop community facilities;
      • (iv) to prepare applications for financial assistance;
      • (v) to improve the management, including financial management, related to the operation of community facilities; or
      • (vi) to assist with other areas of need identified by the Secretary.
    • (B) In selecting recipients of grants under this paragraph, the Secretary shall give priority to private, nonprofit, or public organizations that have experience in providing technical assistance and training to rural entities.
    • (C) Not less than 3 nor more than 5 percent of any funds appropriated to carry out each of the essential community facilities grant, loan and loan guarantee programs as authorized under this subsection for a fiscal year shall be reserved for grants under this paragraph.
• (b) 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)
• (d) 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.

§ 1926a. Emergency and imminent community water assistance grant program

• (a) 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 when such a decline is imminent; or
  • (2) when repairs, partial replacement, or significant maintenance efforts on established water systems would remedy—
    • (A) an acute, or imminent, shortage of quality water; or
    • (B) a significant decline, or imminent decline, in the quantity or quality of water that is available.
• (b) In carrying out subsection (a), the Secretary shall—
  • (1) give priority to projects described in subsection (a)(1), particularly to projects to address contamination that—
    • (A) poses a threat to human health or the environment; and
    • (B) was caused by circumstances beyond the control of the applicant for a grant, including circumstances that occurred over a period of time; and
  • (2) provide at least 70 percent of all such grants to such projects.
• (c) 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), demonstrate to the Secretary that the decline referred to in such subsection occurred, or will occur, within 2 years of the date the application was filed for such grant.
• (d)
  • (1) Grants made under this section may be used—
    • (A) for waterline extensions from existing systems, laying of new waterlines, repairs, significant maintenance, digging of new wells, equipment replacement, and hook and tap fees;
    • (B) for any other appropriate purpose associated with developing sources of, treating, storing, or distributing water;
    • (C) 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.); and
    • (D) to provide potable water to communities through other means, other than those covered above for not to exceed 120 days when a more permanent solution is not feasible in a shorter time frame. Where drinking water supplies are inadequate due to an event, as determined by the Secretary, including drought, severe weather, or contamination, the Secretary may provide potable water for an additional period of time not to exceed an additional 120 days in order to protect public health.
  • (2) Nothing in this section shall preclude rural communities from submitting joint proposals for emergency water assistance, subject to the restrictions contained in subsection (e). Such restrictions should be considered in the aggregate, depending on the number of communities involved.
• (e)
  • (1) 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 10,000 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.
  • (2) Not less than 50 percent of the funds allocated under this section shall be allocated to rural communities with populations that do not exceed 3,000 inhabitants.
• (f) Grants made under this section may not exceed—
  • (1) in the case of each grant made under subsection (a)(1), $1,000,000; and
  • (2) in the case of each grant made under subsection (a)(2), $150,000.
• (g) Subject to subsection (e), 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)
  • (1) 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, or imminent decline, in quantity or quality of water.
  • (2)
    • (A) The application process developed by the Secretary under paragraph (1) shall include a simplified application form that will permit expedited consideration of an application for a grant filed under this section.
    • (B) In processing applications for any water or waste grant or loan authorized under this chapter, the Secretary shall afford priority processing to an application for a grant under this section to the extent funds will be available for an award on the application at the conclusion of priority processing.
    • (C) The Secretary shall, to the maximum extent practicable, review and act on an application under this section within 60 days after the date on which the application is submitted to the Secretary.
• (i)
  • (1)
    • (A) For each fiscal year, not less than 5 percent and not more than 7 percent of the total amount made available to carry out section 1926(a)(2) of this title for the fiscal year shall be reserved for grants under this section.
    • (B)
      • (i) Funds reserved under subparagraph (A) for a fiscal year shall be reserved only until July 1 of the fiscal year.
      • (ii) Notwithstanding clause (i), in response to an eligible community where the drinking water supplies are inadequate, as determined by the Secretary, due to an event, including drought, severe weather, or contamination, the Secretary may use funds described in subparagraph (A) from July 1 through September 30 each fiscal year to provide potable water under this section in order to protect public health.
  • (2) In addition to funds made available under paragraph (1), there is authorized to be appropriated to carry out this section $50,000,000 for each of fiscal years 2019 through 2023.

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

• (a)
  • (1) 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)
    • (A) 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) 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)
  • (1) The Secretary shall make or insure loans and make grants to individuals who reside in a community described in subsection (a)(1) 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) 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) The Secretary shall give preference in the awarding of loans and grants—
  • (1) under subsection (a) 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) 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) 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)
  • (1) Subject to paragraph (2), there are authorized to be appropriated—
    • (A) for grants under this section, $30,000,000 for each fiscal year;
    • (B) for loans under this section, $30,000,000 for each fiscal year; and
    • (C) in addition to grants provided under subparagraph (A), for grants under this section to benefit Indian tribes (as defined in section 5304 of title 25 ), $20,000,000 for each fiscal year.
  • (2) An entity eligible to receive funding through a grant made under section 1926d of this title shall not be eligible for a grant from funds made available under paragraph (1)(C).
• (f) 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.

§ 1926d. Water systems for rural and Native villages in Alaska

• (a) The Secretary may make grants to the State of Alaska, a consortium formed pursuant to section 325 of the Department of the Interior and Related Agencies Appropriations Act, 1998 ( Public Law 105–83 ; 111 Stat. 1597 ), and Native villages (as defined in section 1602 of title 43 ) for the benefit of rural or Native villages in Alaska to provide for the development and construction of water and wastewater systems to improve the health and sanitation conditions in those villages.
• (b) To be eligible to receive a grant under subsection (a), the State of Alaska shall provide 25 percent in matching funds from non-Federal sources for any grant awarded under subsection (a).
• (c) The Secretary shall consult with the State of Alaska on a method of prioritizing the allocation of grants under subsection (a) according to the needs of, and relative health and sanitation conditions in, each village.
• (d)
  • (1) There are authorized to be appropriated to carry out this section $30,000,000 for each of fiscal years 2008 through 2023.
  • (2) Not more than 2 percent of the amount made available under paragraph (1) for a fiscal year may be used by the State of Alaska, and not more than 2 percent of the amount made available under paragraph (1) for a fiscal year may be used by a consortium formed pursuant to section 325 of the Department of the Interior and Related Agencies Appropriations Act, 1998 ( Public Law 105–83 ; 111 Stat. 1597 ), for training and technical assistance programs relating to the operation and management of water and waste disposal services in rural and Native villages.
  • (3) Funds appropriated pursuant to the authorization of appropriations in paragraph (1) shall be available until expended.

§ 1926e. Rural decentralized water systems

• (a) In this section, the term “eligible individual” means an individual who is a member of a household the members of which have a combined income (for the most recent 12-month period for which the information is available) that is not more than 60 percent of the median nonmetropolitan household income for the State or territory in which the individual resides, according to the most recent decennial census of the United States.
• (b)
  • (1) The Secretary may make grants to private nonprofit organizations for the purpose of providing loans and subgrants to eligible individuals for the construction, refurbishing, and servicing of individual household water well systems and individually owned household decentralized wastewater systems in rural areas that are or will be owned by the eligible individuals.
  • (2)
    • (A) A loan made with grant funds under this section—
      • (i) shall have an interest rate of 1 percent; and
      • (ii) shall have a term not to exceed 20 years.
    • (B) A loan or subgrant made with grant funds under this section shall not exceed $15,000 for each water well system or decentralized wastewater system described in paragraph (1).
  • (3) A recipient of a grant made under this section may use grant funds to pay administrative expenses associated with providing the assistance described in paragraph (1), as determined by the Secretary.
  • (4) In the event of ground well water contamination, the Secretary shall allow a loan or subgrant to be made with grant funds under this section for the installation of water treatment where needed beyond the point of entry, with or without the installation of a new water well system.
• (c) In awarding grants under this section, the Secretary shall give priority to an applicant that has substantial expertise and experience in promoting the safe and effective use of individually owned household water well systems, individually owned household decentralized wastewater systems, and ground water.
• (d) There is authorized to be appropriated to carry out this section $20,000,000 for each of fiscal years 2019 through 2023.

§ 1926f. Contracts with not-for-profit third parties

On and after November 10, 2005 , notwithstanding the provisions of the Consolidated Farm and Rural Development Act [ 7 U.S.C. 1921 et seq.] (including the associated regulations) governing the Community Facilities Program, the Secretary may allow all Community Facility Program facility borrowers and grantees to enter into contracts with not-for-profit third parties for services consistent with the requirements of the Program, grant, and/or loan: Provided , That the contracts protect the interests of the Government regarding cost, liability, maintenance, and administrative fees.

§ 1927. Repayment requirements

• (a)
  • (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 subparagraph (D) and 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.
    • (D) If a direct farm ownership loan is made under this subchapter as part of a joint financing arrangement and the amount of the direct farm ownership loan does not exceed 50 percent of the total principal amount financed under the arrangement, the interest rate on the direct farm ownership loan shall be a rate equal to the greater of—
      • (i) the difference between—
        • (I) 2 percent; and
        • (II) the interest rate for farm ownership loans under this subchapter; or
      • (ii) 2.5 percent.
    • (E)
      • (i) Except as provided in clause (ii) and notwithstanding subparagraph (A), in the case of a direct loan for a water or waste disposal facility—
        • (I) in the case of a loan that would be subject to the 5 percent interest rate limitation under subparagraph (A), the Secretary shall establish the interest rate at a rate that is equal to 60 percent of the current market yield for outstanding municipal obligations with remaining periods to maturity comparable to the average maturity of the loan, adjusted to the nearest ⅛ of 1 percent; and
        • (II) in the case of a loan that would be subject to the 7 percent limitation under subparagraph (A), the Secretary shall establish the interest rate at a rate that is equal to 80 percent of the current market yield for outstanding municipal obligations with remaining periods to maturity comparable to the average maturity of the loan, adjusted to the nearest ⅛ of 1 percent.
      • (ii) Clause (i) does not apply to a loan for a specific project that is the subject of a loan that has been approved, but not closed, as of the date of enactment of this subparagraph.
  • (4) Except as provided in paragraph (6), the interest rates on loans under sections 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) the provisions of section 1926(a)(1) of this title relating to loans for recreational developments and essential community facilities,
      • (ii) section 1932(a)(2)(A) of this title ; 1 1 So in original. The semicolon probably should be a comma. and
      • (iii) section 1932(d) 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) 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) 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) 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.

§ 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.

§ 1928. Full faith and credit

• (a) A contract of insurance or guarantee executed by the Secretary under this chapter shall be an obligation supported by the full faith and credit of the United States.
• (b) A contract of insurance or guarantee executed by the Secretary under this chapter shall be incontestable except for fraud or misrepresentation that the lender or any holder—
  • (1) has actual knowledge of at the time the contract or guarantee is executed; or
  • (2) participates in or condones.

§ 1929. Agricultural Credit Insurance Fund

• (a) 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) 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) 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 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) 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) The Secretary may utilize the fund—
  • (1) 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;
  • (2) 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;
  • (3) to purchase notes in accordance with agreements previously entered into;
  • (4) 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;
  • (5) 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)
  • (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 (before the amendment made by section 749(a)(1) of the Federal Agriculture Improvement and Reform Act of 1996) 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, 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)
  • (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.
  • (4) Except as provided in paragraphs (5), (6), and (7), a loan guarantee under this chapter shall be for not more than 90 percent of the principal and interest due on the loan.
  • (5) The Secretary shall guarantee 95 percent of—
    • (A) in the case of a loan that solely refinances a direct loan made under this chapter, the principal and interest due on the loan on the date of the refinancing; or
    • (B) in the case of a loan that is used for multiple purposes, the portion of the loan that refinances the principal and interest due on a direct loan made under this chapter that is outstanding on the date the loan is guaranteed.
  • (6) The Secretary may guarantee not more than 95 percent of—
    • (A) a farm ownership loan for acquiring a farm or ranch to a borrower who is participating in the down payment loan program under section 1935 of this title ; or
    • (B) an operating loan to a borrower who is participating in the down payment loan program under section 1935 of this title that is made during the period that the borrower has a direct loan outstanding under this subchapter for acquiring a farm or ranch.
  • (7) In the case of an operating loan made to a farmer or rancher whose farm or ranch land is subject to the jurisdiction of an Indian tribe and whose loan is secured by 1 or more security instruments that are subject to the jurisdiction of an Indian tribe, the Secretary shall guarantee 95 percent of the loan.
• (i)
  • (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.
• (j) The Secretary may guarantee under this chapter a loan made under a State beginning farmer or rancher program, including a loan financed by the net proceeds of a qualified small issue agricultural bond for land or property described in section 144(a)(12)(B)(ii) of title 26 .

§ 1929a. Rural Development Insurance Fund

• (a) 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 1926(a)(1) and 1932 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) 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.
• (c) 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) 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 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) 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) The Secretary may utilize the Insurance Fund—
  • (1) 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;
  • (2) 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;
  • (3) to purchase notes in accordance with contracts of insurance heretofore or hereafter entered into by the Secretary;
  • (4) to make payments in compliance with the Secretary’s obligations under contracts of guarantee entered into by him;
  • (5) 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;
  • (6) 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
  • (7) 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) 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.

§ 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.

§ 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.

