In the Senate of the United States,

December 21, 1995.

Resolved, That the bill from the House of Representatives (H.R. 2029) entitled ‘‘An Act to to amend the Farm

Credit Act of 1971 to provide regulatory relief, and for other

purposes’’, do pass with the following

AMENDMENTS:

Strike out all after the enacting clause and insert:

1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Farm Credit System Reform Act of 1996’’.

4 (b) TABLE OF CONTENTS.—The table of contents for

5 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—AGRICULTURAL MORTGAGE SECONDARY MARKET

Sec. 101. Definition of real estate.

Sec. 102. Definition of certified facility.

Sec. 103. Duties of Federal Agricultural Mortgage Corporation.

Sec. 104. Powers of the Corporation.

Sec. 105. Federal reserve banks as depositaries and fiscal agents.

Sec. 106. Certification of agricultural mortgage marketing facilities.

Sec. 107. Guarantee of qualified loans.

Sec. 108. Mandatory reserves and subordinated participation interests eliminated.
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Sec. 109. Standards requiring diversified pools.

Sec. 110. Small farms.

Sec. 111. Definition of an affiliate.

Sec. 112. State usury laws superseded.

Sec. 113. Extension of capital transition period.

Sec. 114. Minimum capital level.

Sec. 115. Critical capital level.

Sec. 116. Enforcement levels.

Sec. 117. Recapitalization of the Corporation.

Sec. 118. Liquidation of the Federal Agricultural Mortgage Corporation.

TITLE II—REGULATORY RELIEF

Sec. 201. Compensation of association personnel.

Sec. 202. Use of private mortgage insurance.

Sec. 203. Removal of certain borrower reporting requirement.

Sec. 204. Reform of regulatory limitations on dividend, member business, and

voting practices of eligible farmer-owned cooperatives.

Sec. 205. Removal of Federal Government certification requirement for certain

private sector financings.

Sec. 206. Borrower stock.

Sec. 207. Disclosure relating to adjustable rate loans.

Sec. 208. Borrowers’ rights.

Sec. 209. Formation of administrative service entities.

Sec. 210. Joint management agreements.

Sec. 211. Dissemination of quarterly reports.

Sec. 212. Regulatory review.

Sec. 213. Examination of farm credit system institutions.

Sec. 214. Conservatorships and receiverships.

Sec. 215. Farm Credit Insurance Fund operations.

Sec. 216. Examinations by the Farm Credit System Insurance Corporation.

Sec. 217. Powers with respect to troubled insured system banks.

Sec. 218. Oversight and regulatory actions by the Farm Credit System Insurance

Corporation.

Sec. 219. Farm Credit System Insurance Corporation Board of Directors.

Sec. 220. Interest rate reduction program.

Sec. 221. Liability for making criminal referrals.

TITLE III—NATIONAL NATURAL RESOURCES CONSERVATION

FOUNDATION

Sec. 301. Short title.

Sec. 302. Definitions.

Sec. 303. National Natural Resources Conservation Foundation.

Sec. 304. Composition and operation.

Sec. 305. Officers and employees.

Sec. 306. Corporate powers and obligations of the Foundation.

Sec. 307. Administrative services and support.

Sec. 308. Audits and petition of Attorney General for equitable relief.

Sec. 309. Release from liability.

Sec. 310. Authorization of appropriations.

TITLE IV—IMPLEMENTATION AND EFFECTIVE DATE

Sec. 401. Implementation.

Sec. 302. Effective Date.
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1 TITLE I—AGRICULTURAL MORT2 GAGE SECONDARY MARKET

3 SEC. 101. DEFINITION OF REAL ESTATE.

4 Section 8.0(1)(B)(ii) of the Farm Credit Act of 1971

5 (12 U.S.C. 2279aa(1)(B)(ii)) is amended by striking ‘‘with

6 a purchase price’’ and inserting ‘‘, excluding the land to

7 which the dwelling is affixed, with a value’’.

8 SEC. 102. DEFINITION OF CERTIFIED FACILITY.

9 Section 8.0(3) of the Farm Credit Act of 1971 (12

10 U.S.C. 2279aa(3)) is amended—

11 (1) in subparagraph (A), by striking ‘‘a second12 ary marketing agricultural loan’’ and inserting ‘‘an

13 agricultural mortgage marketing’’; and

14 (2) in subparagraph (B), by striking ‘‘, but

15 only’’ and all that follows through ‘‘(9)(B)’’.

16 SEC. 103. DUTIES OF FEDERAL AGRICULTURAL MORTGAGE

17 CORPORATION.

18 Section 8.1(b) of the Farm Credit Act of 1971 (12

19 U.S.C. 2279aa–1(b)) is amended—

20 (1) in paragraph (2), by striking ‘‘and’’ at the

21 end;

22 (2) in paragraph (3), by striking the period at

23 the end and inserting ‘‘; and’’; and

24 (3) by adding at the end the following:
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1 ‘‘(4) purchase qualified loans and issue securities

2 representing interests in, or obligations backed by, the

3 qualified loans, guaranteed for the timely repayment

4 of principal and interest.’’.

5 SEC. 104. POWERS OF THE CORPORATION.

6 Section 8.3(c) of the Farm Credit Act of 1971 (12

7 U.S.C. 2279aa–3(c)) is amended—

8 (1) by redesignating paragraphs (13) and (14)

9 as paragraphs (14) and (15), respectively; and

10 (2) by inserting after paragraph (12) the follow11 ing:

12 ‘‘(13) To purchase, hold, sell, or assign a quali13 fied loan, to issue a guaranteed security, representing

14 an interest in, or an obligation backed by, the quali15 fied loan, and to perform all the functions and re16 sponsibilities of an agricultural mortgage marketing

17 facility operating as a certified facility under this

18 title.’’.

19 SEC. 105. FEDERAL RESERVE BANKS AS DEPOSITARIES AND

20 FISCAL AGENTS.

21 Section 8.3 of the Farm Credit Act of 1971 (12 U.S.C.

22 2279aa–3) is amended—

23 (1) in subsection (d), by striking ‘‘may act as de24 positories for, or’’ and inserting ‘‘shall act as deposi25 tories for, and’’; and
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1 (2) in subsection (e), by striking ‘‘Secretary of

2 the Treasury may authorize the Corporation to use’’

3 and inserting ‘‘Corporation shall have access to’’.

