US Codex
Pub. L.
Notes

Title V — Credit

113th Congress · Approved Feb 7, 2014 · 128 Stat. 649 · Lineage

TITLE V Credit

Subtitle A Farm Ownership Loans

SEC. 5001. Eligibility for Farm Ownership Loans.

(a)
In General.— Section 302(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1922(a)) is amended—
(1)
by striking “ (a) In General.—The” and inserting the following:

“(a) In General.—

“(1) Eligibility requirements.—The”

(2)
in the first sentence, by striking “ and limited liability companies” and inserting “ limited liability companies, and such other legal entities as the Secretary considers appropriate,”;
(3)
in the second sentence, by redesignating paragraphs (1) through (4) as subparagraphs (A) through (D), respectively;
(4)
in each of the second and third sentences, by striking “ and limited liability companies” each place it appears and inserting “ limited liability companies, and such other legal entities”;
(5)
in the third sentence—
(A)
by striking “ clause (3)” and inserting “ subparagraph (C)”;
(B)
by striking “ clause (4)” and inserting “ subparagraph (D)”; and
(6)
by adding at the end the following:

“(2) Special rules.—

“(A) Eligibility of certain operating-only entities.—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) Eligibility of certain embedded entities.—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)
Direct Farm Ownership Experience Requirement.— Section 302(b)(1) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1922(b)(1)) is amended in the matter preceding subparagraph (A) by inserting “ or has other acceptable experience for a period of time, as determined by the Secretary,” after “ 3 years”.
(c)
Conforming Amendments.—
(1)
Section 304(c)(2) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1924(c)(2)) by striking “ paragraphs (1) and (2) of section 302(a)” and inserting “ subparagraphs (A) and (B) of section 302(a)(1)”.
(2)
Section 310D(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1934(a)) is amended in the second sentence—
(A)
by inserting after “ partnership” the following: “ , or such other legal entities as the Secretary considers appropriate,”; and
(B)
by striking “ or partners” each place it appears and inserting “ partners, or owners”.

SEC. 5002. Conservation Loan and Loan Guarantee Program.

(a)
Eligibility.— Section 304(c) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1924(c)) is amended by striking “ or limited liability companies” and inserting “ limited liability companies, or such other legal entities as the Secretary considers appropriate”.
(b)
Limitations Applicable to Loan Guarantees.— Section 304(e) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1924(e)) is amended by striking “ shall be 75 percent of the principal amount of the loan.” and inserting

“(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.”

(c)
Extension of Program.— Section 304 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1924) is amended by striking subsection (h) and inserting the following:

“(h) Authorization of Appropriations.—There is authorized to be appropriated to the Secretary to carry out this section $150,000,000 for each of fiscal years 2014 through 2018.”

SEC. 5003. Joint Financing Arrangements.

Section 307(a)(3) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1927(a)(3)) is amended by striking subparagraph (D) and inserting the following:

“(D) Joint financing arrangements.—If a direct farm ownership loan is made under this subtitle 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 subtitle; or

“(ii) 2.5 percent.”

SEC. 5004. Elimination of Mineral Rights Appraisal Requirement.

Section 307 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1927) is amended—
(1)
by striking subsection (d); and
(2)
by redesignating subsection (e) as subsection (d).

SEC. 5005. Down Payment Loan Program.

(a)
In General.— Section 310E(b)(1)(C) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1935(b)(1)(C)) is amended by striking “ $500,000” and inserting “ $667,000”.
(b)
Technical Correction.— Section 310E(b) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1935(b)) is amended by striking paragraph (2) (as added by section 7(a) of Public Law 102–554; 106 Stat. 4145).

Subtitle B Operating Loans

SEC. 5101. Eligibility for Farm Operating Loans.

Section 311(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1941(a)) is amended—
(1)
by striking “ (a) In General.—The” and inserting the following:

“(a) In General.—

“(1) Eligibility requirements.—The”

(2)
in the first sentence, by striking “ and limited liability companies” and inserting “ limited liability companies, and such other legal entities as the Secretary considers appropriate,”;
(3)
in the second sentence, by redesignating paragraphs (1) through (4) as subparagraphs (A) through (D), respectively;
(4)
in each of the second and third sentences, by striking “ and limited liability companies” each place it appears and inserting “ limited liability companies, and such other legal entities”;
(5)
in the third sentence—
(A)
by striking “ clause (3)” and inserting “ subparagraph (C)”; and
(B)
by striking “ clause (4)” and inserting “ subparagraph (D)”; and
(6)
by adding at the end the following:

“(2) Special rule.—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.”