§ 1932. Assistance for rural entities

• (a)
  • (1) In this subsection:
    • (A) 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.
    • (B) 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.].
  • (2) The Secretary may make and insure loans to public, private, or cooperative organizations organized for profit or nonprofit and private investment funds that invest primarily in cooperative organizations, to Indian tribes on Federal and State reservations or other federally recognized Indian tribal groups, or to individuals for the purposes of—
    • (A) improving, developing, or financing business, industry, and employment (including through the financing of working capital) and improving the economic and environmental climate in rural communities, including pollution abatement and control;
    • (B) the conservation, development, and use of water for aquaculture purposes in rural areas;
    • (C) reducing the reliance on nonrenewable energy resources by encouraging the development and construction of solar energy systems and other renewable energy systems (including wind energy systems and anaerobic digestors for the purpose of energy generation), including the modification of existing systems, in rural areas; and
    • (D) to facilitate economic opportunity for industries undergoing adjustment from terminated Federal agricultural price and income support programs or increased competition from foreign trade.
  • (3) Loans described in paragraph (2), when originated, held, and serviced by other lenders, may be guaranteed by the Secretary under this section without regard to paragraphs (1) and (4) of section 1983 of this title .
  • (4) No loan may be made, insured, or guaranteed under this subsection that exceeds $25,000,000 in principal amount.
• (b)
  • (1) 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.
  • (2) There is authorized to be appropriated to carry out this subsection $10,000,000 for each of fiscal years 2014 through 2023.
• (c)
  • (1) The Secretary may make grants under this subsection to eligible entities described in paragraph (2) in rural areas that primarily serve rural areas for purposes described in paragraph (3).
  • (2) The Secretary may make grants under this subsection to—
    • (A) governmental entities;
    • (B) Indian tribes; and
    • (C) nonprofit entities.
  • (3) Eligible entities that receive grants under this subsection may use the grant funds for—
    • (A) business opportunity projects that—
      • (i) identify and analyze business opportunities;
      • (ii) identify, train, and provide technical assistance to existing or prospective rural entrepreneurs and managers;
      • (iii) assist in the establishment of new rural businesses and the maintenance of existing businesses, including through business support centers;
      • (iv) conduct regional, community, and local economic development planning and coordination, and leadership development; and
      • (v) establish centers for training, technology, and trade that will provide training to rural businesses in the use of interactive communications technologies to develop international trade opportunities and markets; or
    • (B) projects that support the development of business enterprises that finance or facilitate—
      • (i) the development of small and emerging private business enterprise;
      • (ii) the establishment, expansion, and operation of rural distance learning networks;
      • (iii) the development of rural learning programs that provide educational instruction or job training instruction related to potential employment or job advancement to adult students; and
      • (iv) the provision of technical assistance and training to rural communities for the purpose of improving passenger transportation services or facilities.
  • (4)
    • (A) There is authorized to be appropriated to the Secretary to carry out this subsection $65,000,000 for each of fiscal years 2014 through 2023, to remain available until expended.
    • (B) Of the funds made available under subparagraph (A) for a fiscal year, not more than 10 percent shall be used for the purposes described in paragraph (3)(A).
• (d)
  • (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) 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) 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, 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, 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, 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 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)
  • (1) 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.
  • (2) The Secretary shall make grants effective October 1, 1996 , under this subsection to nonprofit institutions for the purpose of enabling the institutions to establish and operate centers for rural cooperative development.
  • (3) The goals of a center funded under this subsection shall be to facilitate the creation of jobs in rural areas through the development of new rural cooperatives, value added processing, and rural businesses.
  • (4) Any nonprofit institution seeking a grant under paragraph (2) shall submit to the Secretary an application containing a plan for the establishment and operation by the institution of a center or centers for cooperative development. The Secretary may approve the application if the plan contains the following:
    • (A) A provision that substantiates that the center will effectively serve rural areas in the United States.
    • (B) A provision that the primary objective of the center will be to improve the economic condition of rural areas through cooperative development.
    • (C) A description of the activities that the center will carry out to accomplish the objective. The activities may include the following:
      • (i) Programs for applied research and feasibility studies that may be useful to individuals, cooperatives, small businesses, and other similar entities in rural areas served by the center.
      • (ii) Programs for the collection, interpretation, and dissemination of information that may be useful to individuals, cooperatives, small businesses, and other similar entities in rural areas served by the center.
      • (iii) Programs providing training and instruction for individuals, cooperatives, small businesses, and other similar entities in rural areas served by the center.
      • (iv) Programs providing loans and grants to individuals, cooperatives, small businesses, and other similar entities in rural areas served by the center.
      • (v) Programs providing technical assistance, research services, and advisory services to individuals, cooperatives, small businesses, and other similar entities in rural areas served by the center.
      • (vi) Programs providing for the coordination of services and sharing of information among the center. 1 1 So in original. Probably should be “centers.”
    • (D) A description of the contributions that the activities are likely to make to the improvement of the economic conditions of the rural areas for which the center will provide services.
    • (E) Provisions that the center, in carrying out the 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 the center will take all practicable steps to develop continuing sources of financial support for the center, particularly from sources in the private sector.
    • (G) Provisions for—
      • (i) monitoring and evaluating the activities by the nonprofit institution operating the center; and
      • (ii) accounting for money received by the institution under this section.
  • (5) Grants made under paragraph (2) shall be made on a competitive basis. In making grants under paragraph (2), the Secretary shall give preference to grant applications providing for the establishment of centers for rural cooperative development that—
    • (A) demonstrate a proven track record in carrying out activities to promote and assist the development of cooperatively and mutually owned businesses;
    • (B) demonstrate previous expertise in providing technical assistance in rural areas to promote and assist the development of cooperatively and mutually owned businesses;
    • (C) demonstrate the ability to assist in the retention of businesses, facilitate the establishment of cooperatives and new cooperative approaches, and generate employment opportunities that will improve the economic conditions of rural areas;
    • (D) commit to providing technical assistance and other services to underserved and economically distressed areas in rural areas of the United States;
    • (E) demonstrate a commitment to—
      • (i) networking with and sharing the results of the efforts of the center with other cooperative development centers and other organizations involved in rural economic development efforts; and
      • (ii) developing multiorganization and multistate approaches to addressing the economic development and cooperative needs of rural areas; and
    • (F) commit to providing a 25 percent matching contribution with private funds and in-kind contributions, except that the Secretary shall not require non-Federal financial support in an amount that is greater than 5 percent in the case of a 1994 institution (as defined in section 532 of the Equity in Educational Land-Grant Status Act of 1994 ( 7 U.S.C. 301 note; Public Law 103–382 )).
  • (6)
    • (A) A grant awarded to a center that has received no prior funding under this subsection shall be made for a period of 1 year.
    • (B) If the Secretary determines it to be in the best interest of the program, the Secretary shall award grants for a period of more than 1 year, but not more than 3 years, to a center that has successfully met the parameters described in paragraph (5), as determined by the Secretary.
  • (7) The Secretary may extend for 1 additional 12-month period the period in which a grantee may use a grant made under this subsection.
  • (8) In carrying out this subsection, the Secretary may provide technical assistance to alleviate or prevent conditions of excessive unemployment, underemployment, outmigration, or low employment growth in economically distressed rural areas that the Secretary determines have a substantial need for the assistance. The assistance may include planning and feasibility studies, management and operational assistance, and studies evaluating the need for development potential of projects that increase employment and improve economic growth in the areas.
  • (9) The Secretary may make grants to defray not to exceed 75 percent of the costs incurred by organizations and public bodies to carry out projects for which grants or loans are made under this subsection. For purposes of determining the non-Federal share of the costs, the Secretary shall consider contributions in cash and in kind, fairly evaluated, including premises, equipment, and services.
  • (10) The Secretary shall enter into a cooperative research agreement with 1 or more qualified academic institutions in each fiscal year to conduct research (including research and analysis based on data from the latest available Economic Census conducted by the Bureau of the Census) on the effects of all types of cooperatives on the national economy.
  • (11)
    • (A) In this paragraph, the term “socially disadvantaged group” has the meaning given the term in section 2003(e) of this title .
    • (B)
      • (i) If the total amount appropriated under paragraph (13) for a fiscal year exceeds $7,500,000, the Secretary shall reserve an amount equal to 20 percent of the total amount appropriated for grants for cooperative development centers, individual cooperatives, or groups of cooperatives—
        • (I) that serve socially disadvantaged groups; and
        • (II) a majority of the boards of directors or governing boards of which are comprised of individuals who are members of socially disadvantaged groups.
      • (ii) To the extent there are insufficient applications to carry out clause (i), the Secretary shall use the funds as otherwise authorized by this subsection.
  • (12) Not later than 90 days after February 7, 2014 , the Secretary shall coordinate and chair an interagency working group to foster cooperative development and ensure coordination with Federal agencies and national and local cooperative organizations that have cooperative programs and interests.
  • (13) There are authorized to be appropriated to carry out this subsection $40,000,000 for each of fiscal years 2014 through 2023.
• (f)
• (g)
  • (1) In this subsection, the term “business and industry loan” means a business and industry direct or guaranteed loan that is made or guaranteed by the Secretary under subsection (a)(2)(A), including guarantees described in paragraph (3)(A)(ii).
  • (2)
    • (A) The Secretary may guarantee a business and industry loan to individual farmers or ranchers for the purpose of purchasing capital stock of a farmer or rancher cooperative established for the purpose of processing an agricultural commodity.
    • (B) A cooperative described in subparagraph (A) for which a farmer or rancher receives a guarantee to purchase stock under subparagraph (A) may contract for services to process agricultural commodities, or otherwise process value-added agricultural products, during the 5-year period beginning on the date of the startup of the cooperative in order to provide adequate time for the planning and construction of the processing facility of the cooperative.
    • (C) Financial information required by the Secretary from a farmer or rancher as a condition of making a business and industry loan guarantee under this paragraph shall be provided in the manner generally required by commercial agricultural lenders in the area.
  • (3)
    • (A)
      • (i) The Secretary may make or guarantee a business and industry loan to a cooperative organization that is headquartered in a metropolitan area if the loan is used for a project or venture described in subsection (a) that is located in a rural area or a loan guarantee that meets the requirements of paragraph (6).
      • (ii) The Secretary may guarantee a loan made for the purchase of preferred stock or similar equity issued by a cooperative organization or a fund that invests primarily in cooperative organizations, if the guarantee significantly benefits 1 or more entities eligible for assistance for the purposes described in subsection (a)(1), as determined by the Secretary.
    • (B) A cooperative organization that is eligible for a business and industry loan shall be eligible to refinance an existing business and industry loan with a lender if—
      • (i) the cooperative organization—
        • (I) is current and performing with respect to the existing loan; and
        • (II) is not, and has not been, in payment default, or the collateral of which has not been converted, with respect to the existing loan; and
      • (ii) there is adequate security or full collateral for the refinanced loan.
  • (4) The Secretary may require that any appraisal made in connection with a business and industry loan be conducted by a specialized appraiser that uses standards that are similar to standards used for similar purposes in the private sector, as determined by the Secretary.
  • (5) The Secretary may assess a 1-time fee for any guaranteed business and industry loan in an amount that does not exceed 2 percent of the guaranteed principal portion of the loan.
  • (6)
    • (A) The Secretary may guarantee a business and industry loan to a cooperative organization for a facility that is not located in a rural area if—
      • (i) the primary purpose of the loan guarantee is for a facility to provide value-added processing for agricultural producers that are located within 80 miles of the facility;
      • (ii) the applicant demonstrates to the Secretary that the primary benefit of the loan guarantee will be to provide employment for residents of a rural area; and
      • (iii) the total amount of business and industry loans guaranteed for a fiscal year under this paragraph does not exceed 10 percent of the business and industry loans guaranteed for the fiscal year under subsection (a)(2)(A).
    • (B) The principal amount of a business and industry loan guaranteed under this paragraph may not exceed $25,000,000.
  • (7)
    • (A) In determining whether a cooperative organization is eligible for a guaranteed business and industry loan, the Secretary may consider the market value of a properly appraised brand name, patent, or trademark of the cooperative.
    • (B) In the discretion of the Secretary, if the Secretary determines that the action would not create or otherwise contribute to an unreasonable risk of default or loss to the Federal Government, the Secretary may take accounts receivable as security for the obligations entered into in connection with loans and a borrower may use accounts receivable as collateral to secure a loan made or guaranteed under this subsection.
  • (8)
    • (A)
      • (i) Subject to clause (ii), the principal amount of a business and industry loan made to a cooperative organization and guaranteed under this subsection shall not exceed $40,000,000.
      • (ii) To be eligible for a guarantee under this subsection for a business and industry loan made to a cooperative organization, the principal amount of the any such loan in excess of $25,000,000 shall be used to carry out a project that—
        • (I)
        • (II) significantly benefits 1 or more entities eligible for assistance for the purposes described in subsection (a)(1), as determined by the Secretary.
    • (B) If a cooperative organization submits an application for a guarantee under this subsection of a business and industry loan with a principal amount that is in excess of $25,000,000, the Secretary—
      • (i) shall review and, if appropriate, approve the application; and
      • (ii) may not delegate the approval authority.
    • (C) The total amount of business and industry loans made to cooperative organizations and guaranteed for a fiscal year under this subsection with principal amounts that are in excess of $25,000,000 may not exceed 10 percent of the business and industry loans guaranteed for the fiscal year under subsection (a)(2)(A).
  • (9)
    • (A) In this paragraph:
      • (i) The term “locally or regionally produced agricultural food product” means any agricultural food product that is raised, produced, and distributed in—
        • (I) the locality or region in which the final product is marketed, so that the total distance that the product is transported is less than 400 miles from the origin of the product; or
        • (II) the State in which the product is produced.
      • (ii) The term “underserved community” means a community (including an urban or rural community and an Indian tribal community) that has, as determined by the Secretary—
        • (I) limited access to affordable, healthy foods, including fresh fruits and vegetables, in grocery retail stores or farmer-to-consumer direct markets; and
        • (II) a high rate of hunger or food insecurity or a high poverty rate.
    • (B)
      • (i) The Secretary shall make or guarantee loans to individuals, cooperatives, cooperative organizations, businesses, and other entities to establish and facilitate enterprises that process, distribute, aggregate, store, and market locally or regionally produced agricultural food products to support community development and farm and ranch income.
      • (ii) The recipient of a loan or loan guarantee under clause (i) shall include in an appropriate agreement with retail and institutional facilities to which the recipient sells locally or regionally produced agricultural food products a requirement to inform consumers of the retail or institutional facilities that the consumers are purchasing or consuming locally or regionally produced agricultural food products.
      • (iii) In making or guaranteeing a loan under clause (i), the Secretary shall give priority to projects that have components benefitting underserved communities.
      • (iv)
        • (I) For each of fiscal years 2008 through 2023, the Secretary shall reserve not less than 5 percent of the funds made available to carry out this subsection to carry out this subparagraph.
        • (II) Funds reserved under subclause (I) for a fiscal year shall be reserved until April 1 of the fiscal year.
• (h) The Secretary may guarantee loans made under subsection (a) to finance the issuance of bonds for the projects described in section 1926(a)(24) of this title .
• (i)
  • (1) In this subsection, the term “national nonprofit agricultural assistance institution” means an organization that—
    • (A) is described in section 501(c)(3) of title 26 and exempt from taxation under 2 2 So in original. The word “section” probably should appear. 501(a) of that title;
    • (B) has staff and offices in multiple regions of the United States;
    • (C) has experience and expertise in operating national agriculture technical assistance programs;
    • (D) expands markets for the agricultural commodities produced by producers through the use of practices that enhance the environment, natural resource base, and quality of life; and
    • (E) improves the economic viability of agricultural operations.
  • (2) The Secretary shall establish a national appropriate technology transfer for rural areas program to assist agricultural producers that are seeking information to—
    • (A) reduce input costs;
    • (B) conserve energy resources;
    • (C) diversify operations through new energy crops and energy generation facilities; and
    • (D) expand markets for agricultural commodities produced by the producers by using practices that enhance the environment, natural resource base, and quality of life.
  • (3)
    • (A) The Secretary shall carry out the program under this subsection by making a grant to, or offering to enter into a cooperative agreement with, a national nonprofit agricultural assistance institution.
    • (B) A grant made, or cooperative agreement entered into, under subparagraph (A) shall provide 100 percent of the cost of providing information described in paragraph (2).
  • (4) There are authorized to be appropriated to carry out this subsection $5,000,000 for each of fiscal years 2008 through 2023.
• (j) Effective beginning on the date of enactment of this subsection through September 30, 2023 , the Secretary shall carry out those rural economic area partnership zones administratively in effect on the date of enactment of this subsection in accordance with the terms and conditions contained in the memorandums of agreement entered into by the Secretary for the rural economic area partnership zones, except as otherwise provided in this subsection.

§ 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 1 See References in Text note below. 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.

§ 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 section 1923(a) of this title , or paragraphs (1) through (5) of section 1924(a) 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, or such other legal entities as the Secretary considers appropriate, 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, partners, or owners, as applicable, are citizens of the United States and the entity and all such members, stockholders, partners, or owners 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.

§ 1935. Down payment loan program

• (a)
  • (1) 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 eligible farmers or ranchers for down payments on farm ownership loans.
  • (2) 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)
  • (1) Each loan made under this section shall be in an amount that does not exceed 45 percent of the least of—
    • (A) the purchase price of the farm or ranch to be acquired;
    • (B) the appraised value of the farm or ranch to be acquired; or
    • (C) $667,000.
  • (2) The interest rate on any loan made by the Secretary under this section shall be a rate equal to the greater of—
    • (A) the difference obtained by subtracting 4 percent from the interest rate for farm ownership loans under this subchapter; or
    • (B) 1.5 percent.
  • (3) Each loan under this section shall be made for a period of 20 years or less, at the option of the borrower.
  • (4) Each borrower of a loan under this section shall repay the loan to the Secretary in equal annual installments.
  • (5) 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)
  • (1) 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 5 percent of the purchase price of the farm or ranch.
  • (2) 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 20-year period beginning on the date the loan is to be made by the Secretary.
• (d) 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 farmers or ranchers;
    • (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 eligible farmers or ranchers by providing seller financing;
  • (4) coordinate the loan program established by this section with State programs that provide farm ownership or operating loans for—
    • (A) beginning farmers or ranchers;
    • (B) socially disadvantaged farmers or ranchers, as defined in section 2003(e) of this title ; or
    • (C) veteran farmers or ranchers, as defined in section 2279(a) of this title ; and; and 1 1 So in original.
  • (5) establish annual performance goals to promote the use of the down payment loan program and other joint financing arrangements as the preferred choice for direct real estate loans made by any lender to an eligible farmer or rancher.
• (e) In this section, the term “eligible farmer or rancher” means—
  • (1) a qualified beginning farmer or rancher;
  • (2) a socially disadvantaged farmer or rancher, as defined in section 2003(e) of this title ; and
  • (3) a veteran farmer or rancher, as defined in section 2279(a) of this title .

§ 1936. Beginning farmer or rancher and socially disadvantaged farmer or rancher contract land sales program

• (a) The Secretary shall, in accordance with this section, guarantee a loan made by a private seller of a farm or ranch to a qualified beginning farmer or rancher or socially disadvantaged farmer or rancher (as defined in section 2003(e)(2) of this title ) on a contract land sales basis.
• (b) In order to be eligible for a loan guarantee under subsection (a)—
  • (1) the qualified beginning farmer or rancher or socially disadvantaged farmer or rancher shall—
    • (A) on the date the contract land sale that is subject of the loan is complete, own and operate the farm or ranch that is the subject of the contract land sale;
    • (B) have a credit history that—
      • (i) includes a record of satisfactory debt repayment, as determined by the Secretary; and
      • (ii) is acceptable to the Secretary; and
    • (C) demonstrate to the Secretary that the farmer or rancher, as the case may be, is unable to obtain sufficient credit without a guarantee to finance any actual need of the farmer or rancher, as the case may be, at a reasonable rate or term; and
  • (2) the loan shall meet applicable underwriting criteria, as determined by the Secretary.
• (c)
  • (1) The Secretary shall not provide a loan guarantee under subsection (a) if the contribution of the qualified beginning farmer or rancher or socially disadvantaged farmer or rancher to the down payment for the farm or ranch that is the subject of the contract land sale would be less than 5 percent of the purchase price of the farm or ranch.
  • (2) The Secretary shall not provide a loan guarantee under subsection (a) if the purchase price or the appraisal value of the farm or ranch that is the subject of the contract land sale is greater than $500,000.
• (d) The period during which a loan guarantee under this section is in effect shall be the 10-year period beginning with the date the guarantee is provided.
• (e)
  • (1) A private seller of a farm or ranch who makes a loan that is guaranteed by the Secretary under subsection (a) may select—
    • (A) a prompt payment guarantee plan, which shall cover—
      • (i) 3 amortized annual installments; or
      • (ii) an amount equal to 3 annual installments (including an amount equal to the total cost of any tax and insurance incurred during the period covered by the annual installments); or
    • (B) a standard guarantee plan, which shall cover an amount equal to 90 percent of the outstanding principal of the loan.
  • (2) In order for a private seller to be eligible for a standard guarantee plan referred to in paragraph (1)(B), the private seller shall—
    • (A) secure a commercial lending institution or similar entity, as determined by the Secretary, to serve as an escrow agent; or
    • (B) in cooperation with the farmer or rancher, use an appropriate alternate arrangement, as determined by the Secretary.
• (f)
  • (1) The Secretary may phase-in the implementation of the changes to the Beginning Farmer and Rancher and Socially Disadvantaged Farmer or Rancher Contract Land Sales Program provided for in this section.
  • (2) All changes to the Beginning Farmer and Rancher and Socially Disadvantaged Farmer or Rancher Contract Land Sales Program must be implemented for the 2011 Fiscal Year.

§ 1936a. Use of rural development loans and grants for other purposes

If, after making a loan or a grant described in section 2009d(d) of this title , the Secretary determines that the circumstances under which the loan or grant was made have sufficiently changed to make the project or activity for which the loan or grant was made available no longer appropriate, the Secretary may allow the loan borrower or grant recipient to use property (real and personal) purchased or improved with the loan or grant funds, or proceeds from the sale of property (real and personal) purchased with such funds, for another project or activity that (as determined by the Secretary)—

• (1) will be carried out in the same area as the original project or activity;
• (2) meets the criteria for a loan or a grant described in section 2009d(d) of this title ; and
• (3) satisfies such additional requirements as are established by the Secretary.

§ 1936b. Intermediary relending program

• (a) The Secretary may make or guarantee loans to eligible entities described in subsection (b) so that the eligible entities may relend the funds to individuals and entities for the purposes described in subsection (c).
• (b) Entities eligible for loans and loan guarantees described in subsection (a) are—
  • (1) public agencies;
  • (2) Indian tribes;
  • (3) cooperatives; and
  • (4) nonprofit corporations.
• (c) The proceeds from loans made or guaranteed by the Secretary pursuant to subsection (a) may be relent by eligible entities for projects that—
  • (1) predominately serve communities in rural areas; and
  • (2) as determined by the Secretary—
    • (A) promote community development;
    • (B) establish new businesses;
    • (C) establish and support microlending programs; and
    • (D) create or retain employment opportunities.
• (d) The Secretary shall not make loans under section 9812(a) of title 42 .
• (e) The maximum amount of a loan by an eligible entity described in subsection (b) to individuals and entities for a project under subsection (c), including the unpaid balance of any existing loans, shall be the lesser of—
  • (1) $400,000; and
  • (2) 50 percent of the loan to the eligible entity under subsection (a).
• (f)
  • (1) To be eligible to receive a loan or loan guarantee under subsection (a), an eligible entity described in subsection (b) shall submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require.
  • (2) In evaluating applications submitted under paragraph (1), the Secretary shall—
    • (A)
      • (i) take into consideration the previous performance of an eligible entity in carrying out projects under subsection (c); and
      • (ii) in the case of satisfactory performance under clause (i), require the eligible entity to contribute less equity for subsequent loans without modifying the priority given to subsequent applications; and
    • (B) in assigning priorities to applications, require an eligible entity to demonstrate that it has a governing or advisory board made up of business, civic, and community leaders who are representative of the communities of the service area, without limitation to the size of the service area.
• (g) The Secretary shall establish a schedule that is consistent with the amortization schedules of the portfolio of loans made or guaranteed under subsection (a) for the return of any equity contribution made under this section by an eligible entity described in subsection (b), if the eligible entity is—
  • (1) current on all principal and interest payments; and
  • (2) in compliance with loan covenants.
• (h) The Secretary shall promulgate regulations and establish procedures reducing the administrative requirements on eligible entities described in subsection (b), including regulations to carry out the amendments made to this section by the Agriculture Improvement Act of 2018.
• (i) There is authorized to be appropriated to carry out this subsection $25,000,000 for each of fiscal years 2014 through 2023.

§ 1936c. Relending program to resolve ownership and succession on farmland

• (a) The Secretary may make loans to eligible entities described in subsection (b) so that the eligible entities may relend the funds to individuals and entities for the purposes described in subsection (c).
• (b) Entities eligible for loans described in subsection (a) are cooperatives, credit unions, and nonprofit organizations with—
  • (1) certification under section 1805.201 of title 12, Code of Federal Regulations (or successor regulations), to operate as a lender;
  • (2) experience assisting socially disadvantaged farmers and ranchers (as defined in subsection (a) of section 2279 of this title ) or limited resource or new and beginning farmers and ranchers, rural businesses, cooperatives, or credit unions, including experience in making and servicing agricultural and commercial loans; and
  • (3) the ability to provide adequate assurance of the repayment of a loan.
• (c) The proceeds from loans made by the Secretary pursuant to subsection (a) shall be re-lent by eligible entities for projects that assist heirs with undivided ownership interests to resolve ownership and succession on farmland that has multiple owners.
• (d) In making loans under subsection (a), the Secretary shall give preference to eligible entities—
  • (1) with not less than 10 years of experience serving socially disadvantaged farmers and ranchers; and
  • (2) in States that have adopted a statute consisting of an enactment or adoption of the Uniform Partition of Heirs Property Act, as approved and recommended for enactment in all States by the National Conference of Commissioners on Uniform State Laws in 2010, that relend to owners of heirs property (as defined in that Act).
• (e) The following terms and conditions shall apply to loans made under this section:
  • (1) The interest rate at which intermediaries may borrow funds under this section shall be determined by the Secretary.
  • (2) The rates, terms, and payment structure for borrowers to which intermediaries lend shall be—
    • (A) determined by the intermediary in an amount sufficient to cover the cost of operating and sustaining the revolving loan fund; and
    • (B) clearly and publicly disclosed to qualified ultimate borrowers.
  • (3) Borrowers to which intermediaries lend shall be—
    • (A) required to complete a succession plan as a condition of the loan; and
    • (B) be offered the opportunity to borrow sufficient funds to cover costs associated with the succession plan under subparagraph (A) and other associated legal and closing costs.
• (f) Not later than 1 year after December 20, 2018 , the Secretary shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report describing the operation and outcomes of the program under this section, with recommendations on how to strengthen the program.
• (g) There is authorized to be appropriated to carry out this section $10,000,000 for each of fiscal years 2019 through 2023.