4 SEC. 106. CERTIFICATION OF AGRICULTURAL MORTGAGE

5 MARKETING FACILITIES.

6 Section 8.5 of the Farm Credit Act of 1971 (12 U.S.C.

7 2279aa–5) is amended—

8 (1) in subsection (a)—

9 (A) in paragraph (1), by inserting ‘‘(other

10 than the Corporation)’’ after ‘‘agricultural mort11 gage marketing facilities’’; and

12 (B) in paragraph (2), by inserting ‘‘(other

13 than the Corporation)’’ after ‘‘agricultural mort14 gage marketing facility’’; and

15 (2) in subsection (e)(1), by striking ‘‘(other than

16 the Corporation)’’.

17 SEC. 107. GUARANTEE OF QUALIFIED LOANS.

18 Section 8.6 of the Farm Credit Act of 1971 (12 U.S.C.

19 2279aa–6) is amended—

20 (1) in subsection (a)(1)—

21 (A) by striking ‘‘Corporation shall guaran22 tee’’ and inserting the following: ‘‘Corporation—

23 ‘‘(A) shall guarantee’’;

24 (B) by striking the period at the end and

25 inserting ‘‘; and’’; and
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1 (C) by adding at the end the following:

2 ‘‘(B) may issue a security, guaranteed as to

3 the timely payment of principal and interest,

4 that represents an interest solely in, or an obli5 gation fully backed by, a pool consisting of

6 qualified loans that—

7 ‘‘(i) meet the standards established

8 under section 8.8; and

9 ‘‘(ii) have been purchased and held by

10 the Corporation.’’;

11 (2) in subsection (d)—

12 (A) by striking paragraph (4); and

13 (B) by redesignating paragraphs (5), (6),

14 and (7) as paragraphs (4), (5), and (6), respec15 tively; and

16 (3) in subsection (g)(2), by striking ‘‘section

17 8.0(9)(B))’’ and inserting ‘‘section 8.0(9))’’.

18 SEC. 108. MANDATORY RESERVES AND SUBORDINATED

19 PARTICIPATION INTERESTS ELIMINATED.

20 (a) GUARANTEE OF QUALIFIED LOANS.—Section 8.6

21 of the Farm Credit Act of 1971 (12 U.S.C. 2279aa–6) is

22 amended by striking subsection (b).

23 (b) RESERVES AND SUBORDINATED PARTICIPATION

24 INTERESTS.—Section 8.7 of the Farm Credit Act of 1971

25 (12 U.S.C. 2279aa–7) is repealed.
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1 (c) CONFORMING AMENDMENTS.—

2 (1) Section 8.0(9)(B)(i) of the Farm Credit Act

3 of 1971 (12 U.S.C. 2279aa(9)(B)(i)) is amended by

4 striking ‘‘8.7, 8.8,’’ and inserting ‘‘8.8’’.

5 (2) Section 8.6(a)(2) of the Farm Credit Act of

6 1971 (12 U.S.C. 2279aa–6(a)(2)) is amended by

7 striking ‘‘subject to the provisions of subsection (b)’’.

8 SEC. 109. STANDARDS REQUIRING DIVERSIFIED POOLS.

9 (a) IN GENERAL.—Section 8.6 of the Farm Credit Act

10 of 1971 (12 U.S.C. 2279aa–6) (as amended by section 108)

11 is amended—

12 (1) by striking subsection (c); and

13 (2) by redesignating subsections (d) through (g)

14 as subsections (b) through (e), respectively.

15 (b) CONFORMING AMENDMENTS.—

16 (1) Section 8.0(9)(B)(i) of the Farm Credit Act

17 of 1971 (12 U.S.C. 2279aa(9)(B)(i)) is amended by

18 striking ‘‘(f)’’ and inserting ‘‘(d)’’.

19 (2) Section 8.13(a) of the Farm Credit Act of

20 1971 (12 U.S.C. 2279aa–13(a)) is amended by strik21 ing ‘‘sections 8.6(b) and’’ in each place it appears

22 and inserting ‘‘section’’.

23 (3) Section 8.32(b)(1)(C) of the Farm Credit Act

24 of 1971 (12 U.S.C. 2279bb–1(b)(1)(C)) is amended by

25 striking ‘‘under section 8.6(b)(2)’’.
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1 (4) Section 8.6(b) of the Farm Credit Act of

2 1971 (12 U.S.C. 2279aa–6(b)) (as redesignated by

3 subsection (a)(2)) is amended—

4 (A) by striking paragraph (4) (as redesig5 nated by section 107(2)(B)); and

6 (B) by redesignating paragraphs (5) and

7 (6) (as redesignated by section 107(2)(B)) as

8 paragraphs (4) and (5), respectively.

9 SEC. 110. SMALL FARMS.

10 Section 8.8(e) of the Farm Credit Act of 1971 (12

11 U.S.C. 2279aa–8(e)) is amended by adding at the end the

12 following: ‘‘The Board shall promote and encourage the in13 clusion of qualified loans for small farms and family farm14 ers in the agricultural mortgage secondary market.’’.

15 SEC. 111. DEFINITION OF AN AFFILIATE.

16 Section 8.11(e) of the Farm Credit Act of 1971 (21

17 U.S.C. 2279aa–11(e)) is amended—

18 (1) by striking ‘‘a certified facility or’’; and

19 (2) by striking ‘‘paragraphs (3) and (7), respec20 tively, of section 8.0’’ and inserting ‘‘section 8.0(7)’’.