SEC. 5102. Elimination of Rural Residency Requirement for Operating Loans to Youth.

Section 311(b)(1) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1941(b)(1)) is amended by striking “ who are rural residents”.

SEC. 5103. Defaults by Youth Loan Borrowers.

Section 311(b) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1941(b)) is amended by adding at the end the following:

“(5) Equitable considerations for default.—

“(A) Debt forgiveness.—

“(i) In general.—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) Eligibility for future loans.—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) Education loans.—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.”

SEC. 5104. Term Limits on Direct Operating Loans.

Section 311(c) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1941(c)) is amended by adding at the end the following:

“(5) Annual report on term limits on direct operating loans.—

“(A) In general.—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) Demographic information.—

“(i) In general.—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) Demographic information.—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) Additional content.—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) Submission.—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.”

SEC. 5105. Valuation of Local or Regional Crops.

Section 312 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1942) is amended by adding at the end the following:

“(e) Valuation of Local or Regional Crops.—

“(1) In general.—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) Price history.—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.”

SEC. 5106. Microloans.

(a)
In General.— Section 313 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1943) is amended by adding at the end the following:

“(c) Microloans.—

“(1) In general.—Subject to paragraph (2), the Secretary may establish a program to make or guarantee microloans.

“(2) Limitations.—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 title to any 1 borrower to exceed $50,000.

“(3) Applications.—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) Cooperative lending pilot projects.—

“(A) In general.—Subject to subparagraph (B), during each of the 2014 through 2018 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) Requirements.—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) Eligibility.—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) Oversight.—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) Limitation.—The Secretary shall not make more than $10,000,000 in loans under this paragraph in any fiscal year.”

(b)
Conforming Amendments.—
(1)
Section 311(c) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1941(c)) is amended by striking paragraph (2) and inserting the following:

“(2) Definition of direct operating loan.—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 2501(e) of the Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 2279(e)).”

(2)
Section 312(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1942(a)) is amended in the matter preceding paragraph (1) by inserting “ (including a microloan, as defined by the Secretary)” after “ A direct loan”.
(3)
Section 316(a)(2) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1946(a)(2)) is amended in the matter preceding subparagraph (A) by inserting “ a microloan to a beginning farmer or rancher or veteran farmer or rancher (as defined in section 2501(e) of the Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 2279(e)), or” after “ The interest rate on”.

SEC. 5107. Term Limits on Guaranteed Operating Loans.

Section 319 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1949) is amended—
(1)
in subsection (a), by striking “ (a) Graduation Plan.—”; and
(2)
by striking subsection (b).

Subtitle C Emergency Loans

SEC. 5201. Eligibility for Emergency Loans.

Section 321(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1961(a)) is amended—
(1)
by striking “ owner-operators (in the case of loans for a purpose under subtitle A) or operators (in the case of loans for a purpose under subtitle B)” each place it appears and inserting “ (in the case of farm ownership loans in accordance with subtitle A) owner-operators or operators, or (in the case of loans for a purpose under subtitle B) operators”;
(2)
in the first sentence—
(A)
by inserting “ , or such other legal entities as the Secretary considers appropriate” after “ limited liability companies” the first place it appears;
(B)
by inserting “ , or other legal entities” after “ limited liability companies” the second place it appears; and
(C)
by striking “ and limited liability companies,” and inserting “ limited liability companies, and such other legal entities”;
(3)
in the second sentence, by striking “ ownership and operator” and inserting “ ownership or operator”; and
(4)
by adding at the end the following: “ 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.”.

Subtitle D Administrative Provisions

SEC. 5301. Beginning Farmer and Rancher Individual Development Accounts Pilot Program.

Section 333B(h) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1983b(h)) is amended by striking “ 2012” and inserting “ 2018”.

SEC. 5302. Farmer Loan Pilot Projects.

Subtitle D of the Consolidated Farm and Rural Development Act is amended by inserting after section 333C (7 U.S.C. 1983c) the following:

“SEC. 333D. FARMER LOAN PILOT PROJECTS.

“(a) In General.—The Secretary may conduct pilot projects of limited scope and duration that are consistent with subtitle A through this subtitle to evaluate processes and techniques that may improve the efficiency and effectiveness of the programs carried out under subtitle A through this subtitle.