§ 1941. Persons eligible for loans

• (a)
  • (1) The Secretary may make and insure loans under this subchapter to farmers and ranchers in the United States, and to farm cooperatives and private domestic corporations, partnerships, joint operations, trusts, limited liability companies, and such other legal entities as the Secretary considers appropriate, 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, joint operations, trusts, limited liability companies, and such other legal entities, individuals holding a majority interest in such entity, must (A) be citizens of the United States, (B) for direct loans only, have either training or farming experience that the Secretary determines is sufficient to assure reasonable prospects of success in the proposed farming operations, taking into consideration all farming experience of the applicant, without regard to any lapse between farming experiences, (C) be or will become operators of not larger than family farms (or in the case of cooperatives, corporations, partnerships, joint operations, trusts, limited liability companies, and such other legal entities 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 (D) 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, joint operations, trusts, limited liability companies, and such other legal entities, the family farm requirement of subparagraph (C) 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 subparagraph (D) of the preceding sentence shall apply as well to the entity in the case of cooperatives, corporations, partnerships, joint operations, trusts, limited liability companies, and such other legal entities.
  • (2) An entity that is an operator described in paragraph (1) that is owned, in whole or in part, by other entities, shall be considered to meet the direct ownership requirement imposed under paragraph (1) if at least 75 percent of the ownership interests of each embedded entity of the entity is owned directly or indirectly by the individuals that own the family farm.
• (b)
  • (1) Loans may also be made under this subchapter without regard to the requirements of clauses (2) and (3) of subsection (a) to youths to enable them to operate enterprises in connection with their participation in 4–H Clubs, Future Farmers of America, and similar organizations.
  • (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.
  • (4) The operation of an enterprise by a youth under this subsection shall not be considered the operation of a farm or ranch under this chapter.
  • (5)
    • (A)
      • (i) The Secretary may, on a case-by-case basis, provide debt forgiveness to a borrower for a loan made under this subsection if the borrower was unable to timely repay the loan due to circumstances beyond the control of the borrower, as determined by the Secretary, including any natural disaster, act of terrorism, or other man-made disaster that results in an inordinate level of damage or disruption severely affecting the borrower.
      • (ii) Notwithstanding any other provision of law, debt forgiveness provided under this subparagraph shall not be used by any Federal agency in determining the eligibility of the borrower for any loan made or guaranteed by the agency.
    • (B) Notwithstanding any other provision of law, if a borrower becomes delinquent or is provided with debt forgiveness with respect to a youth loan made under this subsection, the borrower shall not become ineligible, as a result of the delinquency or debt forgiveness, to receive loans and loan guarantees from the Federal Government to pay for education expenses of the borrower.
• (c)
  • (1) Subject to paragraphs (3) and (4), the Secretary may make a direct loan under this subchapter only to a farmer or rancher who—
    • (A) is a qualified beginning farmer or rancher;
    • (B) has not received a previous direct operating loan made under this subchapter; or
    • (C) has received a previous direct operating loan made under this subchapter during 6 or fewer years.
  • (2) In this subsection, the term “direct operating loan” does not include—
    • (A) a loan made to a youth under subsection (b); or
    • (B) a microloan made to a beginning farmer or rancher or a veteran farmer or rancher (as defined in section 2279(e) 1 1 See References in Text note below. of this title).
  • (3) If, as of April 4, 1996 , a farmer or rancher has received a direct operating loan under this subchapter during each of 4 or more previous years, the borrower shall be eligible to receive a direct operating loan under this subchapter during 3 additional years after April 4, 1996 .
  • (4)
    • (A) The Secretary shall waive the limitation under paragraph (1)(C) or (3) for a direct loan made under this subchapter to a farmer or rancher whose farm or ranch land is subject to the jurisdiction of an Indian tribe and whose loan is secured by 1 or more security instruments that are subject to the jurisdiction of an Indian tribe if the Secretary determines that commercial credit is not generally available for such farm or ranch operations.
    • (B) On a case-by-case determination not subject to administrative appeal, the Secretary may grant a borrower a waiver, 1 time only for a period of 2 years, of the limitation under paragraph (1)(C) or (3) for a direct operating loan if the borrower demonstrates to the satisfaction of the Secretary that—
      • (i) the borrower has a viable farm or ranch operation;
      • (ii) the borrower applied for commercial credit from at least 2 commercial lenders;
      • (iii) the borrower was unable to obtain a commercial loan (including a loan guaranteed by the Secretary); and
      • (iv) the borrower successfully has completed, or will complete within 1 year, borrower training under section 2006a of this title (from which requirement the Secretary shall not grant a waiver under section 2006a(f) of this title ).
  • (5)
    • (A) The Secretary shall prepare a report annually that describes—
      • (i) the status of the direct operating loan program of the Department of Agriculture; and
      • (ii) the impact of term limits on direct loan borrowers.
    • (B)
      • (i) The report shall provide a demographic breakdown, on a State-by-State basis, of—
        • (I) all direct loan borrowers; and
        • (II) borrowers that have reached the eligibility limit for direct lending programs during the previous calendar year.
      • (ii) The available demographic information shall include, to the maximum extent practicable, a description of race or ethnicity, gender, age, type of farm or ranch, financial classification, number of years of indebtedness, veteran status, and other similar information, as determined by the Secretary.
    • (C) In addition to information described in subparagraph (B), the report shall provide—
      • (i) a demographic analysis of the borrowers impacted by term limits;
      • (ii) information on the conditions impacting the direct lending portfolio of the Department of Agriculture, including impacts by region and agriculture sector, and credit availability within those regions and sectors;
      • (iii) to the maximum extent practicable, information on the status of borrower operations impacted by term limits; and
      • (iv) recommendations, if appropriate, to address any identifiable unmet credit needs.
    • (D) The Secretary shall—
      • (i) annually submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a copy of the report; and
      • (ii) make the report available to the public, including posting the report on the website of the Department of Agriculture.

§ 1942. Purposes of loans

• (a) A direct loan (including a microloan, as defined by the Secretary) may be made under this subchapter only for—
  • (1) paying the costs incident to reorganizing a farm or ranch for more profitable operation;
  • (2) purchasing livestock, poultry, or farm or ranch equipment;
  • (3) purchasing feed, seed, fertilizer, insecticide, or farm or ranch supplies, or to meet other essential farm or ranch operating expenses, including cash rent;
  • (4) financing land or water development, use, or conservation;
  • (5) paying loan closing costs;
  • (6) assisting a farmer or rancher in changing the equipment, facilities, or methods of operation of a farm or ranch to comply with a standard promulgated under section 655 of title 29 or a standard adopted by a State under a plan approved under section 667 of title 29 , if the Secretary determines that without assistance under this paragraph the farmer or rancher is likely to suffer substantial economic injury in complying with the standard;
  • (7) training a limited-resource borrower receiving a loan under section 1934 of this title in maintaining records of farming and ranching operations;
  • (8) training a borrower under section 2006a of this title ;
  • (9) refinancing the indebtedness of a borrower, if the borrower—
    • (A) has refinanced a loan under this subchapter not more than 4 times previously; and
    • (B)
      • (i) is a direct loan borrower under this chapter at the time of the refinancing and has suffered a qualifying loss because of a natural disaster declared by the Secretary under this chapter or 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.); or
      • (ii) is refinancing a debt obtained from a creditor other than the Secretary; or
  • (10) providing other farm, ranch, or home needs, including family subsistence.
• (b) A loan may be guaranteed under this subchapter only for—
  • (1) paying the costs incident to reorganizing a farm or ranch for more profitable operation;
  • (2) purchasing livestock, poultry, or farm or ranch equipment;
  • (3) purchasing feed, seed, fertilizer, insecticide, or farm or ranch supplies, or to meet other essential farm or ranch operating expenses, including cash rent;
  • (4) financing land or water development, use, or conservation;
  • (5) refinancing indebtedness;
  • (6) paying loan closing costs;
  • (7) assisting a farmer or rancher in changing the equipment, facilities, or methods of operation of a farm or ranch to comply with a standard promulgated under section 655 of title 29 or a standard adopted by a State under a plan approved under section 667 of title 29 , if the Secretary determines that without assistance under this paragraph the farmer or rancher is likely to suffer substantial economic injury due to compliance with the standard;
  • (8) training a borrower under section 2006a of this title ; or
  • (9) providing other farm, ranch, or home needs, including family subsistence.
• (c)
  • (1) After the Secretary makes the determination required by paragraph (2), the Secretary may not make a loan to a farmer or rancher under this subchapter unless the farmer or rancher has, or agrees to obtain, hazard insurance on the property to be acquired with the loan.
  • (2) Not later than 180 days after April 4, 1996 , the Secretary shall determine the appropriate level of insurance to be required by paragraph (1).
• (d)
  • (1) Notwithstanding any other provision of this chapter, the Secretary may reserve a portion of any loan made under this subchapter to be placed in an unsupervised bank account that may be used at the discretion of the borrower for the basic family needs of the borrower and the immediate family of the borrower.
  • (2) The size of the reserve shall not exceed the least of—
    • (A) 10 percent of the loan;
    • (B) $5,000; or
    • (C) the amount needed to provide for the basic family needs of the borrower and the borrower’s immediate family for 3 calendar months.
• (e)
  • (1) The Secretary shall develop ways to determine unit prices (or other appropriate forms of valuation) for crops and other agricultural products, the end use of which is intended to be in locally or regionally produced agricultural food products, to facilitate lending to local and regional food producers.
  • (2) The Secretary shall implement a mechanism for local and regional food producers to establish price history for the crops and other agricultural products produced by local and regional food producers.

§ 1943. Limitations on amount of operating loans

• (a) 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, $400,000, or, in the case of a loan guaranteed by the Secretary, $1,750,000 (increased, beginning with fiscal year 2019, by the inflation percentage applicable to the fiscal year in which the loan is guaranteed and reduced by the unpaid indebtedness of the borrower on loans under the sections specified in section 1925 of this title that are guaranteed by the Secretary); 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.
• (b) For purposes of this section, the inflation percentage applicable to a fiscal year is the percentage (if any) by which—
  • (1) the average of the Prices Paid By Farmers Index (as compiled by the National Agricultural Statistics Service of the Department of Agriculture) for the 12-month period ending on July 31 of the immediately preceding fiscal year; exceeds
  • (2) the average of such index (as so defined) for the 12-month period that immediately precedes the 12-month period described in paragraph (1).
• (c)
  • (1) Subject to paragraph (2), the Secretary may establish a program to make or guarantee microloans.
  • (2) The Secretary shall not make or guarantee a microloan under this subsection that would cause the total principal indebtedness outstanding at any 1 time for microloans made under this subsection to any 1 borrower to exceed $50,000.
  • (3) To the maximum extent practicable, the Secretary shall limit the administrative burdens and streamline the application and approval process for microloans under this subsection.
  • (4)
    • (A) Subject to subparagraph (B), during each of the 2014 through 2023 fiscal years, the Secretary may carry out a pilot project to make loans to community development financial institutions, as the Secretary determines appropriate—
      • (i) to make or guarantee microloans consistent with the terms provided under this subsection; and
      • (ii) to provide business, financial, marketing, and credit management services to microloan borrowers.
    • (B) Prior to making a loan to an institution described in subparagraph (A), the Secretary shall—
      • (i) review and approve—
        • (I) the loan loss reserve fund for microloans established by the institution; and
        • (II) the underwriting standards for microloans of the institution; and
      • (ii) establish such other requirements for making a loan to the institution as the Secretary determines necessary.
    • (C) To be eligible for a loan under subparagraph (A), an institution described in subparagraph (A) shall, as determined by the Secretary—
      • (i) have the legal authority necessary to carry out the actions described in subparagraph (A);
      • (ii) have a proven track record of successfully assisting agricultural borrowers; and
      • (iii) have the services of a staff with appropriate loan making and servicing expertise.
    • (D) Not less often than annually, on a date determined by the Secretary, an institution that has a loan under this paragraph shall provide to the Secretary such information as the Secretary may require to ensure that the services provided by the institution are serving the purposes of this subsection.
    • (E) The Secretary shall not make more than $10,000,000 in loans under this paragraph in any fiscal year.

§ 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.

§ 1946. Liability of borrower

• (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 as provided in paragraphs (2) and (3), 1 1 See References in Text note below. 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 a microloan to a beginning farmer or rancher or veteran farmer or rancher (as defined in section 2279(e) 1 of this title), or 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.
• (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.
• (c)
  • (1) A loan made or guaranteed by the Secretary under this subchapter may be in the form of a line-of-credit loan.
  • (2) A line-of-credit loan under paragraph (1) shall terminate not later than 5 years after the date that the loan is made or guaranteed.
  • (3) For purposes of determining eligibility for a farm operating loan under this subchapter, each year during which a farmer or rancher takes an advance or draws on a line-of-credit loan the farmer or rancher shall be considered to have received an operating loan for 1 year.
  • (4) If a borrower does not pay an installment on a line-of-credit loan on schedule, the borrower may not take an advance or draw on the line-of-credit, unless the Secretary determines that—
    • (A) the borrower’s failure to pay on schedule was due to unusual conditions that the borrower could not control; and
    • (B) the borrower will reduce the line-of-credit balance to the scheduled level at the end of—
      • (i) the production cycle; or
      • (ii) the marketing of the borrower’s agricultural products.
  • (5) A line-of-credit loan may be used to finance the production or marketing of an agricultural commodity that—
    • (A) is eligible for a price support program of the Department of Agriculture; or
    • (B) was eligible for a price support program of the Department of Agriculture on the day before April 4, 1996 .

§ 1949. Graduation of borrowers with operating loans or guarantees to private commercial credit

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.

§ 1961. Eligibility for loans

• (a) 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 or ranchers (including equine farmers or ranchers), or persons engaged in aquaculture, who are citizens of the United States and who are (in the case of farm ownership loans in accordance with subchapter I) owner-operators or operators, or (in the case of loans for a purpose under subchapter II) operators of not larger than family farms, and (2) farm cooperatives, private domestic corporations, partnerships, joint operations, trusts, or limited liability companies, or such other legal entities as the Secretary considers appropriate (A) that are engaged primarily in farming or ranching (including equine farming or ranching) or aquaculture, and (B) in which a majority interest is held by individuals who are citizens of the United States and who are (in the case of farm ownership loans in accordance with subchapter I) owner-operators or operators, or (in the case of loans for a purpose under subchapter II) operators of not larger than family farms (or in the case of such cooperatives, corporations, partnerships, joint operations, trusts, or limited liability companies, or other legal entities 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 quarantine imposed by the Secretary under the Plant Protection Act [ 7 U.S.C. 7701 et seq.] or the animal quarantine laws (as defined in section 136a of title 21 ), a natural disaster in the United States, or 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.): 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, joint operations, trusts, limited liability companies, and such other legal entities, the family farm requirement of the preceding sentence shall apply as well to all farms in which the entity has an ownership or operator interest (in the case of loans for a purpose under subchapter I) or an operator interest (in the case of loans for a purpose under subchapter II). 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 quarantine imposed by the Secretary under the Plant Protection Act [ 7 U.S.C. 7701 et seq.] or the animal quarantine laws (as defined in section 136a of title 21 ), a natural disaster in the United States, or 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.). The Secretary shall accept applications for assistance under this subchapter from persons affected by such a quarantine or 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 quarantine or 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. An entity that is an owner-operator or operator described in this subsection shall be considered to meet the direct ownership requirement imposed under this subsection if at least 75 percent of the ownership interests of each embedded entity of the entity is owned directly or indirectly by the individuals that own the family farm.
• (b)
  • (1) After the Secretary makes the determination required by paragraph (2), the Secretary may not make a loan to a farmer or rancher under this subchapter to cover a property loss unless the farmer or rancher had hazard insurance that insured the property at the time of the loss.
  • (2) Not later than 180 days after April 4, 1996 , the Secretary shall determine the appropriate level of insurance to be required under paragraph (1).
  • (3)
    • (A)
      • (i) Notwithstanding any other provision of this subchapter, the Secretary may make a loan to a poultry farmer under this subchapter to cover the loss of a chicken house for which the farmer did not have hazard insurance at the time of the loss, if the farmer—
        • (I) applied for, but was unable, to obtain hazard insurance for the chicken house;
        • (II) uses the loan to rebuild the chicken house in accordance with industry standards in effect on the date the farmer submits an application for the loan (referred to in this paragraph as “current industry standards”);
        • (III) obtains, for the term of the loan, hazard insurance for the full market value of the chicken house; and
        • (IV) meets the other requirements for the loan under this subchapter.
      • (ii) Subject to the limitation contained in section 1964(a)(2) of this title , the amount of a loan made to a poultry farmer under clause (i) shall be an amount that will allow the farmer to rebuild the chicken house in accordance with current industry standards.
    • (B)
      • (i) Notwithstanding any other provision of this subchapter, the Secretary may make a loan to a poultry farmer under this subchapter to cover the loss of a chicken house for which the farmer had hazard insurance at the time of the loss, if—
        • (I) the amount of the hazard insurance is less than the cost of rebuilding the chicken house in accordance with current industry standards;
        • (II) the farmer uses the loan to rebuild the chicken house in accordance with current industry standards;
        • (III) the farmer obtains, for the term of the loan, hazard insurance for the full market value of the chicken house; and
        • (IV) the farmer meets the other requirements for the loan under this subchapter.
      • (ii) Subject to the limitation contained in section 1964(a)(2) of this title , the amount of a loan made to a poultry farmer under clause (i) shall be the difference between—
        • (I) the amount of the hazard insurance obtained by the farmer; and
        • (II) the cost of rebuilding the chicken house in accordance with current industry standards.
• (c) 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) 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.

§ 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 $100,000 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.

§ 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 that are necessitated by a quarantine, natural disaster, major disaster, or emergency and that are deemed desirable by the applicant, subject to the limitations on the amounts of loans provided in section 1964(a) of this title .

§ 1964. Terms of loans

• (a) The Secretary may not make a loan under this subchapter to a borrower who has suffered a loss in an amount that—
  • (1) exceeds the actual loss caused by a disaster; or
  • (2) would cause the total indebtedness of the borrower under this subchapter to exceed $500,000.
• (b) 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) 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)
  • (1) 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 this 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 establish the value of the assets as of the day before the occurrence of the natural disaster, major disaster, or emergency that is the basis for a request for assistance under this subchapter or the Robert T. Stafford Disaster Relief and Emergency Assistance Act ( 42 U.S.C. 5121 et seq.).
  • (2)
    • (A) Subject to subparagraph (B), the Secretary shall not deny a loan under this subchapter to a borrower by reason of the fact that the borrower lacks a particular amount of collateral for the loan if the Secretary is reasonably certain that the borrower will be able to repay the loan.
    • (B) The Secretary may deny or cancel a loan under this subchapter if a borrower refuses to pledge available collateral on request by the Secretary.
• (e) 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.

§ 1966. Emergency Credit Revolving Fund utilization

The Secretary is authorized to utilize the revolving fund created by section 1148a 1 1 See References in Text note below. of title 12 (hereinafter in this subchapter referred to as the “Emergency Credit Revolving Fund”) for carrying out the purposes of this subchapter.

§ 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.

§ 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 subchapter. 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.

§ 1981. Farmers Home Administration

• (a) 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 powers 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) 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 (including debts and claims arising from loan guarantees), and adjust, modify, subordinate, or release the terms of security instruments, leases, contracts, and agreements entered into or administered by the Consolidated Farm Service Agency, 1 1 See Change of Name note below. Rural Utilities Service, Rural Housing Service, Rural Business-Cooperative Service, or a successor agency, or the Rural Development Administration, except for activities under the Housing Act of 1949 [ 42 U.S.C. 1441 et seq.]. In the case of a security instrument entered into under the Rural Electrification Act of 1936 ( 7 U.S.C. 901 et seq.), the Secretary shall notify the Attorney General of the intent of the Secretary to exercise the authority of the Secretary under this paragraph. 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. After consultation with a local or area county committee, 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 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 14 2 2 See References in Text note below. 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) The Secretary may use for the prosecution or defense of any claim or obligation described in subsection (b)(5) the Attorney General, the General Counsel of the Department of Agriculture, or a private attorney who has entered into a contract with the Secretary.
• (d)
  • (1) The Secretary shall develop a coordinated strategy across the relevant programs within the Rural Development mission areas to serve the specific, local needs of rural communities when making investments in rural community colleges and technical colleges through other authorities in effect on February 7, 2014 .
  • (2) In developing a coordinated strategy, the Secretary shall consult with groups representing rural-serving community colleges and technical colleges to coordinate critical investments in rural community colleges and technical colleges involved in workforce training.
  • (3) Nothing in this subsection provides a priority for funding under authorities in effect on February 7, 2014 .
  • (4) The Secretary shall use the coordinated strategy and information developed for the strategy to more effectively serve rural communities with respect to investments in community colleges and technical colleges.
• (e)
  • (1) Except as provided in paragraph (2), the Secretary may allow a recipient of a grant, loan, or loan guarantee provided by the Office of Rural Development under this chapter to use not more than 10 percent of the amount so provided—
    • (A) for any activity for which assistance may be provided under section 601 of the Rural Electrification Act of 1936 [ 7 U.S.C. 950bb ]; or
    • (B) to construct other broadband infrastructure.
  • (2) Paragraph (1) of this subsection shall not apply to a recipient who is seeking to provide retail broadband service in any area where retail broadband service is available at the minimum broadband speeds, as defined under section 601(e) of the Rural Electrification Act of 1936 [ 7 U.S.C. 950bb(e) ].
  • (3) The Secretary shall not provide funding under paragraph (1) if the funding would result in competitive harm to any grant, loan, or loan guarantee provided under the Rural Electrification Act of 1936.
• (f) The Secretary and the designees of the Secretary are hereby granted the same access to information and subject to the same requirements applicable to the Secretary of Housing and Urban Development as provided in section 653 of title 42 and section 6103( l )(7)(D)(ix) of title 26 to verify income for individuals participating in sections 502, 504, 521, and 542 of the Housing Act of 1949 ( 42 U.S.C. 1472 , 1474, 1490a, and 1490r), notwithstanding section 653( l ) of title 42.