21 SEC. 112. STATE USURY LAWS SUPERSEDED.

22 Section 8.12 of the Farm Credit Act of 1971 (12 U.S.C.

23 2279aa–12) is amended by striking subsection (d) and in24 serting the following:
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1 ‘‘(d) STATE USURY LAWS SUPERSEDED.—A provision

2 of the Constitution or law of any State shall not apply to

3 an agricultural loan made by an originator or a certified

4 facility in accordance with this title for sale to the Corpora5 tion or to a certified facility for inclusion in a pool for

6 which the Corporation has provided, or has committed to

7 provide, a guarantee, if the loan, not later than 180 days

8 after the date the loan was made, is sold to the Corporation

9 or included in a pool for which the Corporation has pro10 vided a guarantee, if the provision—

11 ‘‘(1) limits the rate or amount of interest, dis12 count points, finance charges, or other charges that

13 may be charged, taken, received, or reserved by an ag14 ricultural lender or a certified facility; or

15 ‘‘(2) limits or prohibits a prepayment penalty

16 (either fixed or declining), yield maintenance, or

17 make-whole payment that may be charged, taken, or

18 received by an agricultural lender or a certified facil19 ity in connection with the full or partial payment of

20 the principal amount due on a loan by a borrower in

21 advance of the scheduled date for the payment under

22 the terms of the loan, otherwise known as a prepay23 ment of the loan principal.’’.
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1 SEC. 113. EXTENSION OF CAPITAL TRANSITION PERIOD.

2 Section 8.32 of the Farm Credit Act of 1971 (12 U.S.C.

3 2279bb–1) is amended—

4 (1) in the first sentence of subsection (a), by

5 striking ‘‘Not later than the expiration of the 2-year

6 period beginning on December 13, 1991,’’ and insert7 ing ‘‘Not sooner than the expiration of the 3-year pe8 riod beginning on the date of enactment of the Farm

9 Credit System Reform Act of 1996,’’;

10 (2) in the first sentence of subsection (b)(2), by

11 striking ‘‘5-year’’ and inserting ‘‘8-year’’; and

12 (3) in subsection (d)—

13 (A) in the first sentence—

14 (i) by striking ‘‘The regulations estab15 lishing’’ and inserting the following:

16 ‘‘(1) IN GENERAL.—The regulations establish17 ing’’; and

18 (ii) by striking ‘‘shall contain’’ and in19 serting the following: ‘‘shall—

20 ‘‘(A) be issued by the Director for public

21 comment in the form of a notice of proposed

22 rulemaking, to be first published after the expi23 ration of the period referred to in subsection (a);

24 and

25 ‘‘(B) contain’’; and
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1 (B) in the second sentence, by striking ‘‘The

2 regulations shall’’ and inserting the following:

3 ‘‘(2) SPECIFICITY.—The regulations referred to

4 in paragraph (1) shall’’.

5 SEC. 114. MINIMUM CAPITAL LEVEL.

6 Section 8.33 of the Farm Credit Act of 1971 (12 U.S.C.

7 2279bb–2) is amended to read as follows:

8 ‘‘SEC. 8.33. MINIMUM CAPITAL LEVEL.

9 ‘‘(a) IN GENERAL.—Except as provided in subsection

10 (b), for purposes of this subtitle, the minimum capital level

11 for the Corporation shall be an amount of core capital equal

12 to the sum of—

13 ‘‘(1) 2.75 percent of the aggregate on-balance

14 sheet assets of the Corporation, as determined in ac15 cordance with generally accepted accounting prin16 ciples; and

17 ‘‘(2) 0.75 percent of the aggregate off-balance

18 sheet obligations of the Corporation, which, for the

19 purposes of this subtitle, shall include—

20 ‘‘(A) the unpaid principal balance of out21 standing securities that are guaranteed by the

22 Corporation and backed by pools of qualified

23 loans;

24 ‘‘(B) instruments that are issued or guaran25 teed by the Corporation and are substantially
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1 equivalent to instruments described in subpara2 graph (A); and

3 ‘‘(C) other off-balance sheet obligations of

4 the Corporation.

5 ‘‘(b) TRANSITION PERIOD.—

6 ‘‘(1) IN GENERAL.—For purposes of this subtitle,

7 the minimum capital level for the Corporation—

8 ‘‘(A) prior to January 1, 1997, shall be the

9 amount of core capital equal to the sum of—

10 ‘‘(i) 0.45 percent of aggregate off-bal11 ance sheet obligations of the Corporation;

12 ‘‘(ii) 0.45 percent of designated on-bal13 ance sheet assets of the Corporation, as de14 termined under paragraph (2); and

15 ‘‘(iii) 2.50 percent of on-balance sheet

16 assets of the Corporation other than assets

17 designated under paragraph (2);

18 ‘‘(B) during the 1-year period ending De19 cember 31, 1997, shall be the amount of core cap20 ital equal to the sum of—

21 ‘‘(i) 0.55 percent of aggregate off-bal22 ance sheet obligations of the Corporation;

23 ‘‘(ii) 1.20 percent of designated on-bal24 ance sheet assets of the Corporation, as de25 termined under paragraph (2); and
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1 ‘‘(iii) 2.55 percent of on-balance sheet

2 assets of the Corporation other than assets

3 designated under paragraph (2);

4 ‘‘(C) during the 1-year period ending De5 cember 31, 1998, shall be the amount of core cap6 ital equal to—

7 ‘‘(i) if the Corporation’s core capital is

8 not less than $25,000,000 on January 1,

9 1998, the sum of—

10 ‘‘(I) 0.65 percent of aggregate off11 balance sheet obligations of the Cor12 poration;

13 ‘‘(II) 1.95 percent of designated

14 on-balance sheet assets of the Corpora15 tion, as determined under paragraph

16 (2); and

17 ‘‘(III) 2.65 percent of on-balance

18 sheet assets of the Corporation other

19 than assets designated under para20 graph (2); or

21 ‘‘(ii) if the Corporation’s core capital

22 is less than $25,000,000 on January 1,

23 1998, the amount determined under sub24 section (a); and
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1 ‘‘(D) on and after January 1, 1999, shall be

2 the amount determined under subsection (a).

3 ‘‘(2) DESIGNATED ON-BALANCE SHEET AS4 SETS.—For purposes of this subsection, the designated

5 on-balance sheet assets of the Corporation shall be—

6 ‘‘(A) the aggregate on-balance sheet assets of

7 the Corporation acquired under section 8.6(e);

8 and

9 ‘‘(B) the aggregate amount of qualified

10 loans purchased and held by the Corporation

11 under section 8.3(c)(13).’’.