“(b) Notification.—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).”

SEC. 5303. Definition of Qualified Beginning Farmer or Rancher.

(a)
In General.— Section 343(a)(11) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1991(a)(11)) is amended in subparagraphs (C) and (D)—
(1)
by striking “ or joint operation,” each place it appears and inserting “ joint operation, or such other legal entity as the Secretary considers appropriate,”;
(2)
by striking “ or joint operators,” each place it appears and inserting “ joint operators, or owners,”; and
(3)
in subparagraph (D), by striking “ corporation, has stockholders,” each place it appears in clauses (i)(II)(bb) and (ii)(II)(bb) and inserting “ cooperative, corporation, partnership, joint operation, or other such legal entity as the Secretary considers appropriate, has members, stockholders, partners, or joint operators,”.
(b)
Modification of Acreage Ownership Limitation.— Section 343(a)(11)(F) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1991(a)(11)(F)) is amended by striking “ median acreage” and inserting “ average acreage”.

SEC. 5304. Loan Authorization Levels.

Section 346(b)(1) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1994(b)(1)) is amended in the matter preceding subparagraph (A) by striking “ 2012” and inserting “ 2018”.

SEC. 5305. Loan Fund Set-Asides.

Section 346(b)(2)(A)(ii)(III) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1994(b)(2)(A)(ii)(III)) is amended—
(1)
by striking “ 2012” and inserting “ 2018”; and
(2)
by striking “ of the total amount”.

SEC. 5306. Borrower Training.

Section 359(c)(2) of the Consolidated Farm and Rural Development Act (7 U.S.C. 2006a(c)(2)) is amended by striking “ section 302(a)(2) or 311(a)(2)” and inserting “ section 302(a)(1)(B) or 311(a)(1)(B)”.

Subtitle E Miscellaneous

SEC. 5401. State Agricultural Mediation Programs.

Section 506 of the Agricultural Credit Act of 1987 (7 U.S.C. 5106) is amended by striking “ 2015” and inserting “ 2018”.

SEC. 5402. Loans to Purchasers of Highly Fractionated Land.

The first section of Public Law 91–229 (25 U.S.C. 488) is amended—
(1)
in subsection (a), in the first sentence, by striking “ loans from” and all that follows through “ 1929)” and inserting “ direct loans in a manner consistent with direct loans pursuant to subtitle D of the Consolidated Farm and Rural Development Act (7 U.S.C. 1981 et seq.)”; and
(2)
in subsection (b)(1)—
(A)
by striking “ pursuant to section 205(c) of the Indian Land Consolidation Act (25 U.S.C. 2204(c))”; and
(B)
by inserting “ or to intermediaries in order to establish revolving loan funds for the purchase of highly fractionated land under that section” before the period at the end.

SEC. 5403. Removal of Duplicative Appraisals.

Notwithstanding any other law (including regulations), in making loans under the first section of Public Law 91–229 (25 U.S.C. 488), borrowers who are Indian tribes, members of Indian tribes, or tribal corporations shall only be required to obtain 1 appraisal under an appraisal standard recognized as of the date of enactment of this Act by the Secretary or the Secretary of the Interior.

SEC. 5404. Compensation Disclosure by Farm Credit System Institutions.

(a)
Findings.— Congress finds that —
(1)
the reasonable disclosure to stockholders by Farm Credit System institutions regarding the compensation of Farm Credit System institution senior officers is beneficial to stockholders’ understanding of the operation of their institutions;
(2)
transparency regarding compensation practices reinforces the cooperative nature of Farm Credit System institutions;
(3)
the unique cooperative structure of the Farm Credit System should be considered when promulgating rules;
(4)
the participation of stockholders in the election of the boards of directors of Farm Credit System institutions provides stockholders the opportunity to participate in the management of their institutions;
(5)
as representatives of stockholders, the boards of directors of Farm Credit System institutions importantly establish and oversee the compensation practices of Farm Credit System institutions to ensure the safe and sound operation of those institutions; and
(6)
any regulation should strengthen and not hinder the ability of Farm Credit System boards of directors to oversee compensation practices.
(b)
Implementation.— Not later than 60 days after the date of enactment of this Act, the Farm Credit Administration shall review its rules to reflect Congressional intent that a primary responsibility of the boards of directors of Farm Credit System institutions, as elected representatives of their stockholders, is to oversee compensation practices.