§ 1981a. Loan moratorium and policy on foreclosures

• (a) 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.
• (b)
  • (1) Subject to the other provisions of this subsection, effective beginning on the date of the enactment of this subsection, there shall be in effect a moratorium, with respect to farmer program loans made under subchapter I, II, or III, on all acceleration and foreclosure proceedings instituted by the Department of Agriculture against any farmer or rancher who—
    • (A) has pending against the Department a claim of program discrimination that is accepted by the Department as valid; or
    • (B) files a claim of program discrimination that is accepted by the Department as valid.
  • (2) During the period of the moratorium, the Secretary shall waive the accrual of interest and offsets on all farmer program loans made under subchapter I, II, or III for which loan acceleration or foreclosure proceedings have been suspended under paragraph (1).
  • (3) The moratorium shall terminate with respect to a claim of discrimination by a farmer or rancher on the earlier of—
    • (A) the date the Secretary resolves the claim; or
    • (B) if the farmer or rancher appeals the decision of the Secretary on the claim to a court of competent jurisdiction, the date that the court renders a final decision on the claim.
  • (4) If a farmer or rancher does not prevail on a claim of discrimination described in paragraph (1), the farmer or rancher shall be liable for any interest and offsets that accrued during the period that loan acceleration or foreclosure proceedings have been suspended under paragraph (1).

§ 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 lowest of—

• (1) the rate of interest on the original loan;
• (2) the rate being charged by the Secretary for loans, other than guaranteed loans, of the same type at the time at which the borrower applies for a deferral, consolidation, rescheduling, or reamortization; or
• (3) 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.

§ 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) 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 .

§ 1981d. Notice of loan service programs

• (a) The Secretary shall provide notice by certified mail to each borrower who is at least 90 days past due on the payment of principal or interest on a loan made or insured under this chapter.
• (b) The notice required under subsection (a) 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) All notices required by this section shall be contained in the regulations implementing this chapter.
• (d) The notice described in subsection (b) 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) 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.

§ 1981e. Planting and production history guidelines

• (a) 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)
  • (1) 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), 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) 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) Paragraph (1) shall apply to all actions taken by the Secretary to carry out this chapter (except for loans under subchapter III) that involve the yields of a farm of a borrower or applicant, including making loans and loan guarantees, servicing loans, and making credit sales.

§ 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.

§ 1982. Relief for mobilized military reservists from certain agricultural loan obligations

• (a) In this section, the term “mobilized military reservist” means an individual who—
  • (1) is on active duty under section 688, 12301(a), 12301(g), 12302, 12304, 12306, or 12406, or chapter 13 of title 10, or any other provision of law during a war or during a national emergency declared by the President or Congress, regardless of the location at which the active duty service is performed; or
  • (2) in the case of a member of the National Guard, is on full-time National Guard duty (as defined in section 101(d)(5) of title 10 ) under a call to active service authorized by the President or the Secretary of Defense for a period of more than 30 consecutive days under section 502(f) of title 32 for purposes of responding to a national emergency declared by the President and supported by Federal funds.
• (b) Any requirement that a borrower of a direct loan made under this chapter make any interest payment on the loan that would otherwise be required to be made while the borrower is a mobilized military reservist is rescinded.
• (c) The due date of any payment of principal on a direct loan made to a borrower under this chapter that would otherwise be required to be made while or after the borrower is a mobilized military reservist is deferred for a period equal in length to the period for which the borrower is a mobilized military reservist.
• (d) Interest on a direct loan made to a borrower described in this section shall not accrue during the period the borrower is a mobilized military reservist.
• (e) Notwithstanding section 2008h of this title or any other provision of this chapter, a borrower who receives assistance under this section shall not, as a result of the assistance, be considered to be delinquent or receiving debt forgiveness for purposes of receiving a direct or guaranteed loan under this chapter.

§ 1983. Special conditions and limitations on loans

In connection with loans made or insured under this chapter, the Secretary shall—

• (1) require 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 an appropriate written financial statement;
• (2) except with respect to a loan under section 1926, 1932, or 1944 of this title, require—
  • (A) an annual review of the credit history and business operation of the borrower; and
  • (B) an annual review of the continued eligibility of the borrower for the loan;
• (3) except for guaranteed loans, require 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;
• (4) require 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;
• (5) require the application of a person who is a veteran of any war, as defined in section 101(12) of title 38 , for a loan under subchapter I or II to be given preference over a similar application from a person who is not a veteran of any war, if the applications are on file in a county or area office at the same time;
• (6) in the case of water and waste disposal direct and guaranteed loans provided under section 1926 of this title , encourage, to the maximum extent practicable, private or cooperative lenders to finance rural water and waste disposal facilities by—
  • (A) maximizing the use of loan guarantees to finance eligible projects in rural communities in which the population exceeds 5,500;
  • (B) maximizing the use of direct loans to finance eligible projects in rural communities if the impact on ratepayers will be material when compared to financing with a loan guarantee;
  • (C) establishing and applying a materiality standard when determining the difference in impact on ratepayers between a direct loan and a loan guarantee;
  • (D) in the case of projects that require interim financing in excess of $500,000, requiring that the projects initially seek the financing from private or cooperative lenders; and
  • (E) determining if an existing direct loan borrower can refinance with a private or cooperative lender, including with a loan guarantee, prior to providing a new direct loan; and
• (7) in the case of an insured or guaranteed loan issued or modified under section 1926(a) of this title , charge and collect from the lender fees in such amounts as to bring down the costs of subsidies for the insured or guaranteed loan, except that the fees shall not act as a bar to participation in the programs nor be inconsistent with current practices in the marketplace.

§ 1983a. Prompt approval of loans and loan guarantees

• (a)
  • (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) 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, 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 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 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)
  • (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) 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) 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)
  • (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.
• (f)
  • (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 1989 1 1 See References in Text note below. 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)
    • (A) The Secretary shall provide a prospectus of a seasoned direct loan borrower to each approved lender whose lending area includes the location of the seasoned direct loan borrower.
    • (B) The Secretary shall notify each borrower of a loan that a prospectus has been provided to a lender under subparagraph (A).
    • (C) 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, 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, 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)
  • (1) The Secretary shall provide to lenders a short, simplified application form for guarantees under this chapter of—
    • (A) farmer program loans the principal amount of which is $125,000 or less; and
    • (B) business and industry guaranteed loans under section 1932(a)(2)(A) of this title the principal amount of which is—
      • (i) in the case of a loan guarantee made during fiscal year 2002 or 2003, $400,000 or less; and
      • (ii) in the case of a loan guarantee made during any subsequent fiscal year—
        • (I) $400,000 or less; or
        • (II) if the Secretary determines that there is not a significant increased risk of a default on the loan, $600,000 or less.
  • (2) The Secretary shall develop an application process that accelerates, to the maximum extent practicable, the processing of applications for water and waste disposal grants or direct or guaranteed loans under paragraph (1) or (2) of section 1926(a) of this title the grant award amount or principal loan amount, respectively, of which is $300,000 or less.
  • (3) In developing an application under this subsection, 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.
• (h) Except as provided in subsection (g)(2), the Secretary shall, to the maximum extent practicable, develop a simplified application process, including a single page application if practicable, for grants and relending authorized under sections 1926, 1926c, 1926d, 1926e, 1932(b), 1932(c), 1932(e), 1936b, 2008p, and 2008s of this title.

§ 1983b. Beginning farmer and rancher individual development accounts pilot program

• (a) In this section:
  • (1) The term “demonstration program” means a demonstration program carried out by a qualified entity under the pilot program established in subsection (b)(1).
  • (2) The term “eligible participant” means a qualified beginning farmer or rancher that—
    • (A) lacks significant financial resources or assets; and
    • (B) has an income that is less than—
      • (i) 80 percent of the median income of the State in which the farmer or rancher resides; or
      • (ii) 200 percent of the most recent annual Federal Poverty Income Guidelines published by the Department of Health and Human Services for the State.
  • (3) The term “individual development account” means a savings account described in subsection (b)(4)(A).
  • (4)
    • (A) The term “qualified entity” means—
      • (i) 1 or more organizations—
        • (I) described in section 501(c)(3) of title 26 ; and
        • (II) exempt from taxation under section 501(a) of such title; or
      • (ii) a State, local, or tribal government submitting an application jointly with an organization described in clause (i).
    • (B) An organization described in subparagraph (A)(i) may collaborate with a financial institution or for-profit community development corporation to carry out the purposes of this section.
• (b)
  • (1) The Secretary shall establish a pilot program to be known as the “New Farmer Individual Development Accounts Pilot Program” under which the Secretary shall work through qualified entities to establish demonstration programs—
    • (A) of at least 5 years in duration; and
    • (B) in at least 15 States.
  • (2) The Secretary shall operate the pilot program through, and in coordination with the farm loan programs of, the Farm Service Agency.
  • (3)
    • (A) A qualified entity carrying out a demonstration program under this section shall establish a reserve fund consisting of a non-Federal match of 50 percent of the total amount of the grant awarded to the demonstration program under this section.
    • (B) After the qualified entity has deposited the non-Federal matching funds described in subparagraph (A) in the reserve fund, the Secretary shall provide the total amount of the grant awarded under this section to the demonstration program for deposit in the reserve fund.
    • (C) Of the funds deposited under subparagraph (B) in the reserve fund established for a demonstration program, the qualified entity carrying out the demonstration program—
      • (i) may use up to 10 percent for administrative expenses; and
      • (ii) shall use the remainder in making matching awards described in paragraph (4)(B)(ii)(I).
    • (D) Any interest earned on amounts in a reserve fund established under subparagraph (A) may be used by the qualified entity as additional matching funds for, or to administer, the demonstration program.
    • (E) The Secretary shall issue guidance regarding the investment requirements of reserve funds established under this paragraph.
    • (F) On the date on which all funds remaining in any individual development account established by a qualified entity have reverted under paragraph (5)(B)(ii) to the reserve fund established by the qualified entity, there shall revert to the Treasury of the United States a percentage of the amount (if any) in the reserve fund equal to—
      • (i) the amount of Federal funds deposited in the reserve fund under subparagraph (B) that were not used for administrative expenses; divided by
      • (ii) the total amount of funds deposited in the reserve fund.
  • (4)
    • (A) A qualified entity receiving a grant under this section shall establish and administer individual development accounts for eligible participants.
    • (B) To be eligible to receive funds under this section from a qualified entity, an eligible participant shall enter into a contract with only 1 qualified entity under which—
      • (i) the eligible participant agrees—
        • (I) to deposit a certain amount of funds of the eligible participant in a personal savings account, as prescribed by the contractual agreement between the eligible participant and the qualified entity;
        • (II) to use the funds described in subclause (I) only for 1 or more eligible expenditures described in paragraph (5)(A); and
        • (III) to complete financial training; and
      • (ii) the qualified entity agrees—
        • (I) to deposit, not later than 1 month after an amount is deposited pursuant to clause (i)(I), at least a 100-percent, and up to a 200-percent, match of that amount into the individual development account established for the eligible participant; and
        • (II) with uses of funds proposed by the eligible participant.
    • (C)
      • (i) A qualified entity administering a demonstration program under this section may provide not more than $6,000 for each fiscal year in matching funds to the individual development account established by the qualified entity for an eligible participant.
      • (ii) An amount provided under clause (i) shall not be considered to be a gift or loan for mortgage purposes.
  • (5)
    • (A) An eligible expenditure described in this subparagraph is an expenditure—
      • (i) to purchase farmland or make a down payment on an accepted purchase offer for farmland;
      • (ii) to make mortgage payments on farmland purchased pursuant to clause (i), for up to 180 days after the date of the purchase;
      • (iii) to purchase breeding stock, fruit or nut trees, or trees to harvest for timber; and
      • (iv) for other similar expenditures, as determined by the Secretary.
    • (B)
      • (i) An eligible participant may make an eligible expenditure at any time during the 2-year period beginning on the date on which the last matching funds are provided under paragraph (4)(B)(ii)(I) to the individual development account established for the eligible participant.
      • (ii) At the end of the period described in clause (i), any funds remaining in an individual development account established for an eligible participant shall revert to the reserve fund of the demonstration program under which the account was established.
• (c)
  • (1) A qualified entity that seeks to carry out a demonstration program under this section may submit to the Secretary an application at such time, in such form, and containing such information as the Secretary may prescribe.
  • (2) In considering whether to approve an application to carry out a demonstration program under this section, the Secretary shall assess—
    • (A) the degree to which the demonstration program described in the application is likely to aid eligible participants in successfully pursuing new farming opportunities;
    • (B) the experience and ability of the qualified entity to responsibly administer the demonstration program;
    • (C) the experience and ability of the qualified entity in recruiting, educating, and assisting eligible participants to increase economic independence and pursue or advance farming opportunities;
    • (D) the aggregate amount of direct funds from non-Federal public sector and private sources that are formally committed to the demonstration program as matching contributions;
    • (E) the adequacy of the plan of the qualified entity to provide information relevant to an evaluation of the demonstration program; and
    • (F) such other factors as the Secretary considers to be appropriate.
  • (3) In considering an application to conduct a demonstration program under this section, the Secretary shall give preference to an application from a qualified entity that demonstrates—
    • (A) a track record of serving clients targeted by the program, including, as appropriate, socially disadvantaged farmers or ranchers (as defined in section 2003(e)(2) of this title ); and
    • (B) expertise in dealing with financial management aspects of farming.
  • (4) Not later than 1 year after the date of enactment of this section, in accordance with this section, the Secretary shall, on a competitive basis, approve such applications to conduct demonstration programs as the Secretary considers appropriate.
  • (5) If the Secretary approves an application to carry out a demonstration program, the Secretary shall authorize the applicant to carry out the project for a period of 5 years, plus an additional 2 years to make eligible expenditures in accordance with subsection (b)(5)(B).
• (d)
  • (1) The Secretary shall make a grant to a qualified entity authorized to carry out a demonstration program under this section.
  • (2) The aggregate amount of grant funds provided to a demonstration program carried out under this section shall not exceed $250,000.
  • (3) The Secretary shall pay the amounts awarded under a grant made under this section—
    • (A) on the awarding of the grant; or
    • (B) pursuant to such payment plan as the qualified entity may specify.
• (e)
  • (1)
    • (A) Not later than 60 days after the end of the calendar year in which the Secretary authorizes a qualified entity to carry out a demonstration program under this section, and annually thereafter until the conclusion of the demonstration program, the qualified entity shall prepare an annual report that includes, for the period covered by the report—
      • (i) an evaluation of the progress of the demonstration program;
      • (ii) information about the demonstration program, including the eligible participants and the individual development accounts that have been established; and
      • (iii) such other information as the Secretary may require.
    • (B) A qualified entity shall submit each report required under subparagraph (A) to the Secretary.
  • (2) Not later than 1 year after the date on which all demonstration programs under this section are concluded, the Secretary shall submit to Congress a final report that describes the results and findings of all reports and evaluations carried out under this section.
• (f) The Secretary may conduct an annual review of the financial records of a qualified entity—
  • (1) to assess the financial soundness of the qualified entity; and
  • (2) to determine the use of grant funds made available to the qualified entity under this section.
• (g) In carrying out this section, the Secretary may promulgate regulations to ensure that the program includes provisions for—
  • (1) the termination of demonstration programs;
  • (2) control of the reserve funds in the case of such a termination;
  • (3) transfer of demonstration programs to other qualified entities; and
  • (4) remissions from a reserve fund to the Secretary in a case in which a demonstration program is terminated without transfer to a new qualified entity.
• (h) There is authorized to be appropriated to carry out this section $5,000,000 for each of fiscal years 2008 through 2023.

§ 1983c. Provision of information to borrowers

• (a) 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) Subsection (a) 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).

§ 1983d. Farmer loan pilot projects

• (a) The Secretary may conduct pilot projects of limited scope and duration that are consistent with subchapter I through this subchapter to evaluate processes and techniques that may improve the efficiency and effectiveness of the programs carried out under subchapter I through this subchapter.
• (b) The Secretary shall—
  • (1) not less than 60 days before the date on which the Secretary initiates a pilot project under subsection (a), submit notice of the proposed pilot project to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate; and
  • (2) consider any recommendations or feedback provided to the Secretary in response to the notice provided under paragraph (1).

§ 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,

§ 1985. Security servicing

• (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 subsections (c) and (e), 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) Subject to this subsection and subsection (e)(1)(A), the Secretary shall offer to sell real property that is acquired by the Secretary under this chapter using the following order and method of sale:
    • (A) Not later than 15 days after acquiring real property, the Secretary shall publicly advertise the property for sale.
    • (B)
      • (i) Not later than 135 days after acquiring real property, the Secretary shall offer to sell the property to a qualified beginning farmer or rancher or a socially disadvantaged farmer or rancher at current market value based on a current appraisal.
      • (ii) If more than 1 qualified beginning farmer or rancher or socially disadvantaged farmer or rancher offers to purchase the property, the Secretary shall select between the qualified applicants on a random basis.
      • (iii) A random selection or denial by the Secretary of a beginning farmer or rancher or a socially disadvantaged farmer or rancher for farm inventory property under this subparagraph shall be final and not administratively appealable.
      • (iv) To the maximum extent practicable, the Secretary shall maximize the opportunity for beginning farmers or ranchers and socially disadvantaged farmers or ranchers to purchase real property acquired by the Secretary under this chapter by combining or dividing inventory parcels of the property in such manner as the Secretary determines to be appropriate.
    • (C) If no acceptable offer is received from a qualified beginning farmer or rancher or a socially disadvantaged farmer or rancher under subparagraph (B) not later than 135 days after acquiring the real property, the Secretary shall, not later than 30 days after the 135-day period, sell the property after public notice at a public sale, and, if no acceptable bid is received, by negotiated sale, at the best price obtainable.
  • (2) In the case of real property acquired before April 4, 1996 , that the Secretary leased before April 4, 1996 , not later than 60 days after the lease expires, the Secretary shall offer to sell the property in accordance with paragraph (1).
  • (3)
    • (A) Subject to subparagraph (B), any conveyance of real property under this subsection shall include all of the interest of the United States in the property, including mineral rights.
    • (B) The Secretary may for conservation purposes grant or sell an easement, restriction, development right, or similar legal right to real property to a State, a political subdivision of a State, or a private nonprofit organization separately from the underlying fee or other rights to the property owned by the United States.
  • (4) Chapters 1 to 11 of title 40 and division C (except sections 3302, 3307(e), 3501(b), 3509, 3906, 4710, and 4711) of subtitle I of title 41 shall not apply to any exercise of authority under this chapter.
  • (5)
    • (A) Subject to subparagraph (B), the Secretary may not lease any real property acquired under this chapter.
    • (B)
      • (i) The Secretary may lease or contract to sell to a beginning farmer or rancher or a socially disadvantaged farmer or rancher a farm or ranch acquired by the Secretary under this chapter if the beginning farmer or rancher or the socially disadvantaged farmer or rancher qualifies for a credit sale or direct farm ownership loan under subchapter I but credit sale authority for loans or direct farm ownership loan funds, respectively, are not available.
      • (ii) The term of a lease or contract to sell to a beginning farmer or rancher or a socially disadvantaged farmer or rancher under clause (i) shall be until the earlier of—
        • (I) the date that is 18 months after the date of the lease or sale; or
        • (II) the date that direct farm ownership loan funds or credit sale authority for loans becomes available to the beginning farmer or rancher or the socially disadvantaged farmer or rancher.
      • (iii) In determining the rental rate on real property leased under this subparagraph, the Secretary shall consider the income-producing capability of the property during the term that the property is leased.
  • (6)
    • (A) On the request of an applicant, not later than 30 days after denial of the applicant’s application, the appropriate State director shall provide an expedited review and determination of whether the applicant is a beginning farmer or rancher or a socially disadvantaged farmer or rancher for the purpose of acquiring farm inventory property.
    • (B) The determination of a State Director under subparagraph (A) shall be final and not administratively appealable.
    • (C)
      • (i) The Secretary shall maintain statistical data on the number and results of determinations made under subparagraph (A) and the effect of the determinations on—
        • (I) selling farm inventory property to beginning farmers or ranchers and socially disadvantaged farmers or ranchers; and
        • (II) disposing of real property in inventory.
      • (ii) The Secretary shall notify the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate if the Secretary determines that the review process under subparagraph (A) is adversely affecting the selling of farm inventory property to beginning farmers or ranchers or socially disadvantaged farmers or ranchers or the disposing of real property in inventory.
• (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) Except as provided in subparagraph (D), if—
        • (I) the Secretary acquires property under this chapter that is located within an Indian reservation; and
        • (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;
      • (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) Not later than 90 days after acquiring the property, the Secretary shall 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).
    • (B) 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.
    • (C) 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.
    • (D)
      • (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,
      • (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 subparagraph (A), this subparagraph, and subsection (g)(6); 1 1 See References in Text note below.
        • (II) if the borrower-owner does not voluntarily convey the real property to the Secretary, that—
        • (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)
        • (I) If an Indian borrower-owner does not voluntarily convey to the Secretary real property described in clause (i), not less than 30 days before a foreclosure sale of the property, the Secretary shall provide the Indian borrower-owner with the option of—
        • (II) If an Indian borrower-owner does not voluntarily convey to the Secretary real property described in clause (i), not less than 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—
        • (III) If an Indian tribe assumes a loan under subclause (I)—
      • (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—
        • (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 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.
    • (B) The Secretary may subsequently sell any contract entered into to carry out subparagraph (A).
  • (4) 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.
  • (5) 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.
  • (6) 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 paragraph (2), 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.
  • (2) The Secretary shall not establish a wetland conservation easement on an inventoried property that—
    • (A) was cropland on the date the property entered the inventory of the Secretary; or
    • (B) was used for farming at any time during the period beginning on the date 5 years before the property entered the inventory of the Secretary and ending on the date the property entered the inventory of the Secretary.
  • (3) 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.
  • (4) The appraised value of the farm shall reflect the value of the land due to the placement of wetland conservation easements.