12 SEC. 115. CRITICAL CAPITAL LEVEL.

13 Section 8.34 of the Farm Credit Act of 1971 (12 U.S.C.

14 2279bb–3) is amended to read as follows:

15 ‘‘SEC. 8.34. CRITICAL CAPITAL LEVEL.

16 ‘‘For purposes of this subtitle, the critical capital level

17 for the Corporation shall be an amount of core capital equal

18 to 50 percent of the total minimum capital amount deter19 mined under section 8.33.’’.

20 SEC. 116. ENFORCEMENT LEVELS.

21 Section 8.35(e) of the Farm Credit Act of 1971 (12

22 U.S.C. 2279bb–4(e)) is amended by striking ‘‘during the 30-

23 month period beginning on the date of enactment of this

24 section,’’ and inserting ‘‘during the period beginning on De25 cember 13, 1991, and ending on the effective date of the
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1 risk based capital regulation issued by the Director under

2 section 8.32,’’.

3 SEC. 117. RECAPITALIZATION OF THE CORPORATION.

4 Title VIII of the Farm Credit Act of 1971 (12 U.S.C.

5 2279aa et seq.) is amended by adding at the end the follow6 ing:

7 ‘‘SEC. 8.38. RECAPITALIZATION OF THE CORPORATION.

8 ‘‘(a) MANDATORY RECAPITALIZATION.—The Corpora9 tion shall increase the core capital of the Corporation to

10 an amount equal to or greater than $25,000,000, not later

11 than the earlier of—

12 ‘‘(1) the date that is 2 years after the date of en13 actment of this section; or

14 ‘‘(2) the date that is 180 days after the end of

15 the first calendar quarter that the aggregate on-bal16 ance sheet assets of the Corporation, plus the out17 standing principal of the off-balance sheet obligations

18 of the Corporation, equal or exceed $2,000,000,000.

19 ‘‘(b) RAISING CORE CAPITAL.—In carrying out this

20 section, the Corporation may issue stock under section 8.4

21 and otherwise employ any recognized and legitimate means

22 of raising core capital in the power of the Corporation

23 under section 8.3.

24 ‘‘(c) LIMITATION ON GROWTH OF TOTAL ASSETS.—

25 During the 2-year period beginning on the date of enact-
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1 ment of this section, the aggregate on-balance sheet assets

2 of the Corporation plus the outstanding principal of the off3 balance sheet obligations of the Corporation may not exceed

4 $3,000,000,000 if the core capital of the Corporation is less

5 than $25,000,000.

6 ‘‘(d) ENFORCEMENT.—If the Corporation fails to carry

7 out subsection (a) by the date required under paragraph

8 (1) or (2) of subsection (a), the Corporation may not pur9 chase a new qualified loan or issue or guarantee a new

10 loan-backed security until the core capital of the Corpora11 tion is increased to an amount equal to or greater than

12 $25,000,000.’’.

13 SEC. 118. LIQUIDATION OF THE FEDERAL AGRICULTURAL

14 MORTGAGE CORPORATION.

15 Title VIII of the Farm Credit Act of 1971 (12 U.S.C.

16 2279aa et seq.) (as amended by section 117) is amended

17 by adding at the end the following:

18 ‘‘Subtitle C—Receivership,

19 Conservatorship, and Liquida20 tion of the Federal Agricultural

21 Mortgage Corporation

22 ‘‘SEC. 8.41. CONSERVATORSHIP; LIQUIDATION; RECEIVER23 SHIP.

24 ‘‘(a) VOLUNTARY LIQUIDATION.—The Corporation

25 may voluntarily liquidate only with the consent of, and in
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1 accordance with a plan of liquidation approved by, the

2 Farm Credit Administration Board.

3 ‘‘(b) INVOLUNTARY LIQUIDATION.—

4 ‘‘(1) IN GENERAL.—The Farm Credit Adminis5 tration Board may appoint a conservator or receiver

6 for the Corporation under the circumstances specified

7 in section 4.12(b).

8 ‘‘(2) APPLICATION.—In applying section 4.12(b)

9 to the Corporation under paragraph (1)—

10 ‘‘(A) the Corporation shall also be consid11 ered insolvent if the Corporation is unable to

12 pay its debts as they fall due in the ordinary

13 course of business;

14 ‘‘(B) a conservator may also be appointed

15 for the Corporation if the authority of the Cor16 poration to purchase qualified loans or issue or

17 guarantee loan-backed securities is suspended;

18 and

19 ‘‘(C) a receiver may also be appointed for

20 the Corporation if—

21 ‘‘(i)(I) the authority of the Corporation

22 to purchase qualified loans or issue or guar23 antee loan-backed securities is suspended; or

24 ‘‘(II) the Corporation is classified

25 under section 8.35 as within level III or IV
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1 and the alternative actions available under

2 subtitle B are not satisfactory; and

3 ‘‘(ii) the Farm Credit Administration

4 determines that the appointment of a con5 servator would not be appropriate.

6 ‘‘(3) NO EFFECT ON SUPERVISORY ACTIONS.—

7 The grounds for appointment of a conservator for the

8 Corporation under this subsection shall be in addition

9 to those in section 8.37.

10 ‘‘(c) APPOINTMENT OF CONSERVATOR OR RECEIVER.—

11 ‘‘(1) QUALIFICATIONS.—Notwithstanding section

12 4.12(b), if a conservator or receiver is appointed for

13 the Corporation, the conservator or receiver shall be—

14 ‘‘(A) the Farm Credit Administration or

15 any other governmental entity or employee, in16 cluding the Farm Credit System Insurance Cor17 poration; or

18 ‘‘(B) any person that—

19 ‘‘(i) has no claim against, or financial

20 interest in, the Corporation or other basis

21 for a conflict of interest as the conservator

22 or receiver; and

23 ‘‘(ii) has the financial and manage24 ment expertise necessary to direct the oper-
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1 ations and affairs of the Corporation and,

2 if necessary, to liquidate the Corporation.

3 ‘‘(2) COMPENSATION.—

4 ‘‘(A) IN GENERAL.—A conservator or re5 ceiver for the Corporation and professional per6 sonnel (other than a Federal employee) employed

7 to represent or assist the conservator or receiver

8 may be compensated for activities conducted as,

9 or for, a conservator or receiver.