§ 1986. Conflicts of interests

• (a) 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) 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 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) 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) 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.

§ 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.

§ 1988. Appropriations

• (a) 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)
  • (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) 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.

§ 1989. Rules and regulations

• (a) 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) Notwithstanding subsection (a), 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).
• (c)
  • (1) The Secretary shall establish a program under which the Secretary shall guarantee loans for any purpose specified in subchapter II that are made by lending institutions certified by the Secretary.
  • (2) 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) 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) 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) Neither this subsection nor subsection (d) shall affect the responsibility of the Secretary to certify eligibility, review financial information, and otherwise assess an application.
• (d)
  • (1) 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);
    • (B) knowledge of the regulations concerning the guaranteed loan program; and
    • (C) proficiency related to the certified lender program requirements.
  • (2) 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) 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) 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.
• (e) The Secretary may administer the loan guarantee programs under subsections (c) and (d) through central offices established in States or in multi-State areas.

§ 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.

§ 1990a. Refinancing of certain rural hospital debt

Assistance under section 1926(a) of this title for a community facility, or under section 1932 of this title , may include the refinancing of a debt obligation of a rural hospital as an eligible loan or loan guarantee purpose if the assistance would help preserve access to a health service in a rural community, meaningfully improve the financial position of the hospital, and otherwise meet the financial feasibility and adequacy of security requirements of the Rural Development Agency.

§ 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 , 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, regardless of whether the applicant is participating in a program under section 1935 of this title —
    • (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, joint operation, or such other legal entity as the Secretary considers appropriate, who has members, stockholders, partners, joint operator, 1 1 So in original. or owners 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—
        • (II)
      • (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—
        • (II)
    • (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 30 percent of the average 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, except that this subparagraph shall not apply to a loan made or guaranteed under subchapter II; 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.
  • (12)
    • (A) Except as provided in subparagraph (B), the term “debt forgiveness” means reducing or terminating a farmer program loan made or guaranteed under this chapter, in a manner that results in a loss to the Secretary, through—
      • (i) writing down or writing off a loan under section 2001 of this title ;
      • (ii) compromising, adjusting, reducing, or charging-off a debt or claim under section 1981 of this title ;
      • (iii) paying a loss on a guaranteed loan under section 2005 of this title ; or
      • (iv) discharging a debt as a result of bankruptcy.
    • (B) The term “debt forgiveness” does not include—
      • (i) consolidation, rescheduling, reamortization, or deferral of a loan; or
      • (ii) any write-down provided as part of a resolution of a discrimination complaint against the Secretary.
  • (13)
    • (A) Subject to subparagraphs (B) through (I), the terms “rural” and “rural area” mean any area other than—
      • (i) a city or town that has a population of greater than 50,000 inhabitants; and
      • (ii) any urbanized area contiguous and adjacent to a city or town described in clause (i).
    • (B) For the purpose of water and waste disposal grants and direct loans provided under paragraphs (1) and (2) of section 1926(a) of this title , the terms “rural” and “rural area” mean a city, town, or unincorporated area that has a population of no more than 10,000 inhabitants.
    • (C) For the purpose of community facility direct loans and grants under paragraphs (1), (19), (20), and (21) of section 1926(a) of this title , the terms “rural” and “rural area” mean any area other than a city, town, or unincorporated area that has a population of greater than 20,000 inhabitants.
    • (D)
      • (i) This subparagraph applies to—
        • (I) an urbanized area described in subparagraphs (A)(ii) and (F) that—
        • (II) an area within an urbanized area described in subparagraphs (A)(ii) and (F) that is within ¼-mile of a rural area described in subparagraph (A).
      • (ii) Notwithstanding any other provision of this paragraph, on the petition of a unit of local government in an area described in clause (i) or on the initiative of the Under Secretary for Rural Development, the Under Secretary may determine that a part of an area described in clause (i) is a rural area for the purposes of this paragraph, if the Under Secretary finds that the part is rural in character, as determined by the Under Secretary.
      • (iii) In carrying out this subparagraph, the Under Secretary for Rural Development shall—
        • (I) not delegate the authority to carry out this subparagraph;
        • (II) consult with the applicable rural development State or regional director of the Department of Agriculture and the governor of the respective State;
        • (III) provide to the petitioner an opportunity to appeal to the Under Secretary a determination made under this subparagraph;
        • (IV) release to the public notice of a petition filed or initiative of the Under Secretary under this subparagraph not later than 30 days after receipt of the petition or the commencement of the initiative, as appropriate;
        • (V) make a determination under this subparagraph not less than 15 days, and not more than 60 days, after the release of the notice under subclause (IV);
        • (VI) submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate an annual report on actions taken to carry out this subparagraph; and
        • (VII) terminate a determination under this subparagraph that part of an area is a rural area on the date that data is available for the next decennial census conducted under section 141(a) of title 13 .
    • (E) Notwithstanding any other provision of this paragraph, in determining which census blocks in an urbanized area are not in a rural area (as defined in this paragraph), the Secretary shall exclude any cluster of census blocks that would otherwise be considered not in a rural area only because the cluster is adjacent to not more than 2 census blocks that are otherwise considered not in a rural area under this paragraph.
    • (F)
      • (i) This subparagraph applies to—
        • (I) any area that—
        • (II) any urbanized area contiguous and adjacent to a city or town described in subparagraph (A)(i).
      • (ii) The Secretary may, by regulation only, consider—
        • (I) an area described in clause (i)(I) not to be a rural area for purposes of subparagraphs (A) and (C); and
        • (II) an area described in clause (i)(II) not to be a rural area for purposes of subparagraph (C).
      • (iii) A program applicant may appeal an estimate made under clause (i)(I) based on appropriate data for an area, as determined by the Secretary.
    • (G) Notwithstanding any other provision of this paragraph, within the areas of the County of Honolulu, Hawaii, and the Commonwealth of Puerto Rico, the Secretary may designate any part of the areas as a rural area if the Secretary determines that the part is not urban in character, other than any area included in the Honolulu Census Designated Place or the San Juan Census Designated Place.
    • (H) Populations of individuals incarcerated on a long-term or regional basis shall not be included in determining whether an area is “rural” or a “rural area”.
    • (I) The first 1,500 individuals who reside in housing located on a military base shall not be included in determining whether an area is “rural” or a “rural area”.
• (b) As used in sections 1927(d), 1981d, 1985(e) and (f), 1988(b), 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 homestead retention as authorized under section 2000 of this title .

§ 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 1926(a)(1), 1932, 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.

§ 1993. Transition to private commercial or other sources of credit

• (a) In making or insuring a farm loan under subchapter I or II, the Secretary shall establish a plan and promulgate regulations (including performance criteria) that promote the goal of transitioning borrowers to private commercial credit and other sources of credit in the shortest period of time practicable.
• (b) In carrying out this section, the Secretary shall integrate and coordinate the transition policy described in subsection (a) with—
  • (1) the borrower training program established by section 2006a of this title ;
  • (2) the loan assessment process established by section 2006b of this title ;
  • (3) the supervised credit requirement established by section 2006c of this title ;
  • (4) the market placement program established by section 2006d of this title ; and
  • (5) other appropriate programs and authorities, as determined by the Secretary.

§ 1994. Maximum amounts for loans authorized; long-term cost projections

• (a) 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.
• (b)
  • (1) The Secretary may make or guarantee loans under subchapters I and II from the Agricultural Credit Insurance Fund provided for in section 1929 of this title for not more than $10,000,000,000 for each of fiscal years 2019 through 2023, of which, for each fiscal year—
    • (A) $3,000,000,000 shall be for direct loans, of which—
      • (i) $1,500,000,000 shall be for farm ownership loans under subchapter I; and
      • (ii) $1,500,000,000 shall be for operating loans under subchapter II; and
    • (B) $7,000,000,000 shall be for guaranteed loans, of which—
      • (i) $3,500,000,000 shall be for farm ownership loans under subchapter I; and
      • (ii) $3,500,000,000 shall be for operating loans under subchapter II.
  • (2)
    • (A)
      • (i)
        • (I) Of the amounts made available under paragraph (1) for direct farm ownership loans, the Secretary shall reserve an amount that is not less than 75 percent of the total amount for qualified beginning farmers and ranchers.
        • (II) Of the amounts reserved for a fiscal year under subclause (I), the Secretary shall reserve an amount not less than ⅔ of the amount for the down payment loan program under section 1935 of this title and joint financing arrangements under section 1927(a)(3)(D) of this title until April 1 of the fiscal year.
      • (ii) Of the amounts made available under paragraph (1) for direct operating loans, the Secretary shall reserve for qualified beginning farmers and ranchers—
        • (I) for each of fiscal years 1996 through 1998, 25 percent;
        • (II) for fiscal year 1999, 30 percent; and
        • (III) for each of fiscal years 2008 through 2023, an amount that is not less than 50 percent.
      • (iii) Except as provided in clause (i)(II), funds reserved for qualified beginning farmers or ranchers under this subparagraph for a fiscal year shall be reserved only until September 1 of the fiscal year.
    • (B)
      • (i) Of the amounts made available under paragraph (1) for guarantees of farm ownership loans, the Secretary shall reserve an amount that is not less than 40 percent of the total amount for qualified beginning farmers and ranchers.
      • (ii) Of the amounts made available under paragraph (1) for guarantees of operating loans, the Secretary shall reserve 40 percent for qualified beginning farmers and ranchers.
      • (iii) Funds reserved for qualified beginning farmers or ranchers under this subparagraph for a fiscal year shall be reserved only until April 1 of the fiscal year.
    • (C) If a qualified beginning farmer or rancher meets the eligibility criteria for receiving a direct or guaranteed loan under section 1922, 1935, or 1941 of this title, the Secretary shall make or guarantee the loan if sufficient funds reserved under this paragraph are available to make or guarantee the loan.
  • (3)
    • (A) Notwithstanding subsection (a), subject to subparagraph (B)—
      • (i) beginning on August 1 of each fiscal year, the Secretary shall use available unsubsidized guaranteed farm operating loan funds to provide direct farm ownership loans approved by the Secretary to qualified beginning farmers and ranchers under the down payment loan program established under section 1935 of this title , if sufficient direct farm ownership loan funds are not otherwise available; and
      • (ii) beginning on September 1 of each fiscal year, the Secretary shall use available unsubsidized guaranteed farm operating loan funds to provide direct farm ownership loans approved by the Secretary to qualified beginning farmers and ranchers, if sufficient direct farm ownership loan funds are not otherwise available.
    • (B) The Secretary shall limit the transfer of funds under subparagraph (A) so that all guaranteed farm operating loans that have been approved, or will be approved, by the Secretary during the fiscal year will be made to the extent of available amounts.
  • (4)
    • (A) Notwithstanding subsection (a), subject to subparagraphs (B) and (C), beginning on September 1 of each fiscal year, the Secretary may use available funds made available under subchapter III for the fiscal year to fund the credit sale of farm real estate in the inventory of the Secretary.
    • (B) The transfer authority provided under subparagraph (A) shall not apply to any funds made available to the Secretary for any fiscal year under an Act making supplemental appropriations.
    • (C) The Secretary shall limit the transfer of funds under subparagraph (A) so that all emergency disaster loans that have been approved, or will be approved, by the Secretary during the fiscal year will be made to the extent of available amounts.
  • (5)
    • (A) If the Secretary determines that the amount needed for a fiscal year for direct operating loans (including microloans) under subchapter II is greater than the aggregate principal amount authorized for that fiscal year by this Act, an appropriations Act, or any other provision of law, the Secretary shall make additional microloans under subchapter II using amounts made available under subparagraph (C).
    • (B) Not later than 15 days before the date on which the Secretary uses the authority under subparagraph (A), the Secretary shall submit a notice of the use of that authority to—
      • (i) the Committee on Appropriations of the House of Representatives;
      • (ii) the Committee on Appropriations of the Senate;
      • (iii) the Committee on Agriculture of the House of Representatives; and
      • (iv) the Committee on Agriculture, Nutrition, and Forestry of the Senate.
    • (C) There is authorized to be appropriated to carry out this paragraph $5,000,000 for each of fiscal years 2019 through 2023.
• (c) 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)
  • (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.

§ 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.

§ 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.

§ 1997. Conservation easements

• (a) 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) Subject to subsection (c), the Secretary may enter into a contract related to real property for conservation, recreation, or wildlife purposes.
• (c) The Secretary may enter into a contract under subsection (b) 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; and
  • (3)
    • (A) such property secures any loan made under any law administered by the Secretary and held by the Secretary; and
    • (B) such contract better enables a qualified borrower to repay the loan in a timely manner, as determined by the Secretary.
• (d) The terms and conditions specified in each such contract 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 contract.
• (e)
  • (1) Subject to paragraph (2), the Secretary may reduce or forgive the outstanding debt of a borrower—
    • (A) in the case of a borrower to whom the Secretary has made one or more outstanding loans under laws administered by the Secretary, 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 contract 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 Secretary 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 contract 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 contract is entered into 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) 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 enter into contracts under this section;
  • (2) formulating the terms and conditions of such contracts; and
  • (3) enforcing such contracts.
• (g) The Secretary, and any person or governmental entity designated by the Secretary, may enforce a contract entered into by the Secretary under this section.

§ 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.

§ 1999. Interest rate reduction program

• (a) The Secretary shall establish and carry out in accordance with this section an interest rate reduction program for loans guaranteed under this chapter.
• (b) 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) In return for a contract entered into by a lender under subsection (b) 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) 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)
  • (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)
    • (A) The total amount of funds used by the Secretary to carry out this section for a fiscal year shall not exceed $750,000,000.
    • (B)
      • (i) The Secretary shall reserve not less than 15 percent of the funds used by the Secretary under subparagraph (A) to make payments for guaranteed loans made to beginning farmers and ranchers or veteran farmers and ranchers (as defined in section 2279(a) of this title ).
      • (ii) Funds reserved for farmers or ranchers under clause (i) for a fiscal year shall be reserved only until March 1 of the fiscal year.
• (f) The Secretary shall make available to farmers, on request, a list of lenders in the area that participate in 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) 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.

§ 2000. Homestead protection

• (a) 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); 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 subchapters 1 1 So in original. Probably should be “subchapter”. I or II.
  • (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)
  • (1) The Secretary or the Administrator shall, on application by a borrower-owner who meets the eligibility requirements of subsection (c)(1), 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).
• (c)
  • (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 30 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 30 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 1983b 2 2 See References in Text note below. 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 of a borrower-owner who is a socially disadvantaged farmer or rancher (as defined in section 2003(e)(2) of this title ), the borrower-owner or a member of the immediate family of 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 or immediate family member, as the case may be, 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) Not later than the date of acquisition of the property securing a loan made under this chapter (or, in the case of real property in inventory on April 4, 1996 , not later than 5 days after April 4, 1996 ), the Secretary shall notify the borrower-owner from whom the property was acquired of the availability of homestead protection rights under this section.
• (d) At the end of the period of occupancy described in subsection (c), 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) 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).
• (f) The Secretary may enter into contracts authorized by this section before the Secretary acquires title to the homestead property.
• (g) 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.

§ 2001. Debt restructuring and loan servicing

• (a) 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)), and debt set-aside (subject to subsection (e)), 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) To be eligible to obtain assistance under subsection (a)—
  • (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) 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);
  • (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)
  • (1) 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) 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)
    • (A) 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) 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) 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 110 percent of the amount indicated for payment of farm operating expenses, debt service obligations, and family living expenses.
  • (4) 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) 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) The obligations of a borrower to the Secretary under a loan shall terminate if—
    • (A) the borrower satisfies the requirements of paragraphs (1) and (2) of subsection (b);
    • (B) the value of the restructured loan is less than the recovery value; and
    • (C) not later than 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 current market value.
  • (7)
    • (A) 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) 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)
  • (1)
    • (A) 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 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) 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)
  • (1) 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) 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) 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) 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 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).
  • (6) Beginning with fiscal year 2000 not later than 12 months before the end of the term of a shared appreciation arrangement, the Secretary shall notify the borrower involved of the provisions of the arrangement.
  • (7)
    • (A) The Secretary may amortize a recapture payment owed to the Secretary under this subsection.
    • (B) The term of an amortization under this paragraph may not exceed 25 years.
    • (C)
      • (i) The interest rate applicable to an amortization under this paragraph may not exceed the rate applicable to a loan to reacquire homestead property less 100 basis points.
      • (ii) The interest rate applicable to an amortization or loan made by the Secretary before October 28, 2000 , to finance a recapture payment owed to the Secretary under this subsection may not exceed the rate applicable to a loan to reacquire homestead property less 100 basis points.
    • (D)
      • (i) The Secretary may modify the amortization of a recapture payment referred to in subparagraph (A) of this paragraph on which a payment has become delinquent by using loan service tools under section 1991(b)(3) of this title if—
        • (I) the default is due to circumstances beyond the control of the borrower; and
        • (II) the borrower acted in good faith (as determined by the Secretary) in attempting to repay the recapture amount.
      • (ii)
        • (I) The term of a reamortization under this subparagraph may not exceed 25 years from the date of the original amortization agreement.
        • (II) A reamortization of a recapture payment under this subparagraph may not provide for reducing the outstanding principal or unpaid interest due on the recapture payment.
• (f) 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) 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) Once an appeal has been filed under section 1983b 1 1 See References in Text note below. 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)
  • (1) A notice of ineligibility for restructuring shall be sent to the borrower by registered or certified mail within 15 days after such determination.
  • (2) 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) 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) 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.
• (l) For purposes of subsection (b)(2) of this section, 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,
• (m)
  • (1) 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) 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.
• (n) 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).
• (o) The Secretary may provide not more than $300,000 in principal and interest forgiveness under this section per borrower.

§ 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 .

§ 2002. Transfer of inventory lands

• (a) Subject to subsection (b), the Secretary 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 eligible to be disposed of in accordance with section 1985 of this title ; and
  • (3) that—
    • (A) has marginal value for agricultural production;
    • (B) is environmentally sensitive; or
    • (C) has special management importance.
• (b) The Secretary may not transfer any property or interest in property under subsection (a) unless—
  • (1) at least 2 public notices are given of the transfer;
  • (2) if requested, at least 1 public meeting is held prior to the transfer; and
  • (3) the Governor and at least 1 elected county official of the State and county where the property is located are consulted prior to the transfer.