10 ‘‘(B) LIMIT ON COMPENSATION.—Com11 pensation may not be provided in amounts

12 greater than the compensation paid to employees

13 of the Federal Government for similar services,

14 except that the Farm Credit Administration may

15 provide for compensation at higher rates that are

16 not in excess of rates prevailing in the private

17 sector if the Farm Credit Administration deter18 mines that compensation at higher rates is nec19 essary in order to recruit and retain competent

20 personnel.

21 ‘‘(C) CONTRACTUAL ARRANGEMENTS.—The

22 conservator or receiver may contract with any

23 governmental entity, including the Farm Credit

24 System Insurance Corporation, to make person25 nel, services, and facilities of the entity available
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1 to the conservator or receiver on such terms and

2 compensation arrangements as shall be mutually

3 agreed, and each entity may provide the same to

4 the conservator or receiver.

5 ‘‘(3) EXPENSES.—A valid claim for expenses of

6 the conservatorship or receivership (including com7 pensation under paragraph (2)) and a valid claim

8 with respect to a loan made under subsection (f)

9 shall—

10 ‘‘(A) be paid by the conservator or receiver

11 from funds of the Corporation before any other

12 valid claim against the Corporation; and

13 ‘‘(B) may be secured by a lien, on such

14 property of the Corporation as the conservator or

15 receiver may determine, that shall have priority

16 over any other lien.

17 ‘‘(4) LIABILITY.—If the conservator or receiver

18 for the Corporation is not a Federal entity, or an offi19 cer or employee of the Federal Government, the con20 servator or receiver shall not be personally liable for

21 damages in tort or otherwise for an act or omission

22 performed pursuant to and in the course of the

23 conservatorship or receivership, unless the act or

24 omission constitutes gross negligence or any form of

25 intentional tortious conduct or criminal conduct.
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1 ‘‘(5) INDEMNIFICATION.—The Farm Credit Ad2 ministration may allow indemnification of the con3 servator or receiver from the assets of the

4 conservatorship or receivership on such terms as the

5 Farm Credit Administration considers appropriate.

6 ‘‘(d) JUDICIAL REVIEW OF APPOINTMENT.—

7 ‘‘(1) IN GENERAL.—Notwithstanding subsection

8 (i)(1), not later than 30 days after a conservator or

9 receiver is appointed under subsection (b), the Cor10 poration may bring an action in the United States

11 District Court for the District of Columbia for an

12 order requiring the Farm Credit Administration

13 Board to remove the conservator or receiver. The court

14 shall, on the merits, dismiss the action or direct the

15 Farm Credit Administration Board to remove the

16 conservator or receiver.

17 ‘‘(2) STAY OF OTHER ACTIONS.—On the com18 mencement of an action under paragraph (1), any

19 court having jurisdiction of any other action or en20 forcement proceeding authorized under this subtitle to

21 which the Corporation is a party shall stay the action

22 or proceeding during the pendency of the action for

23 removal of the conservator or receiver.

24 ‘‘(e) GENERAL POWERS OF CONSERVATOR OR RE25 CEIVER.—The conservator or receiver for the Corporation
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1 shall have powers comparable to the powers available to a

2 conservator or receiver appointed pursuant to section

3 4.12(b).

4 ‘‘(f) BORROWINGS FOR WORKING CAPITAL.—

5 ‘‘(1) IN GENERAL.—If the conservator or receiver

6 of the Corporation determines that it is likely that

7 there will be insufficient funds to pay the ongoing ad8 ministrative expenses of the conservatorship or receiv9 ership or that there will be insufficient liquidity to

10 fund maturing obligations of the conservatorship or

11 receivership, the conservator or receiver may borrow

12 funds in such amounts, from such sources, and at

13 such rates of interest as the conservator or receiver

14 considers necessary or appropriate to meet the admin15 istrative expenses or liquidity needs of the

16 conservatorship or receivership.

17 ‘‘(2) WORKING CAPITAL FROM FARM CREDIT

18 BANKS.—A Farm Credit bank may loan funds to the

19 conservator or receiver for a loan authorized under

20 paragraph (1) or, in the event of receivership, a Farm

21 Credit bank may purchase assets of the Corporation.

22 ‘‘(g) AGREEMENTS AGAINST INTERESTS OF CON23 SERVATOR OR RECEIVER.—No agreement that tends to di24 minish or defeat the right, title, or interest of the conserva25 tor or receiver for the Corporation in any asset acquired
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1 by the conservator or receiver as conservator or receiver for

2 the Corporation shall be valid against the conservator or

3 receiver unless the agreement—

4 ‘‘(1) is in writing;

5 ‘‘(2) is executed by the Corporation and any per6 son claiming an adverse interest under the agreement,

7 including the obligor, contemporaneously with the ac8 quisition of the asset by the Corporation;

9 ‘‘(3) is approved by the Board or an appropriate

10 committee of the Board, which approval shall be re11 flected in the minutes of the Board or committee; and

12 ‘‘(4) has been, continuously, from the time of the

13 agreement’s execution, an official record of the Cor14 poration.

15 ‘‘(h) REPORT TO THE CONGRESS.—On a determina16 tion by the receiver for the Corporation that there are insuf17 ficient assets of the receivership to pay all valid claims

18 against the receivership, the receiver shall submit to the Sec19 retary of the Treasury, the Committee on Agriculture of the

20 House of Representatives, and the Committee on Agri21 culture, Nutrition, and Forestry of the Senate a report on

22 the financial condition of the receivership.

23 ‘‘(i) TERMINATION OF AUTHORITIES.—

24 ‘‘(1) CORPORATION.—The charter of the Corpora25 tion shall be canceled, and the authority provided to
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1 the Corporation by this title shall terminate, on such

2 date as the Farm Credit Administration Board deter3 mines is appropriate following the placement of the

4 Corporation in receivership, but not later than the

5 conclusion of the receivership and discharge of the re6 ceiver.

7 ‘‘(2) OVERSIGHT.—The Office of Secondary Mar8 ket Oversight established under section 8.11 shall be

9 abolished, and section 8.11(a) and subtitle B shall

10 have no force or effect, on such date as the Farm

11 Credit Administration Board determines is appro12 priate following the placement of the Corporation in

13 receivership, but not later than the conclusion of the

14 receivership and discharge of the receiver.’’.

15 TITLE II—REGULATORY RELIEF

16 SEC. 201. COMPENSATION OF ASSOCIATION PERSONNEL.

17 Section 1.5(13) of the Farm Credit Act of 1971 (12

18 U.S.C. 2013(13)) is amended by striking ‘‘, and the ap19 pointment and compensation of the chief executive officer

20 thereof,’’.

21 SEC. 202. USE OF PRIVATE MORTGAGE INSURANCE.

22 (a) IN GENERAL.—Section 1.10(a)(1) of the Farm

23 Credit Act of 1971 (12 U.S.C. 2018(a)(1)) is amended by

24 adding at the end the following:
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1 ‘‘(D) PRIVATE MORTGAGE INSURANCE.—A

2 loan on which private mortgage insurance is ob3 tained may exceed 85 percent of the appraised

4 value of the real estate security to the extent that

5 the loan amount in excess of 85 percent is cov6 ered by the insurance.’’.

7 (b) CONFORMING AMENDMENT.—Section 1.10(a)(1)(A)

8 of the Farm Credit Act of 1971 (12 U.S.C. 2018(a)(1)(A))

9 is amended by striking ‘‘paragraphs (2) and (3)’’ and in10 serting ‘‘subparagraphs (B), (C), and (D)’’.

11 SEC. 203. REMOVAL OF CERTAIN BORROWER REPORTING

12 REQUIREMENT.

13 Section 1.10(a) of the Farm Credit Act of 1971 (12

14 U.S.C. 2018(a)) is amended by striking paragraph (5).

15 SEC. 204. REFORM OF REGULATORY LIMITATIONS ON DIVI16 DEND, MEMBER BUSINESS, AND VOTING

17 PRACTICES OF ELIGIBLE FARMER-OWNED CO18 OPERATIVES.

19 (a) IN GENERAL.—Section 3.8(a) of the Farm Credit

20 Act of 1971 (12 U.S.C. 2129(a)) is amended by adding at

21 the end the following: ‘‘Any such association that has re22 ceived a loan from a bank for cooperatives shall, without

23 regard to the requirements of paragraphs (1) through (4),

24 continue to be eligible for so long as more than 50 percent

25 (or such higher percentage as is established by the bank
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1 board) of the voting control of the association is held by

2 farmers, producers or harvesters of aquatic products, or eli3 gible cooperative associations.’’.

4 (b) CONFORMING AMENDMENT.—Section 3.8(b)(1)(D)

5 of the Farm Credit Act of 1971 (12 U.S.C. 2129(b)(1)(D))

6 is amended by striking ‘‘and (4) of subsection (a)’’ and in7 serting ‘‘and (4), or under the last sentence, of subsection

8 (a)’’.

9 SEC. 205. REMOVAL OF FEDERAL GOVERNMENT CERTIFI10 CATION REQUIREMENT FOR CERTAIN PRI11 VATE SECTOR FINANCINGS.

12 Section 3.8(b)(1)(A) of the Farm Credit Act of 1971

13 (12 U.S.C. 2129(b)(1)(A)) is amended—

14 (1) by striking ‘‘have been certified by the Ad15 ministrator of the Rural Electrification Administra16 tion to be eligible for such’’ and inserting ‘‘are eligible

17 under the Rural Electrification Act of 1936 (7 U.S.C.

18 901 et seq.) for’’; and

19 (2) by striking ‘‘loan guarantee, and’’ and in20 serting ‘‘loan guarantee from the Administration or

21 the Bank (or a successor of the Administration or the

22 Bank), and’’.

23 SEC. 206. BORROWER STOCK.

24 Section 4.3A of the Farm Credit Act of 1971 (12

25 U.S.C. 2154a) is amended—
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1 (1) by redesignating subsections (f) and (g) as

2 subsections (g) and (h), respectively; and

3 (2) by inserting after subsection (e) the following:

4 ‘‘(f) LOANS DESIGNATED FOR SALE OR SOLD INTO

5 THE SECONDARY MARKET.—

6 ‘‘(1) IN GENERAL.—Subject to paragraph (2)

7 and notwithstanding any other provision of this sec8 tion, the bylaws adopted by a bank or association

9 under subsection (b) may provide—

10 ‘‘(A) in the case of a loan made on or after

11 the date of enactment of this paragraph that is

12 designated, at the time the loan is made, for sale

13 into a secondary market, that no voting stock or

14 participation certificate purchase requirement

15 shall apply to the borrower for the loan; and

16 ‘‘(B) in the case of a loan made before the

17 date of enactment of this paragraph that is sold

18 into a secondary market, that all outstanding

19 voting stock or participation certificates held by

20 the borrower with respect to the loan shall, sub21 ject to subsection (d)(1), be retired.

22 ‘‘(2) APPLICABILITY.—Notwithstanding any

23 other provision of this section, in the case of a loan

24 sold to a secondary market under title VIII, para25 graph (1) shall apply regardless of whether the bank
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1 or association retains a subordinated participation

2 interest in a loan or pool of loans or contributes to

3 a cash reserve.

4 ‘‘(3) EXCEPTION.—

5 ‘‘(A) IN GENERAL.—Subject to subpara6 graph (B) and notwithstanding any other provi7 sion of this section, if a loan designated for sale

8 under paragraph (1)(A) is not sold into a sec9 ondary market during the 180-day period that

10 begins on the date of the designation, the voting

11 stock or participation certificate purchase re12 quirement that would otherwise apply to the

13 loan in the absence of a bylaw provision de14 scribed in paragraph (1)(A) shall be effective.

15 ‘‘(B) RETIREMENT.—The bylaws adopted by

16 a bank or association under subsection (b) may

17 provide that if a loan described in subparagraph

18 (A) is sold into a secondary market after the end

19 of the 180-day period described in the subpara20 graph, all outstanding voting stock or participa21 tion certificates held by the borrower with respect

22 to the loan shall, subject to subsection (d)(1), be

23 retired.’’.
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1 SEC. 207. DISCLOSURE RELATING TO ADJUSTABLE RATE

2 LOANS.

3 Section 4.13(a)(4) of the Farm Credit Act of 1971 (12

4 U.S.C. 2199(a)(4)) is amended by inserting before the semi5 colon at the end the following: ‘‘, and notice to the borrower

6 of a change in the interest rate applicable to the loan of

7 the borrower may be made within a reasonable time after

8 the effective date of an increase or decrease in the interest

9 rate’’.