§ 2003. Target participation rates

• (a)
  • (1) 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 and will have the opportunity to purchase or lease inventory farmland.
  • (2) 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) 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)
  • (1) The Secretary shall, to the greatest extent practicable, reserve sufficient loan funds made available under subchapter I, for use by members of socially disadvantaged groups identified under target participation rates established under subsection (a).
  • (2) 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) 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)
  • (1) 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. 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) The Secretary shall, to the greatest extent practicable, reserve and allocate the proportion of each State’s loan funds made available under subchapter II 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 under this paragraph but not used within a State shall, to the extent necessary to satisfy pending applications under this chapter, be available for use by socially disadvantaged farmers and ranchers in other States, as determined by the Secretary, and any remaining funds shall be reallocated within the State.
• (d) 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)
  • (1) 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) 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.
• (f) Not later than 180 days after April 4, 1996 , the Secretary shall ensure that the implementation of this section is consistent with the holding of the Supreme Court in Adarand Constructors, Inc. v. Federico Pena, Secretary of Transportation, 115 S. Ct. 2097 (1995).

§ 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.

§ 2005. Payment of losses on guaranteed loans

• (a)
  • (1) 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) 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)
  • (1) 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) 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) 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 .

§ 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.

§ 2006a. Borrower training

• (a) The Secretary shall enter into contracts to provide educational training to all borrowers of farmer program direct loans made under this chapter in financial and farm management concepts associated with commercial farming.
• (b)
  • (1) 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) 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)
  • (1) Subject to paragraph (2), to be eligible to obtain a direct 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 during the determination of eligibility for the loan).
  • (2) The need of a borrower who satisfies the criteria set out in section 1922(a)(1)(B) or 1941(a)(1)(B) of this title for management assistance under this section shall not be cause for denial of eligibility of the borrower for a direct loan under this chapter.
• (d) The Secretary shall issue regulations establishing guidelines and curriculum for the borrower training program established under this section.
• (e) A borrower shall pay for training received under this section, and may use funds from operating loans made under subchapter II to pay for the training.
• (f)
  • (1) The Secretary may waive the requirements of this section for an individual borrower if the Secretary determines that the borrower demonstrates adequate knowledge in areas described in this section.
  • (2) The Secretary shall establish criteria providing for the application of paragraph (1) consistently in all counties nationwide.

§ 2006b. Loan assessments

• (a) 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) 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) 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)
  • (1) Loan assessments conducted under this section shall include annual 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) 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) 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) The Secretary shall issue regulations providing guidelines for loan assessments conducted under this section.

§ 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.

§ 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.

§ 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) 1 1 See References in Text note below. 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 . This section shall not apply to a loan made or guaranteed under this chapter for a utility line.

§ 2006f. Rural development certified lenders program

• (a)
  • (1) The Secretary may establish a program under which the Secretary may guarantee a loan for any rural development program that is made by a lender certified by the Secretary.
  • (2) The Secretary may certify a lender if the lender meets such criteria as the Secretary may prescribe in regulations, including the ability of the lender to properly make, service, and liquidate the guaranteed loans of the lender.
  • (3) As a condition of certification, the Secretary may require the lender to undertake to service the guaranteed loan using standards that are not less stringent than generally accepted banking standards concerning loan servicing that are used by prudent commercial or cooperative lenders.
  • (4) Notwithstanding any other provision of law, the Secretary may guarantee not more than 80 percent of a loan made by a certified lender described in paragraph (1), if the borrower of the loan meets the eligibility requirements and such other criteria for the loan guarantee that are established by the Secretary.
  • (5) With respect to loans to be guaranteed, the Secretary may permit a certified lender to make appropriate certifications (as provided in regulations issued by the Secretary)—
    • (A) relating to issues such as creditworthiness, repayment ability, adequacy of collateral, and feasibility of the operation; and
    • (B) that the borrower is in compliance with all requirements of law, including regulations issued by the Secretary.
  • (6) This subsection shall not affect the responsibility of the Secretary to determine eligibility, review financial information, and otherwise assess an application.
• (b)
  • (1) The Secretary may establish a preferred certified lenders program for lenders who establish their—
    • (A) knowledge of, and experience under, the program established under subsection (a);
    • (B) knowledge of the regulations concerning the particular guaranteed loan program; and
    • (C) proficiency related to the certified lender program requirements.
  • (2) The Secretary may certify any lending institution as a preferred certified lender if the institution meets such additional criteria as the Secretary may prescribe by regulation.
  • (3) The designation of a lender as a preferred certified lender shall be revoked if the Secretary determines that the lender is not adhering to the rules and regulations applicable to the program or if the loss experiences of the preferred certified lender are greater than other preferred certified lenders, except that the suspension or revocation shall not affect any outstanding guarantee.
  • (4) As a condition of the preferred certification, the Secretary shall require the lender to undertake to service the loan 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 the certification are being met.
  • (5) Notwithstanding any other provision of law, the Secretary may—
    • (A) guarantee not more than 80 percent of any approved loan made by a preferred certified lender as described in this subsection, if the borrower meets the eligibility requirements and such other criteria as may be applicable to loans guaranteed by the Secretary; and
    • (B) permit preferred certified lenders to make all decisions, with respect to loans to be guaranteed by the Secretary under this subsection relating to creditworthiness, the closing, monitoring, collection, and liquidation of loans, and to accept appropriate certifications, as provided in regulations issued by the Secretary, that the borrower is in compliance with all requirements of law and regulations issued by the Secretary.

§ 2008. Rural development and farm loan program activities

The Secretary may not complete a study of, or enter into a contract with a private party to carry out, without specific authorization in a subsequent Act of Congress, a competitive sourcing activity of the Secretary, including support personnel of the Department of Agriculture, relating to rural development or farm loan programs.

§ 2008a. Equitable relief

• (a) Subject to subsection (b), the Secretary may provide a form of relief described in subsection (c) to any farmer or rancher who—
  • (1) received a direct farm ownership, operating, or emergency loan under this chapter; and
  • (2) the Secretary determines is not in compliance with the requirements of this chapter with respect to the loan.
• (b) The Secretary may only provide relief to a farmer or rancher under subsection (a) if the Secretary determines that the farmer or rancher—
  • (1) acted in good faith; and
  • (2) relied on an action of, or the advice of, the Secretary (including any authorized representative of the Secretary) to the detriment of the farming or ranching operation of the farmer or rancher.
• (c) The Secretary may provide to a farmer or rancher under subsection (a) any of the following forms of relief:
  • (1) The farmer or rancher may retain loans or other benefits received in association with the loan with respect to which the farmer or rancher was determined to be noncompliant under subsection (a)(2).
  • (2) The farmer or rancher may receive such other equitable relief as the Secretary determines to be appropriate.
• (d) As a condition of receiving relief under this section, the Secretary may require the farmer or rancher to take actions designed to remedy the noncompliance.
• (e) A determination or action of the Secretary under this section—
  • (1) shall be final; and
  • (2) shall not be subject to administrative appeal or judicial review under chapter 7 of title 5.

§ 2008b. Socially disadvantaged farmers and ranchers; qualified beginning farmers and ranchers

In the case of a loan guaranteed by the Secretary under subchapter I or II to a socially disadvantaged farmer or rancher (as defined in section 2003(e) of this title ) or a qualified beginning farmer or rancher, the Secretary may provide for a standard guarantee plan, which shall cover an amount equal to 95 percent of the outstanding principal of the loan.

§ 2008c. Rural Business-Cooperative Service programs technical assistance and training

• (a) The Secretary may make grants to public bodies, private nonprofit corporations, economic development authorities, institutions of higher education, federally recognized Indian Tribes, and rural cooperatives for the purpose of providing or obtaining technical assistance and training to support funding applications for programs carried out by the Secretary, acting through the Administrator of the Rural Business-Cooperative Service.
• (b) A grant under subsection (a) may be used—
  • (1) to assist communities in identifying and planning for business and economic development needs;
  • (2) to identify public and private resources to finance business and small and emerging business needs;
  • (3) to prepare reports and surveys necessary to request financial assistance for businesses in rural communities; and
  • (4) to prepare applications for financial assistance.
• (c) In selecting recipients of grants under this section, the Secretary shall give priority to grants serving persistent poverty counties and high poverty communities, as determined by the Secretary.
• (d)
  • (1) There is authorized to be appropriated to carry out this section $5,000,000 for each of fiscal years 2019 through 2023, to remain available until expended.
  • (2) Any amounts authorized to be appropriated under paragraph (1) for any fiscal year that are not appropriated for that fiscal year may be appropriated for the immediately succeeding fiscal year.

§ 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.

§ 2008e. Prohibition under rural development programs

• (a) 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) 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).
• (c) Not later than 6 months after November 1, 1993 , the Secretary shall issue interim final regulations to ensure compliance with subsection (a).

§ 2008f. Crop insurance requirement

• (a) As a condition of obtaining any benefit (including a direct loan, loan guarantee, or payment) described in subsection (b), 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) Subsection (a) 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 .

§ 2008g. Payment of interest as condition of loan servicing for borrowers

The Secretary may not reschedule or reamortize a loan for a borrower under this chapter who has not requested consideration under section 1981d(e) of this title unless the borrower pays a portion, as determined by the Secretary, of the interest due on the loan.

§ 2008h. Loan and loan servicing limitations

• (a) The Secretary may not make a direct operating loan under subchapter II to a borrower who is delinquent on any loan made or guaranteed under this chapter.
• (b)
  • (1) Except as provided in paragraph (2)—
    • (A) the Secretary may not make a loan under this chapter to a borrower that has received debt forgiveness on a loan made or guaranteed under this chapter; and
    • (B) the Secretary may not guarantee a loan under this chapter to a borrower that has received—
      • (i) debt forgiveness after April 4, 1996 , on a loan made or guaranteed under this chapter; or
      • (ii) received debt forgiveness on more than 3 occasions on or before April 4, 1996 .
  • (2)
    • (A) The Secretary may make a direct or guaranteed farm operating loan for paying annual farm or ranch operating expenses of a borrower who—
      • (i) was restructured with a write-down under section 2001 of this title ;
      • (ii) is current on payments under a confirmed reorganization plan under chapters 1 1 So in original. Probably should be “chapter”. 11, 12, or 13 of title 11; or
      • (iii) received debt forgiveness on not more than 1 occasion resulting directly and primarily from a major disaster or emergency designated by the President on or after April 4, 1996 , under the Robert T. Stafford Disaster Relief and Emergency Assistance Act ( 42 U.S.C. 5121 et seq.).
    • (B)
      • (i) The Secretary may make an emergency loan under section 1961 of this title to a borrower that—
        • (I) on or before April 4, 1996 , received not more than 1 debt forgiveness on a loan made or guaranteed under this chapter; and
        • (II) after April 4, 1996 , has not received debt forgiveness on a loan made or guaranteed under this chapter.
      • (ii) For purposes of clause (i), a borrower who was restructured with a write-down or restructuring under section 2001 of this title shall not be considered to have received debt forgiveness on a loan made or guaranteed under this chapter.
• (c) The Secretary may not provide to a borrower debt forgiveness on a direct loan made under this chapter if the borrower has received debt forgiveness on another direct loan made under this chapter.

§ 2008i. Short form certification of farm program borrower compliance

The Secretary shall develop and utilize a consolidated short form for farm program borrowers to use in certifying compliance with any applicable provision of law (including a regulation) that serves as an eligibility prerequisite for a loan made under this chapter.

§ 2008k. Making and servicing of loans by personnel of State, county, or area committees

The Secretary shall use personnel of a State, county or area committee established under section 590h(b)(5) of title 16 to make and service loans under this chapter to the extent the personnel have been trained to do so.

§ 2008l. Eligibility of employees of State, county, or area committee for loans and loan guarantees

• (a) The Secretary shall not prohibit an employee of a State, county or area committee established under section 590h(b)(5) of title 16 or an employee of the Department of Agriculture from obtaining a loan or loan guarantee under subchapter I, II or III of this chapter.
• (b)
  • (1) In the case of a loan application from an employee in a county or area office, the Farm Service Agency State office shall be responsible for reviewing and approving the application.
  • (2) In the case of a loan application from an employee of a State office, the Farm Service Agency national office shall be responsible for reviewing and approving the application.

§ 2008m. National Rural Development Partnership

• (a) In this section:
  • (1) The term “agency with rural responsibilities” means any executive agency (as defined in section 105 of title 5 ) that implements a Federal law, or administers a program, targeted at or having a significant impact on rural areas.
  • (2) The term “Coordinating Committee” means the National Rural Development Coordinating Committee established by subsection (c).
  • (3) The term “Partnership” means the National Rural Development Partnership continued by subsection (b).
  • (4) The term “State rural development council” means a State rural development council that meets the requirements of subsection (d).
• (b)
  • (1) The Secretary shall continue the National Rural Development Partnership composed of—
    • (A) the Coordinating Committee; and
    • (B) State rural development councils.
  • (2) The purposes of the Partnership are to empower and build the capacity of States and rural communities to design flexible and innovative responses to their own special rural development needs, with local determinations of progress and selection of projects and activities.
  • (3)
    • (A) A panel consisting of representatives of the Coordinating Committee and State rural development councils shall be established to lead and coordinate the strategic operation, policies, and practices of the Partnership.
    • (B) In conjunction with the Coordinating Committee and State rural development councils, the panel shall prepare and submit to Congress an annual report on the activities of the Partnership.
  • (4) The role of the Federal Government in the Partnership may be that of a partner and facilitator, with Federal agencies authorized—
    • (A) to cooperate with States to implement the Partnership;
    • (B) to provide States with the technical and administrative support necessary to plan and implement tailored rural development strategies to meet local needs;
    • (C) to ensure that the head of each agency with rural responsibilities designates a senior-level agency official to represent the agency on the Coordinating Committee and directs appropriate field staff to participate fully with the State rural development council within the jurisdiction of the field staff; and
    • (D) to enter into cooperative agreements with, and to provide grants and other assistance to, the Coordinating Committee and State rural development councils.
• (c)
  • (1) The Secretary shall establish a National Rural Development Coordinating Committee within the Department of Agriculture.
  • (2) The Coordinating Committee shall be composed of—
    • (A) 1 representative of each agency with rural responsibilities; and
    • (B) representatives, approved by the Secretary, of—
      • (i) national associations of State, regional, local, and tribal governments and intergovernmental and multijurisdictional agencies and organizations;
      • (ii) national public interest groups;
      • (iii) other national nonprofit organizations that elect to participate in the activities of the Coordinating Committee; and
      • (iv) the private sector.
  • (3) The Coordinating Committee shall—
    • (A) support the work of the State rural development councils;
    • (B) facilitate coordination of rural development policies, programs, and activities among Federal agencies and with those of State, local, and tribal governments, the private sector, and nonprofit organizations;
    • (C) review and comment on policies, regulations, and proposed legislation that affect or would affect rural areas and gather and provide related information;
    • (D) develop and facilitate strategies to reduce or eliminate administrative and regulatory impediments; and
    • (E) require each State rural development council receiving funds under this section to submit an annual report on the use of the funds, including a description of strategic plans, goals, performance measures, and outcomes for the State rural development council of the State.
  • (4)
    • (A) A Federal employee shall fully participate in the governance and operations of the Coordinating Committee, including activities related to grants, contracts, and other agreements, in accordance with this section.
    • (B) Participation by a Federal employee in the Coordinating Committee in accordance with this paragraph shall not constitute a violation of section 205 or 208 of title 18.
  • (5) The Secretary may provide such administrative support for the Coordinating Committee as the Secretary determines is necessary to carry out the duties of the Coordinating Committee.
  • (6) The Secretary may prescribe such regulations, bylaws, or other procedures as are necessary for the operation of the Coordinating Committee.
• (d)
  • (1) Notwithstanding chapter 63 of title 31, each State may elect to participate in the Partnership by entering into an agreement with the Secretary to recognize a State rural development council.
  • (2) A State rural development council shall—
    • (A) be composed of representatives of Federal, State, local, and tribal governments, nonprofit organizations, regional organizations, the private sector, and other entities committed to rural advancement; and
    • (B) have a nonpartisan and nondiscriminatory membership that—
      • (i) is broad and representative of the economic, social, and political diversity of the State; and
      • (ii) shall be responsible for the governance and operations of the State rural development council.
  • (3) A State rural development council shall—
    • (A) facilitate collaboration among Federal, State, local, and tribal governments and the private and nonprofit sectors in the planning and implementation of programs and policies that have an impact on rural areas of the State;
    • (B) monitor, report, and comment on policies and programs that address, or fail to address, the needs of the rural areas of the State;
    • (C) as part of the Partnership, in conjunction with the Coordinating Committee, facilitate the development of strategies to reduce or eliminate conflicting or duplicative administrative or regulatory requirements of Federal, State, local, and tribal governments; and
    • (D)
      • (i) provide to the Coordinating Committee an annual plan with goals and performance measures; and
      • (ii) submit to the Coordinating Committee an annual report on the progress of the State rural development council in meeting the goals and measures.
  • (4)
    • (A) A State Director for Rural Development of the Department of Agriculture, other employees of the Department, and employees of other Federal agencies with rural responsibilities shall fully participate as voting members in the governance and operations of State rural development councils (including activities related to grants, contracts, and other agreements in accordance with this section) on an equal basis with other members of the State rural development councils.
    • (B) Participation by a Federal employee in a State rural development council in accordance with this paragraph shall not constitute a violation of section 205 or 208 of title 18.
• (e)
  • (1)
    • (A) In order to provide experience in intergovernmental collaboration, the head of an agency with rural responsibilities that elects to participate in the Partnership may, and is encouraged to, detail to the Secretary for the support of the Partnership 1 or more employees of the agency with rural responsibilities without reimbursement for a period of up to 1 year.
    • (B) The detail shall be without interruption or loss of civil service status or privilege.
  • (2) The Secretary may provide for any additional support staff to the Partnership as the Secretary determines to be necessary to carry out the duties of the Partnership.
  • (3) The Secretary may enter into a contract with a qualified intermediary under which the intermediary shall be responsible for providing administrative and technical assistance to a State rural development council, including administering the financial assistance available to the State rural development council.
• (f)
  • (1) Except as provided in paragraph (2), a State rural development council shall provide matching funds, or in-kind goods or services, to support the activities of the State rural development council in an amount that is not less than 33 percent of the amount of Federal funds received from a Federal agency under subsection (g)(2).
  • (2) Paragraph (1) shall not apply to funds, grants, funds provided under contracts or cooperative agreements, gifts, contributions, or technical assistance received by a State rural development council from a Federal agency that are used—
    • (A) to support 1 or more specific program or project activities; or
    • (B) to reimburse the State rural development council for services provided to the Federal agency providing the funds, grants, funds provided under contracts or cooperative agreements, gifts, contributions, or technical assistance.
  • (3) The Secretary shall develop a plan to decrease, over time, the share of the Department of Agriculture of the cost of the core operations of State rural development councils.
• (g)
  • (1) There is authorized to be appropriated to carry out this section $10,000,000 for each of fiscal years 2008 through 2023.
  • (2)
    • (A) Notwithstanding any other provision of law limiting the ability of an agency, along with other agencies, to provide funds to the Coordinating Committee or a State rural development council in order to carry out the purposes of this section, a Federal agency may make grants, gifts, or contributions to, provide technical assistance to, or enter into contracts or cooperative agreements with, the Coordinating Committee or a State rural development council.
    • (B) Federal agencies are encouraged to use funds made available for programs that have an impact on rural areas to provide assistance to, and enter into contracts with, the Coordinating Committee or a State rural development council, as described in subparagraph (A).
  • (3) The Coordinating Committee and a State rural development council may accept private contributions.
• (h) The authority provided under this section shall terminate on September 30, 2023 .

§ 2008p. Grants for NOAA weather radio transmitters

• (a) The Secretary, acting through the Administrator of the Rural Utilities Service, may make grants to public and nonprofit entities, and borrowers of loans made by the Rural Utilities Service, for the Federal share of the cost of acquiring radio transmitters to increase coverage of rural areas by the all hazards weather radio broadcast system of the National Oceanic and Atmospheric Administration.
• (b) To be eligible for a grant under this section, an applicant shall provide to the Secretary—
  • (1) a binding commitment from a tower owner to place the transmitter on a tower; and
  • (2) a description of how the tower placement will increase coverage of a rural area by the all hazards weather radio broadcast system of the National Oceanic and Atmospheric Administration.
• (c) A grant provided under this section shall be not more than 75 percent of the total cost of acquiring a radio transmitter, as described in subsection (a).
• (d) There is authorized to be appropriated to carry out this section $1,000,000 for each of fiscal years 2014 through 2023.

§ 2008s. Rural microentrepreneur assistance program

• (a) In this section:
  • (1) The term “Indian tribe” has the meaning given the term in section 5304 of title 25 .
  • (2) The term “microentrepreneur” means an owner and operator, or prospective owner and operator, of a rural microenterprise who is unable to obtain sufficient training, technical assistance, or credit other than under this section, as determined by the Secretary.
  • (3) The term “microenterprise development organization” means an organization that—
    • (A) is—
      • (i) a nonprofit entity;
      • (ii) an Indian tribe, the tribal government of which certifies to the Secretary that—
        • (I) no microenterprise development organization serves the Indian tribe; and
        • (II) no rural microentrepreneur assistance program exists under the jurisdiction of the Indian tribe; or
      • (iii) a public institution of higher education;
    • (B) provides training and technical assistance to rural microentrepreneurs;
    • (C) facilitates access to capital or another service described in subsection (b) for rural microenterprises; and
    • (D) has a demonstrated record of delivering services to rural microentrepreneurs, or an effective plan to develop a program to deliver services to rural microentrepreneurs, as determined by the Secretary.
  • (4) The term “microloan” means a business loan of not more than $50,000 that is provided to a rural microenterprise.
  • (5) The term “program” means the rural microentrepreneur assistance program established under subsection (b).
  • (6) The term “rural microenterprise” means—
    • (A) a sole proprietorship located in a rural area; or
    • (B) a business entity with not more than 10 full-time-equivalent employees located in a rural area.
• (b)
  • (1) The Secretary shall establish a rural microentrepreneur assistance program to provide loans and grants to support microentrepreneurs in the development and ongoing success of rural microenterprises.
  • (2) The purpose of the program is to provide microentrepreneurs with—
    • (A) the skills necessary to establish new rural microenterprises; and
    • (B) continuing technical and financial assistance related to the successful operation of rural microenterprises.
  • (3)
    • (A) The Secretary shall make loans to microenterprise development organizations for the purpose of providing fixed interest rate microloans to microentrepreneurs for startup and growing rural microenterprises.
    • (B) A loan made by the Secretary to a microenterprise development organization under this paragraph shall—
      • (i) be for a term not to exceed 20 years; and
      • (ii) bear an annual interest rate of at least 1 percent.
    • (C) The Secretary shall require each microenterprise development organization that receives a loan under this paragraph to—
      • (i) establish a loan loss reserve fund; and
      • (ii) maintain the reserve fund in an amount equal to at least 5 percent of the outstanding balance of such loans owed by the microenterprise development organization, until all obligations owed to the Secretary under this paragraph are repaid.
    • (D) The Secretary may permit the deferral of payments on principal and interest due on a loan to a microenterprise development organization made under this paragraph for a 2-year period beginning on the date the loan is made.
  • (4)
    • (A)
      • (i) The Secretary shall make grants to microenterprise development organizations to—
        • (I) provide training, operational support, business planning, and market development assistance, and other related services to rural microentrepreneurs; and
        • (II) carry out such other projects and activities as the Secretary determines appropriate to further the purposes of the program.
      • (ii) In making grants under clause (i), the Secretary shall—
        • (I) place an emphasis on microenterprise development organizations that serve microentrepreneurs that are located in rural areas that have suffered significant outward migration, as determined by the Secretary; and
        • (II) ensure, to the maximum extent practicable, that grant recipients include microenterprise development organizations—
    • (B)
      • (i) The Secretary shall make grants to microenterprise development organizations to provide marketing, management, and other technical assistance to microentrepreneurs that—
        • (I) received a loan from the microenterprise development organization under paragraph (3); or
        • (II) are seeking a loan from the microenterprise development organization under paragraph (3).
      • (ii) A microenterprise development organization shall be eligible to receive an annual grant under this subparagraph in an amount equal to not less than 20 percent and not more than 25 percent of the total outstanding balance of microloans made by the microenterprise development organization under paragraph (3), as of the date the grant is awarded, subject to—
        • (I) satisfactory performance by the microenterprise development organization under this section, and
        • (II) the availability of funding.
    • (C) Not more than 10 percent of a grant received by a microenterprise development organization for a fiscal year under this paragraph may be used to pay administrative expenses.
• (c)
  • (1)
    • (A) Subject to subparagraph (B), the Federal share of the cost of a project funded under this section shall not exceed 75 percent.
    • (B) As a condition of any grant made under this subparagraph, the Secretary shall require the microenterprise development organization to match not less than 15 percent of the total amount of the grant in the form of matching funds, indirect costs, or in-kind goods or services.
    • (C) The non-Federal share of the cost of a project funded under this section may be provided—
      • (i) in cash (including through fees, grants (including community development block grants), and gifts); or
      • (ii) in the form of in-kind contributions.
  • (2) At a minimum, not later than December 1 of each fiscal year, a microenterprise development organization that receives a loan or grant under this section shall provide to the Secretary such information as the Secretary may require to ensure that assistance provided under this section is used for the purposes for which the loan or grant was made.
• (d) There are authorized to be appropriated to carry out this section $20,000,000 for each of fiscal years 2019 through 2023.

§ 2008u. Health care services

• (a) The purpose of this section is to address the continued unmet health needs in the Delta region through cooperation among health care professionals, institutions of higher education, research institutions, and other individuals and entities in the region.
• (b) In this section, the term “eligible entity” means a consortium of regional institutions of higher education, academic health and research institutes, and economic development entities located in the Delta region that have experience in addressing the health care issues in the region.
• (c) To carry out the purpose described in subsection (a), the Secretary may award a grant to an eligible entity for—
  • (1) the development of—
    • (A) health care services;
    • (B) health education programs; and
    • (C) health care job training programs; and
  • (2) the development and expansion of public health-related facilities in the Delta region to address longstanding and unmet health needs of the region.
• (d) As a condition of the receipt of the grant, the eligible entity shall use the grant to fund projects and activities described in subsection (c), based on input solicited from local governments, public health care providers, and other entities in the Delta region.
• (e) There is authorized to be appropriated to the Secretary to carry out this section, $3,000,000 for each of fiscal years 2008 through 2023.

§ 2008v. Strategic economic and community development

• (a) In the case of any program under this chapter or administered by the Secretary, acting through the rural development mission area, as determined by the Secretary (referred to in this section as a “covered program”), the Secretary shall give priority to an application for a project that, as determined and approved by the Secretary—
  • (1) meets the applicable eligibility requirements of this chapter or the other applicable authorizing law;
  • (2) will be carried out in a rural area; and
  • (3) supports the implementation of a strategic community investment plan described in subsection (d) on a multisectoral and multijurisdictional basis, to include considerations for improving and expanding broadband services as needed.
• (b)
  • (1) Subject to paragraph (2), the Secretary shall reserve not more than 15 percent of the funds made available for a fiscal year for covered programs for projects that support the implementation of a strategic community investment plan described in subsection (d) on a multisectoral and multijurisdictional basis.
  • (2) Any funds reserved under paragraph (1) shall only be reserved for the 1-year period beginning on the date on which the funds were first made available, as determined by the Secretary.
• (c)
  • (1) Subject to paragraph (2), any applicant who submitted an application under a covered program that was approved before the date of enactment of this section 1 1 See References in Text note below. may amend the application to qualify for the funds reserved under subsection (b).
  • (2) Any applicant who submitted an application under paragraph (2), (14), or (24) of section 1926(a) of this title , or section 1926a or 1932(b) of this title, that was approved by the Secretary before the date of enactment of this section 1 shall be eligible for the funds reserved under subsection (b)—
    • (A) on the same basis as an application submitted under this section; and
    • (B) until September 30, 2019 .
• (d)
  • (1) The Secretary shall provide assistance to rural communities in developing strategic community investment plans.
  • (2) A strategic community investment plan described in paragraph (1) shall include—
    • (A) a variety of activities designed to facilitate the vision of a rural community for the future, including considerations for improving and expanding broadband services as needed;
    • (B) participation by multiple stakeholders, including local and regional partners;
    • (C) leverage of applicable regional resources;
    • (D) investment from strategic partners, such as—
      • (i) private organizations;
      • (ii) cooperatives;
      • (iii) other government entities;
      • (iv) Indian Tribes; and
      • (v) philanthropic organizations;
    • (E) clear objectives with the ability to establish measurable performance metrics;
    • (F) action steps for implementation; and
    • (G) any other elements necessary to ensure that the plan results in a comprehensive and strategic approach to rural economic development, as determined by the Secretary.
  • (3) The Secretary shall coordinate with Indian Tribes and local, State, regional, and Federal partners to develop strategic community investment plans under this subsection.
  • (4) There is authorized to be appropriated to carry out this subsection $5,000,000 for each of fiscal years 2019 through 2023, to remain available until expended.

§ 2008w. Rural Innovation Stronger Economy Grant Program

• (a) In this section:
  • (1) The term “eligible entity” means a rural jobs accelerator partnership established after December 20, 2018 , that—
    • (A) organizes key community and regional stakeholders into a working group that—
      • (i) focuses on the shared goals and needs of the industry clusters that are objectively identified as existing, emerging, or declining;
      • (ii) represents a region defined by the partnership in accordance with subparagraph (B);
      • (iii) includes 1 or more representatives of—
        • (I) an institution of higher education (as defined in section 1001 of title 20 );
        • (II) a private entity; or
        • (III) a government entity; and
      • (iv) has, as a lead applicant—
        • (I) a District Organization (as defined in section 300.3 of title 13, Code of Federal Regulations (or a successor regulation));
        • (II) an Indian tribe (as defined in section 5304 of title 25 ), or a consortium of Indian tribes;
        • (III) a State or a political subdivision of a State, including a special purpose unit of a State or local government engaged in economic development activities, or a consortium of political subdivisions;
        • (IV) an institution of higher education (as defined in section 1001 of title 20 ) or a consortium of institutions of higher education; or
        • (V) a public or private nonprofit organization; and
    • (B) subject to approval by the Secretary, may—
      • (i) serve a region that is—
        • (I) a single jurisdiction; or
        • (II) if the region is a rural area, multijurisdictional; and
      • (ii) define the region that the partnership represents, if the region—
        • (I) is large enough to contain critical elements of the industry cluster prioritized by the partnership;
        • (II) is small enough to enable close collaboration among members of the partnership;
        • (III) includes a majority of communities that are located in—
        • (IV)
  • (2) The term “industry cluster” means a broadly defined network of interconnected firms and supporting institutions in related industries that accelerate innovation, business formation, and job creation by taking advantage of assets and strengths of a region in the business environment.
  • (3) The term “high-wage job” means a job that provides a wage that is greater than the median wage for the applicable region, as determined by the Secretary.
  • (4) The term “jobs accelerator” means a jobs accelerator center or program located in or serving a low-income rural community that may provide co-working space, in-demand skills training, entrepreneurship support, and any other services described in subsection (d)(1)(B).
  • (5) The term “small and disadvantaged business” has the meaning given the term “small business concern owned and controlled by socially and economically disadvantaged individuals” in section 637(d)(3)(C) of title 15 .
• (b)
  • (1) The Secretary shall establish a grant program under which the Secretary shall award grants, on a competitive basis, to eligible entities to establish jobs accelerators, including related programming, that—
    • (A) improve the ability of distressed rural communities to create high-wage jobs, accelerate the formation of new businesses with high-growth potential, and strengthen regional economies, including by helping to build capacity in the applicable region to achieve those goals; and
    • (B) help rural communities identify and maximize local assets and connect to regional opportunities, networks, and industry clusters that demonstrate high growth potential.
  • (2)
    • (A) The Federal share of the cost of any activity carried out using a grant made under paragraph (1) shall be not greater than 80 percent.
    • (B) The non-Federal share of the total cost of any activity carried out using a grant made under paragraph (1) may be in the form of donations or in-kind contributions of goods or services fairly valued.
  • (3) In selecting eligible entities to receive grants under paragraph (1), the Secretary shall consider—
    • (A) the commitment of participating core stakeholders in the jobs accelerator partnership, including a demonstration that—
      • (i) investment organizations, including venture development organizations, venture capital firms, revolving loan funders, angel investment groups, community lenders, community development financial institutions, rural business investment companies, small business investment companies (as defined in section 662 of title 15 ), philanthropic organizations, and other institutions focused on expanding access to capital, are committed partners in the jobs accelerator partnership and willing to potentially invest in projects emerging from the jobs accelerator; and
      • (ii) institutions of higher education, applied research institutions, workforce development entities, and community-based organizations are willing to partner with the jobs accelerator to provide workers with skills relevant to the industry cluster needs of the region, with an emphasis on the use of on-the-job training, registered apprenticeships, customized training, classroom occupational training, or incumbent worker training;
    • (B) the ability of the eligible entity to provide the non-Federal share as required under paragraph (2);
    • (C) the identification of a targeted industry cluster;
    • (D) the ability of the partnership to link rural communities to markets, networks, industry clusters, and other regional opportunities and assets;
    • (E) other grants or loans of the Secretary and other Federal agencies that the jobs accelerator would be able to leverage; and
    • (F) prospects for the proposed center and related programming to have sustainability beyond the full maximum length of assistance under this subsection, including the maximum number of renewals.
  • (4)
    • (A) The initial term of a grant under paragraph (1) shall be 4 years.
    • (B) The Secretary may extend the term of a grant under paragraph (1) for an additional period of not longer than 2 years if the Secretary is satisfied, using the evaluation under subsection (e)(2), that the grant recipient has successfully established a jobs accelerator and related programming.
  • (5) To the maximum extent practicable, the Secretary shall provide grants under paragraph (1) for jobs accelerators and related programming in not fewer than 25 States at any time.
• (c) A grant awarded under subsection (b) may be in an amount equal to—
  • (1) not less than $500,000; and
  • (2) not more than $2,000,000.
• (d)
  • (1) Subject to paragraph (2), funds from a grant awarded under subsection (b) may be used—
    • (A) to construct, purchase, or equip a building to serve as an innovation center;
    • (B) to support programs to be carried out at, or in direct partnership with, the jobs accelerator that support the objectives of the jobs accelerator, including—
      • (i) linking rural communities and entrepreneurs to markets, networks, industry clusters, and other regional opportunities to support high-wage job creation, new business formation, business expansion, and economic growth;
      • (ii) integrating small businesses into a supply chain;
      • (iii) creating or expanding commercialization activities for new business formation;
      • (iv) identifying and building assets in rural communities that are crucial to supporting regional economies;
      • (v) facilitating the repatriation of high-wage jobs to the United States;
      • (vi) supporting the deployment of innovative processes, technologies, and products;
      • (vii) enhancing the capacity of small businesses in regional industry clusters, including small and disadvantaged businesses;
      • (viii) increasing United States exports and business interaction with international buyers and suppliers;
      • (ix) developing the skills and expertise of local workforces, entrepreneurs, and institutional partners to meet the needs of employers and prepare workers for high-wage jobs in the identified industry clusters, including the upskilling of incumbent workers;
      • (x) ensuring rural communities have the capacity and ability to carry out projects relating to housing, community facilities, infrastructure, or community and economic development to support regional industry cluster growth; or
      • (xi) any other activities that the Secretary may determine to be appropriate.
  • (2)
    • (A) Subject to subparagraph (B), not more than 10 percent of a grant awarded under subsection (b) shall be used for indirect costs associated with administering the grant.
    • (B) The Secretary may increase the percentage described in subparagraph (A) on a case-by-case basis.
• (e) Not later than 1 year after receiving a grant under this section, and annually thereafter for the duration of the grant, an eligible entity shall—
  • (1) report to the Secretary on the activities funded with the grant; and
  • (2)
    • (A) evaluate the progress that the eligible entity has made toward the strategic objectives identified in the application for the grant; and
    • (B) measure that progress using performance measures during the project period, which may include—
      • (i) high-wage jobs created;
      • (ii) high-wage jobs retained;
      • (iii) private investment leveraged;
      • (iv) businesses improved;
      • (v) new business formations;
      • (vi) new products or services commercialized;
      • (vii) improvement of the value of existing products or services under development;
      • (viii) regional collaboration, as measured by such metrics as—
        • (I) the number of organizations actively engaged in the industry cluster;
        • (II) the number of symposia held by the industry cluster, including organizations that are not located in the immediate region defined by the partnership; and
        • (III) the number of further cooperative agreements;
      • (ix) the number of education and training activities relating to innovation;
      • (x) the number of jobs relocated from outside of the United States to the region;
      • (xi) the amount and number of new equity investments in industry cluster firms;
      • (xii) the amount and number of new loans to industry cluster firms;
      • (xiii) the dollar increase in exports resulting from the project activities;
      • (xiv) the percentage of employees for which training was provided;
      • (xv) improvement in sales of participating businesses;
      • (xvi) improvement in wages paid at participating businesses;
      • (xvii) improvement in income of participating workers; or
      • (xviii) any other measure the Secretary determines to be appropriate.
• (f) There is authorized to be appropriated to carry out this section $10,000,000 for each of fiscal years 2019 through 2023.

§ 2008x. Reporting

• (a) In this section, the term “farm loan” means—
  • (1) a farm ownership loan under subtitle A of the Consolidated Farm and Rural Development Act ( 7 U.S.C. 1922 et seq.); and
  • (2) an operating loan under subtitle B of that Act ( 7 U.S.C. 1941 et seq.).
• (b)
  • (1) For each fiscal year, the Secretary shall prepare a report that includes—
    • (A) aggregate data based on a review of each outstanding farm loan made or guaranteed by the Secretary describing, for the United States and for each State and county in the United States—
      • (i) the age of the recipient producer;
      • (ii) the duration that the recipient producer has engaged in agricultural production;
      • (iii) the size of the farm or ranch of the recipient producer;
      • (iv) the race, ethnicity, and gender of the recipient producer;
      • (v) the agricultural commodity or commodities, or type of enterprise, for which the loan was secured;
      • (vi) the amount of the farm loan made or guaranteed;
      • (vii) the type of the farm loan made or guaranteed; and
      • (viii) the default rate of the farm loan made or guaranteed;
    • (B) for each State and county in the United States, data demonstrating the number of outstanding farm loans made or guaranteed, according to loan size cohort; and
    • (C) an assessment of actual loans made or guaranteed as measured against target participation rates for beginning and socially disadvantaged farmers, broken down by State, as described in sections 346(b)(2) and 355 of the Consolidated Farm and Rural Development Act ( 7 U.S.C. 1994(b)(2) , 2003).
  • (2) The report described in paragraph (1) shall be—
    • (A) submitted—
      • (i) to—
        • (I) the Committee on Agriculture of the House of Representatives;
        • (II) the Committee on Appropriations of the House of Representatives;
        • (III) the Committee on Agriculture, Nutrition, and Forestry of the Senate; and
        • (IV) the Committee on Appropriations of the Senate; and
      • (ii) not later than December 30, 2019 , and annually thereafter; and
    • (B) made publicly available not later than 90 days after the date described in subparagraph (A)(ii).
• (c)
  • (1) Not later than 4 years after December 20, 2018 (and every 5 years thereafter), the Secretary shall—
    • (A) prepare a comprehensive review of all reports submitted under subsection (b)(2);
    • (B) identify trends within data outlined in subsection (b)(1), including the extent to which target annual participation rates for beginning and socially disadvantaged farmers (as defined by the Secretary) are being met for each loan type; and
    • (C) provide specific actions the Department will take to improve the performance of direct and guaranteed loans with respect to underserved producers and any recommendations the Secretary may make for further congressional action.
  • (2) The comprehensive review described in paragraph (1) shall be—
    • (A) submitted to—
      • (i) the Committee on Agriculture of the House of Representatives;
      • (ii) the Committee on Appropriations of the House of Representatives;
      • (iii) the Committee on Agriculture, Nutrition, and Forestry of the Senate; and
      • (iv) the Committee on Appropriations of the Senate; and
    • (B) made publicly available not later than 90 days after the date of submission under subparagraph (A).
• (d) In preparing any report or review under this section, the Secretary shall aggregate or de-identify the data in a manner sufficient to ensure that the identity of a recipient producer associated with the data cannot be ascertained.

§ 2009. Definitions

In this subchapter:

• (1) The term “State” means each of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United States, American Samoa, the Commonwealth of the Northern Mariana Islands, the Trust Territory of the Pacific Islands, and the Federated States of Micronesia.
• (2) The term “State director” means, with respect to a State, the Director of the Rural Economic and Community Development State Office.

§ 2009a. Establishment

The Secretary shall establish a rural community advancement program to provide grants, loans, loan guarantees, and other assistance to meet the rural development needs of local communities in States and federally recognized Indian tribes.

§ 2009aa. Definitions

In this subchapter:

• (1) The term “Authority” means the Delta Regional Authority established by section 2009aa–1 of this title .
• (2) The term “region” means the Lower Mississippi (as defined in section 4 of the Delta Development Act ( 42 U.S.C. 3121 note; Public Law 100–460 )).
• (3) The term “Federal grant program” means a Federal grant program to provide assistance in—
  • (A) acquiring or developing land;
  • (B) constructing or equipping a highway, road, bridge, or facility; or
  • (C) carrying out other economic development activities.
• (4) Notwithstanding any other provision of law, the State of Alabama shall be a full member of the Delta Regional Authority and shall be entitled to all rights and privileges that said membership affords to all other participating States in the Delta Regional Authority.