10 SEC. 208. BORROWERS’ RIGHTS.

11 (a) DEFINITION OF LOAN.—Section 4.14A(a)(5) of the

12 Farm Credit Act of 1971 (12 U.S.C. 2202a(a)(5)) is amend13 ed—

14 (1) by striking ‘‘(5) LOAN.—The’’ and inserting

15 the following:

16 ‘‘(5) LOAN.—

17 ‘‘(A) IN GENERAL.—Subject to subpara18 graph (B), the’’; and

19 (2) by adding at the end the following:

20 ‘‘(B) EXCLUSION FOR LOANS DESIGNATED

21 FOR SALE INTO SECONDARY MARKET.—

22 ‘‘(i) IN GENERAL.—Except as provided

23 in clause (ii), the term ‘loan’ does not in24 clude a loan made on or after the date of

25 enactment of this subparagraph that is des-
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1 ignated, at the time the loan is made, for

2 sale into a secondary market.

3 ‘‘(ii) UNSOLD LOANS.—

4 ‘‘(I) IN GENERAL.—Except as pro5 vided in subclause (II), if a loan des6 ignated for sale under clause (i) is not

7 sold into a secondary market during

8 the 180-day period that begins on the

9 date of the designation, the provisions

10 of this section and sections 4.14, 4.14B,

11 4.14C, 4.14D, and 4.36 that would oth12 erwise apply to the loan in the absence

13 of the exclusion described in clause (i)

14 shall become effective with respect to

15 the loan.

16 ‘‘(II) LATER SALE.—If a loan de17 scribed in subclause (I) is sold into a

18 secondary market after the end of the

19 180-day period described in subclause

20 (I), subclause (I) shall not apply with

21 respect to the loan beginning on the

22 date of the sale.’’.

23 (b) BORROWERS’ RIGHTS FOR POOLED LOANS.—The

24 first sentence of section 8.9(b) of the Farm Credit Act of

25 1971 (12 U.S.C. 2279aa–9(b)) is amended by inserting ‘‘(as
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1 defined in section 4.14A(a)(5))’’ after ‘‘application for a

2 loan’’.

3 SEC. 209. FORMATION OF ADMINISTRATIVE SERVICE ENTI4 TIES.

5 Part E of title IV of the Farm Credit Act of 1971 is

6 amended by inserting after section 4.28 (12 U.S.C. 2214)

7 the following:

8 ‘‘SEC. 4.28A. DEFINITION OF BANK.

9 ‘‘In this part, the term ‘bank’ includes each association

10 operating under title II.’’.

11 SEC. 210. JOINT MANAGEMENT AGREEMENTS.

12 The first sentence of section 5.17(a)(2)(A) of the Farm

13 Credit Act of 1971 (12 U.S.C. 2252(a)(2)(A)) is amended

14 by striking ‘‘or management agreements’’.

15 SEC. 211. DISSEMINATION OF QUARTERLY REPORTS.

16 Section 5.17(a)(8) of the Farm Credit Act of 1971 (12

17 U.S.C. 2252(a)(8)) is amended by inserting after ‘‘except

18 that’’ the following: ‘‘the requirements of the Farm Credit

19 Administration governing the dissemination to stockholders

20 of quarterly reports of System institutions may not be more

21 burdensome or costly than the requirements applicable to

22 national banks, and’’.

23 SEC. 212. REGULATORY REVIEW.

24 (a) FINDINGS.—Congress finds that—
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1 (1) the Farm Credit Administration, in the role

2 of the Administration as an arms-length safety and

3 soundness regulator, has made considerable progress

4 in reducing the regulatory burden on Farm Credit

5 System institutions;

6 (2) the efforts of the Farm Credit Administration

7 described in paragraph (1) have resulted in cost sav8 ings for Farm Credit System institutions; and

9 (3) the cost savings described in paragraph (2)

10 ultimately benefit the farmers, ranchers, agricultural

11 cooperatives, and rural residents of the United States.

12 (b) CONTINUATION OF REGULATORY REVIEW.—The

13 Farm Credit Administration shall continue the comprehen14 sive review of regulations governing the Farm Credit Sys15 tem to identify and eliminate, consistent with law, safety,

16 and soundness, all regulations that are unnecessary, unduly

17 burdensome or costly, or not based on law.

18 SEC. 213. EXAMINATION OF FARM CREDIT SYSTEM INSTITU19 TIONS.

20 The first sentence of section 5.19(a) of the Farm Credit

21 Act of 1971 (12 U.S.C. 2254(a)) is amended by striking

22 ‘‘each year’’ and inserting ‘‘during each 18-month period’’.

23 SEC. 214. CONSERVATORSHIPS AND RECEIVERSHIPS.

24 (a) DEFINITIONS.—Section 5.51 of the Farm Credit

25 Act of 1971 (12 U.S.C. 2277a) is amended—
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1 (1) by striking paragraph (5); and

2 (2) by redesignating paragraph (6) as para3 graph (5).

4 (b) GENERAL CORPORATE POWERS.—Section 5.58 of

5 the Farm Credit Act of 1971 (12 U.S.C. 2277a–7) is amend6 ed by striking paragraph (9) and inserting the following:

7 ‘‘(9) CONSERVATOR OR RECEIVER.—The Cor8 poration may act as a conservator or receiver.’’.