§ 2009b. National objectives

The national objectives of the program established under this subchapter shall be to—

• (1) promote strategic development activities and collaborative efforts by State and local communities, and federally recognized Indian tribes, to maximize the impact of Federal assistance;
• (2) optimize the use of resources;
• (3) provide assistance in a manner that reflects the complexity of rural needs, including the needs for business development, health care, education, infrastructure, cultural resources, the environment, and housing;
• (4) advance activities that empower, and build the capacity of, State and local communities to design unique responses to the special needs of the State and local communities, and federally recognized Indian tribes, for rural development assistance; and
• (5) adopt flexible and innovative approaches to solving rural development problems.

§ 2009bb. Definitions

In this subchapter:

• (1) The term “Authority” means the Northern Great Plains Regional Authority established by section 2009bb–1 of this title .
• (2) The term “Federal grant program” means a Federal grant program to provide assistance in—
  • (A) implementing the recommendations of the Northern Great Plains Rural Development Commission established by the Northern Great Plains Rural Development Act ( 7 U.S.C. 2661 note; Public Law 103–318 );
  • (B) acquiring or developing land;
  • (C) constructing or equipping a highway, road, bridge, or facility;
  • (D) carrying out other economic development activities; or
  • (E) conducting research activities related to the activities described in subparagraphs (A) through (D).
• (3) The term “Indian tribe” has the meaning given the term in section 5304 of title 25 .
• (4) The term “region” means the States of Iowa, Minnesota, Missouri (other than counties included in the Delta Regional Authority), Nebraska, North Dakota, and South Dakota.

§ 2009c. Strategic plans

• (a) The Secretary shall direct each of the Directors of Rural Economic and Community Development State Offices to prepare a strategic plan—
  • (1) for each State for the delivery of assistance under this subchapter in the State; and
  • (2) for each federally recognized Indian tribe for the delivery of assistance under this subchapter to the Indian tribe.
• (b)
  • (1) Financial assistance for rural development provided under this subchapter for a State or a federally recognized Indian tribe shall be used only for orderly community development that is consistent with the strategic plan of the State or Indian tribe.
  • (2) Assistance under this subchapter may only be provided in a rural area.
  • (3) In carrying out this subchapter in a State, the Secretary shall give priority to communities with the smallest populations and lowest per capita income.
• (c) The Secretary shall review the strategic plan of each State and federally recognized Indian tribe not later than 60 days after receiving the plan, and at least once every 5 years thereafter.
• (d) A strategic plan of a State or federally recognized Indian tribe under this section shall be a plan that—
  • (1) coordinates economic, human, and community development plans and related activities proposed for an affected area;
  • (2) provides that the State or federally recognized Indian tribe, as appropriate, and an affected community (including local institutions and organizations that have contributed to the planning process) shall act as full partners in the process of developing and implementing the plan;
  • (3) identifies goals, methods, and benchmarks for measuring the success of carrying out the plan and how the plan relates to local or regional ecosystems;
  • (4) in the case of a State, provides for the involvement, in the preparation of the plan, of State, local, private, and public persons, State rural development councils, federally recognized Indian tribes in the State, and community-based organizations;
  • (5) identifies the amount and source of Federal and non-Federal resources that are available for carrying out the plan; and
  • (6) includes such other information as may be required by the Secretary.

§ 2009cc. Definitions

In this subchapter:

• (1) The term “articles” means articles of incorporation for an incorporated body or the functional equivalent or other similar documents specified by the Secretary for other business entities.
• (2) The term “developmental capital” means capital in the form of equity capital investments in rural business investment companies with an objective of fostering economic development in rural areas.
• (3)
  • (A) The terms “employee welfare benefit plan” and “pension plan” have the meanings given the terms in section 1002 of title 29 .
  • (B) The terms “employee welfare benefit plan” and “pension plan” include—
    • (i) public and private pension or retirement plans subject to this subchapter; and
    • (ii) similar plans not covered by this subchapter that have been established, and that are maintained, by the Federal Government or any State (including by a political subdivision, agency, or instrumentality of the Federal Government or a State) for the benefit of employees.
• (4) The term “equity capital” means—
  • (A) common or preferred stock or a similar instrument, including subordinated debt with equity features; and
  • (B) any other type of equity-like financing that might be necessary to facilitate the purposes of this Act, excluding financing such as senior debt or other types of financing that competes with routine loanmaking of commercial lenders.
• (5) The term “leverage” includes—
  • (A) debentures purchased or guaranteed by the Secretary;
  • (B) participating securities purchased or guaranteed by the Secretary; and
  • (C) preferred securities outstanding as of May 13, 2002 .
• (6) The term “license” means a license issued by the Secretary as provided in section 2009cc–3(e) of this title .
• (7) The term “limited liability company” means a business entity that is organized and operating in accordance with a State limited liability company law approved by the Secretary.
• (8) The term “member” means, with respect to a rural business investment company that is a limited liability company, a holder of an ownership interest or a person otherwise admitted to membership in the limited liability company.
• (9) The term “operational assistance” means management, marketing, and other technical assistance that assists a rural business concern with business development.
• (10) The term “participation agreement” means an agreement, between the Secretary and a rural business investment company granted final approval under section 2009cc–3(e) of this title , that requires the rural business investment company to make investments in smaller enterprises in rural areas.
• (11)
  • (A) The term “private capital” means the total of—
    • (i)
      • (I) the paid-in capital and paid-in surplus of a corporate rural business investment company;
      • (II) the contributed capital of the partners of a partnership rural business investment company; or
      • (III) the equity investment of the members of a limited liability company rural business investment company; and
    • (ii) unfunded binding commitments from investors that meet criteria established by the Secretary to contribute capital to the rural business investment company, except that—
      • (I) unfunded commitments may be counted as private capital for purposes of approval by the Secretary of any request for leverage; but
      • (II) leverage shall not be funded based on the commitments.
  • (B) The term “private capital” does not include—
    • (i) any funds borrowed by a rural business investment company from any source;
    • (ii) any funds obtained through the issuance of leverage; or
    • (iii) any funds obtained directly or indirectly from the Federal Government or any State (including by a political subdivision, agency, or instrumentality of the Federal Government or a State), except for—
      • (I) funds obtained from the business revenues (excluding any governmental appropriation) of any federally chartered or government-sponsored enterprise established prior to May 13, 2002 ;
      • (II) funds invested by an employee welfare benefit plan or pension plan; and
      • (III) any qualified nonprivate funds (if the investors of the qualified nonprivate funds do not control, directly or indirectly, the management, board of directors, general partners, or members of the rural business investment company).
• (12) The term “qualified nonprivate funds” means any—
  • (A) funds directly or indirectly invested in any applicant or rural business investment company on or before May 13, 2002 , by any Federal agency, other than the Department of Agriculture, under a provision of law explicitly mandating the inclusion of those funds in the definition of the term “private capital”; and
  • (B) funds invested in any applicant or rural business investment company by 1 or more entities of any State (including by a political subdivision, agency, or instrumentality of the State and including any guarantee extended by those entities) in an aggregate amount that does not exceed 33 percent of the private capital of the applicant or rural business investment company.
• (13) The term “rural business concern” means—
  • (A) a public, private, or cooperative for-profit or nonprofit organization;
  • (B) a for-profit or nonprofit business controlled by an Indian tribe on a Federal or State reservation or other federally recognized Indian tribal group; or
  • (C) any other person or entity;
• (14) The term “rural business investment company” means a company that—
  • (A) has been granted final approval by the Secretary under section 2009cc–3(e) of this title ; and
  • (B) has entered into a participation agreement with the Secretary.
• (15) The term “smaller enterprise” means any rural business concern that, together with its affiliates—
  • (A) has—
    • (i) a net financial worth of not more than $6,000,000, as of the date on which assistance is provided under this subchapter to the rural business concern; and
    • (ii) an average net income for the 2-year period preceding the date on which assistance is provided under this subchapter to the rural business concern, of not more than $2,000,000, after Federal income taxes (excluding any carryover losses), except that, for purposes of this clause, if the rural business concern is not required by law to pay Federal income taxes at the enterprise level, but is required to pass income through to the shareholders, partners, beneficiaries, or other equitable owners of the business concern, the net income of the business concern shall be determined by allowing a deduction in an amount equal to the total of—
      • (I) if the rural business concern is not required by law to pay State (and local, if any) income taxes at the enterprise level, the net income (determined without regard to this clause), multiplied by the marginal State income tax rate (or by the combined State and local income tax rates, as applicable) that would have applied if the business concern were a corporation; and
      • (II) the net income (so determined) less any deduction for State (and local) income taxes calculated under subclause (I), multiplied by the marginal Federal income tax rate that would have applied if the rural business concern were a corporation; or
  • (B) satisfies the standard industrial classification size standards established by the Administrator of the Small Business Administration for the industry in which the rural business concern is primarily engaged.

§ 2009d. Rural Development Trust Fund

• (a) There is established in the Treasury of the United States a trust fund which shall be known as the Rural Development Trust Fund (in this subchapter referred to as the “Trust Fund”).
• (b) There are established in the Trust Fund the following accounts:
  • (1) The rural community facilities account.
  • (2) The rural utilities account.
  • (3) The rural business and cooperative development account.
  • (4) The federally recognized Indian tribe account.
• (c) Notwithstanding any other provision of law, each fiscal year—
  • (1) all amounts made available to carry out the authorities described in subsection (d)(1) for the fiscal year shall be deposited into the rural community facilities account of the Trust Fund;
  • (2) all amounts made available to carry out the authorities described in subsection (d)(2) for the fiscal year shall be deposited into the rural utilities account of the Trust Fund; and
  • (3) all amounts made available to carry out the authorities described in subsection (d)(3) for the fiscal year shall be deposited into the rural business and cooperative development account of the Trust Fund.
• (d) The function categories described in this subsection are the following:
  • (1) The rural community development category consists of all amounts made available for—
    • (A) community facility direct and guaranteed loans under section 1926(a)(1) of this title ; or
    • (B) community facility grants under paragraph (19), (20), or (21) of section 1926(a) of this title .
  • (2) The rural utilities category consists of all amounts made available for—
    • (A) water or waste disposal grants or direct or guaranteed loans under paragraph (1) or (2) of section 1926(a) of this title ;
    • (B) rural water or wastewater technical assistance and training grants under section 1926(a)(14) of this title ;
    • (C) emergency community water assistance grants under section 1926a of this title ; or
    • (D) solid waste management grants under section 1932(b) of this title .
  • (3) The rural business and cooperative development category consists of all amounts made available for—
    • (A) business and industry direct and guaranteed loans under section 1932(a)(2)(A) of this title ; or
    • (B) rural business enterprise grants or rural educational network grants under section 1932(c) of this title .
• (e)
  • (1) Each fiscal year, the Secretary shall transfer to the federally recognized Indian tribe account of the Trust Fund 3 percent of the amount deposited into the Trust Fund for the fiscal year under subsection (d).
  • (2) The Secretary shall make available to federally recognized Indian tribes the amounts in the federally recognized Indian tribe account for use pursuant to any authority described in subsection (d).
• (f) The Secretary shall allocate the amounts in each account specified in subsection (c) among the States in a fair, reasonable, and appropriate manner that takes into consideration rural population, levels of income, unemployment, and other relevant factors, as determined by the Secretary.
• (g) The Secretary shall make available to each State the total amount allocated for the State under subsection (f) that remains after applying section 2009f of this title .

§ 2009e. Transfers of funds

• (a) Subject to subsection (b) of this section, the State Director 1 1 So in original. Probably should not be capitalized. of any State may, during any fiscal year, transfer from each account specified in section 2009d(c) of this title a total of not more than 25 percent of the amount in the account that is allocated for the State for the fiscal year to any other account in which amounts are allocated for the State for the fiscal year.
• (b) Except as provided in subsection (c) of this section, a transfer otherwise authorized by subsection (a) of this section to be made during a fiscal year may not be made to the extent that the sum of the amount to be transferred and all amounts so transferred by State directors under subsection (a) of this section during the fiscal year exceeds 10 percent of the total amount made available to carry out the authorities described in section 2009d(d) of this title for the fiscal year.
• (c) Subsections (a) and (b) shall not apply to a transfer of funds by a State director if the State director certifies to the Secretary that—
  • (1) there is an approved application for a project in the function category to which the funds are to be transferred but funds are not available for the project in the function category; and
  • (2)
    • (A) there is no such approved application in the function category from which the funds are to be transferred; or
    • (B) the community that would benefit from the project has a smaller population and a lesser per capita income than any community that would benefit from a project in the function category from which the funds are to be transferred.

§ 2009f. Grants to States

• (a)
  • (1) The Secretary shall make a grant to any eligible State for any fiscal year for which the State requests a grant under this section in an amount equal to 5 percent of the total amount allocated for the State under section 2009d(f) of this title .
  • (2) Before July 15 of each fiscal year, the Secretary may make a grant to any State to defray the cost of any subsidy associated with a guarantee provided by an eligible public entity of the State under section 2009g of this title in an amount that does not exceed 5 percent of the total amount allocated for the State under section 2009d(f) of this title .
  • (3) The Secretary shall make grants to a State under paragraphs (1) and (2) from amounts allocated for the State in the accounts specified in section 2009d(c) of this title , by reducing each such allocated amount by the same percentage.
• (b)
  • (1) Subject to paragraph (2), the Secretary shall make a grant to any eligible State for any fiscal year for which the State requests a grant under this section in an amount equal to 5 percent of the amount allocated for the State for the fiscal year under section 2009d(g) of this title .
  • (2) A State shall be eligible for a grant under paragraph (1) if the State makes commitments to the Secretary to—
    • (A) expend from non-Federal sources in accordance with subsection (c) an amount that is not less than 200 percent of the amount of the grant; and
    • (B) maintain the amounts paid to the State under this subsection and the amount referred to in subparagraph (A) in an account separate from all other State funds until expended in accordance with subsection (c).
  • (3) If the Secretary makes a grant under paragraph (1) before July 15 of the fiscal year, the grant shall be made from amounts allocated for the State in the accounts specified in section 2009d(c) of this title for the fiscal year, by reducing each allocated amount by the same percentage.
• (c) A State to which funds are provided under this section shall use the funds in rural areas for any activity authorized under the authorities described in section 2009d(d) of this title in accordance with the State strategic plan referred to in section 2009c of this title .
• (d) The State shall provide assurances to the Secretary that funds provided to the State under this section will be used only to supplement, not to supplant, the amount of Federal, State, and local funds otherwise expended for rural development assistance in the State.
• (e) The Secretary shall provide to a State an opportunity to appeal any action taken with respect to the State under this section.
• (f) Federal funds shall not be used for any administrative costs incurred by a State in carrying out this subchapter.
• (g)
  • (1) Payments to a State from a grant under this section for a fiscal year shall be obligated by the State in the fiscal year or in the succeeding fiscal year. A State shall obligate funds under this section to provide assistance to rural areas.
  • (2) If a State fails to obligate payments in accordance with paragraph (1), the Secretary shall make an equal reduction in the amount of payments provided to the State under this section for the immediately succeeding fiscal year.
  • (3)
    • (A) The Secretary shall review and monitor State compliance with this section.
    • (B) If the Secretary finds that there has been misuse of grant funds provided under this section, or noncompliance with any of the terms and conditions of a grant, after reasonable notice and opportunity for a hearing—
      • (i) the Secretary shall notify the State of the finding; and
      • (ii) no further payments to the State shall be made with respect to the programs funded under this section until the Secretary is satisfied that there is no longer any failure to comply or that the noncompliance will be promptly corrected.
    • (C) In the case of a finding of noncompliance made pursuant to subparagraph (B), the Secretary may, in addition to, or in lieu of, imposing the sanctions described in subparagraph (B), impose other appropriate sanctions, including recoupment of money improperly expended for purposes prohibited or not authorized by this section and disqualification from the receipt of financial assistance under this section.
• (h) Nothing in this subchapter—
  • (1) entitles any person to assistance or a contract or grant; or
  • (2) limits the right of a State to impose additional limitations or conditions on assistance or a contract or grant under this section.

§ 2009g. Guarantee and commitment to guarantee loans

• (a) In this section, the term “eligible public entity” means any unit of general local government.
• (b) The Secretary, on such terms and conditions as the Secretary may prescribe, may guarantee and make commitments to guarantee notes or other obligations issued by eligible public entities, or by public agencies designated by the eligible public entities, for the purposes of financing rural development activities authorized and funded under section 2009f of this title .
• (c) The Secretary may not make a guarantee or commitment to guarantee with respect to a note or other obligation if the total amount of outstanding notes or obligations guaranteed under this section (excluding any amount repaid under the contract entered into under subsection (e)(1)(A)) for issuers in the State would exceed an amount equal to 5 times the sum of the total amount of grants made to the State under section 2009f of this title .
• (d) Notwithstanding any other provision of this subchapter, a State to which a grant is made under section 2009f of this title may use the grant (including program income derived from the grant) to pay principal and interest due (including such servicing, underwriting, or other costs as may be specified in regulations of the Secretary) on any note or other obligation guaranteed under this section.
• (e)
  • (1) To ensure the repayment of notes or other obligations and charges incurred under this section and as a condition for receiving the guarantees, the Secretary shall require the issuer to—
    • (A) enter into a contract, in a form acceptable to the Secretary, for repayment of notes or other obligations guaranteed under this section;
    • (B) pledge any grant for which the issuer may become eligible under this subchapter; and
    • (C) furnish, at the discretion of the Secretary, such other security as may be considered appropriate by the Secretary in making the guarantees.
  • (2) To assist in ensuring the repayment of notes or other obligations and charges incurred under this section, a State shall pledge any grant for which the State may become eligible under this subchapter as security for notes or other obligations and charges issued under this section by any eligible public entity in the State.
• (f) Notwithstanding any other provision of this subchapter, the Secretary may apply grants pledged pursuant to paragraphs (1)(B) and (2) of subsection (e) to any repayments due the United States as a result of the guarantees.
• (g) The total amount of outstanding obligations guaranteed on a cumulative basis by the Secretary pursuant to subsection (b) shall not at any time exceed such amount as may be authorized to be appropriated for such purpose for any fiscal year.
• (h) Notes or other obligations guaranteed under this section may not be purchased by the Federal Financing Bank.
• (i) The full faith and credit of the United States is pledged to the payment of all guarantees made under this section. Any such guarantee made by the Secretary shall be conclusive evidence of the eligibility of the obligations for the guarantee with respect to principal and interest. The validity of the guarantee shall be incontestable in the hands of a holder of the guaranteed obligations.

§ 2009h. Local involvement

An application for assistance under this subchapter shall include evidence of significant community support for the project for which the assistance is requested. In the case of assistance for a community facilities or infrastructure project, the evidence shall be in the form of a certification of support for the project from each affected general purpose local government.

§ 2009i. Interstate collaboration

The Secretary shall permit the establishment of voluntary pooling arrangements among States, and regional fund-sharing agreements, to carry out projects receiving assistance under this subchapter.

§ 2009j. Annual report

• (a) The Secretary, in collaboration with State, local, public, and private entities, State rural development councils, and community-based organizations, shall prepare an annual report that contains evaluations, assessments, and performance outcomes concerning the rural community advancement programs carried out under this subchapter.
• (b) Not later than March 1 of each year, the Secretary shall—
  • (1) submit the report required by subsection (a) to Congress and the chief executives of the States participating in the program established under this subchapter; and
  • (2) make the report available to State and local participants.

§ 2009k. Rural development interagency working group

• (a) The Secretary shall provide leadership within the Executive branch for, and assume responsibility for, establishing an interagency working group chaired by the Secretary.
• (b) The working group shall establish policy for, coordinate, make recommendations with respect to, and evaluate the performance of, all Federal rural development efforts.

§ 2009l. Duties of Rural Economic and Community Development State Offices

In carrying out this subchapter, the Director of a Rural Economic and Community Development State Office shall—

• (1) to the maximum extent practicable, ensure that the State strategic plan referred to in section 2009c of this title is implemented;
• (2) coordinate community development objectives within the State;
• (3) establish links between local, State, and field office program administrators of the Department of Agriculture;
• (4) ensure that recipient communities comply with applicable Federal and State laws and requirements; and
• (5) integrate State development programs with assistance under this subchapter.

§ 2009m. Electronic transfer

The Secretary shall transfer funds in accordance with this subchapter through electronic transfer as soon as practicable after April 4, 1996 .