9 SEC. 215. FARM CREDIT INSURANCE FUND OPERATIONS.

10 (a) ADJUSTMENT OF PREMIUMS.—

11 (1) IN GENERAL.—Section 5.55(a) of the Farm

12 Credit Act of 1971 (12 U.S.C. 2277a–4(a)) is amend13 ed—

14 (A) in paragraph (1), by striking ‘‘Until

15 the aggregate of amounts in the Farm Credit In16 surance Fund exceeds the secure base amount,

17 the annual premium due from any insured Sys18 tem bank for any calendar year’’ and inserting

19 the following: ‘‘If at the end of any calendar year

20 the aggregate of amounts in the Farm Credit In21 surance Fund does not exceed the secure base

22 amount, subject to paragraph (2), the annual

23 premium due from any insured System bank for

24 the calendar year’’;
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1 (B) by redesignating paragraph (2) as

2 paragraph (3); and

3 (C) by inserting after paragraph (1) the fol4 lowing:

5 ‘‘(2) REDUCED PREMIUMS.—The Corporation, in

6 the sole discretion of the Corporation, may reduce by

7 a percentage uniformly applied to all insured System

8 banks the annual premium due from each insured

9 System bank during any calendar year, as deter10 mined under paragraph (1).’’.

11 (2) CONFORMING AMENDMENTS.—

12 (A) Section 5.55(b) of the Farm Credit Act

13 of 1971 (12 U.S.C. 2277a–4(b)) is amended—

14 (i) by striking ‘‘Insurance Fund’’ each

15 place it appears and inserting ‘‘Farm Cred16 it Insurance Fund’’;

17 (ii) by striking ‘‘for the following cal18 endar year’’; and

19 (iii) by striking ‘‘subsection (a)’’ and

20 inserting ‘‘subsection (a)(1)’’.

21 (B) Section 5.56(a) of the Farm Credit Act

22 of 1971 (12 U.S.C. 2277a–5(a)) is amended by

23 striking ‘‘section 5.55(a)(2)’’ each place it ap24 pears in paragraphs (2) and (3) and inserting

25 ‘‘section 5.55(a)(3)’’.
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1 (b) ALLOCATION TO INSURED SYSTEM BANKS AND

2 OTHER SYSTEM INSTITUTIONS OF EXCESS AMOUNTS IN

3 THE FARM CREDIT INSURANCE FUND.—Section 5.55 of the

4 Farm Credit Act of 1971 (12 U.S.C. 2277a–4) is amended

5 by adding at the end the following:

6 ‘‘(e) ALLOCATION TO SYSTEM INSTITUTIONS OF EX7 CESS RESERVES.—

8 ‘‘(1) ESTABLISHMENT OF ALLOCATED INSURANCE

9 RESERVES ACCOUNTS.—The Corporation shall estab10 lish an Allocated Insurance Reserves Account in the

11 Farm Credit Insurance Fund—

12 ‘‘(A) for each insured System bank; and

13 ‘‘(B) subject to paragraph (6)(C), for all

14 holders, in the aggregate, of Financial Assistance

15 Corporation stock.

16 ‘‘(2) TREATMENT.—Amounts in any Allocated

17 Insurance Reserves Account shall be considered to be

18 part of the Farm Credit Insurance Fund.

19 ‘‘(3) ANNUAL ALLOCATIONS.—If, at the end of

20 any calendar year, the aggregate of the amounts in

21 the Farm Credit Insurance Fund exceeds the average

22 secure base amount for the calendar year (as cal23 culated on an average daily balance basis), the Cor24 poration shall allocate to the Allocated Insurance Re25 serves Accounts the excess amount less the amount
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1 that the Corporation, in its sole discretion, determines

2 to be the sum of the estimated operating expenses and

3 estimated insurance obligations of the Corporation for

4 the immediately succeeding calendar year.

5 ‘‘(4) ALLOCATION FORMULA.—From the total

6 amount required to be allocated at the end of a cal7 endar year under paragraph (3)—

8 ‘‘(A) 10 percent of the total amount shall be

9 credited to the Allocated Insurance Reserves Ac10 count established under paragraph (1)(B), sub11 ject to paragraph (6)(C); and

12 ‘‘(B) there shall be credited to the Allocated

13 Insurance Reserves Account of each insured Sys14 tem bank an amount that bears the same ratio

15 to the total amount (less any amount credited

16 under subparagraph (A)) as the average prin17 cipal outstanding for the 3-year period ending

18 on the end of the calendar year on loans made

19 by the bank that are in accrual status bears to

20 the average principal outstanding for the 3-year

21 period ending on the end of the calendar year on

22 loans made by all insured System banks that are

23 in accrual status (excluding, in each case, the

24 guaranteed portions of government-guaranteed

25 loans described in subsection (a)(1)(C)).
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1 ‘‘(5) USE OF FUNDS IN ALLOCATED INSURANCE

2 RESERVES ACCOUNTS.—To the extent that the sum of

3 the operating expenses of the Corporation and the in4 surance obligations of the Corporation for a calendar

5 year exceeds the sum of operating expenses and insur6 ance obligations determined under paragraph (3) for

7 the calendar year, the Corporation shall cover the ex8 penses and obligations by—

9 ‘‘(A) reducing each Allocated Insurance Re10 serves Account by the same proportion; and

11 ‘‘(B) expending the amounts obtained under

12 subparagraph (A) before expending other

13 amounts in the Fund.

14 ‘‘(6) OTHER DISPOSITION OF ACCOUNT FUNDS.—

15 ‘‘(A) IN GENERAL.—As soon as practicable

16 during each calendar year beginning more than

17 8 years after the date on which the aggregate of

18 the amounts in the Farm Credit Insurance Fund

19 exceeds the secure base amount, but not earlier

20 than January 1, 2005, the Corporation may—

21 ‘‘(i) subject to subparagraphs (D) and

22 (F), pay to each insured System bank, in a

23 manner determined by the Corporation, an

24 amount equal to the lesser of—
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1 ‘‘(I) 20 percent of the balance in

2 the insured System bank’s Allocated

3 Insurance Reserves Account as of the

4 preceding December 31; or

5 ‘‘(II) 20 percent of the balance in

6 the bank’s Allocated Insurance Reserves

7 Account on the date of the payment;

8 and

9 ‘‘(ii) subject to subparagraphs (C), (E),

10 and (F), pay to each System bank and asso11 ciation holding Financial Assistance Cor12 poration stock a proportionate share, deter13 mined by dividing the number of shares of

14 Financial Assistance Corporation stock held

15 by the institution by the total number of

16 shares of Financial Assistance Corporation

17 stock outstanding, of the lesser of—

18 ‘‘(I) 20 percent of the balance in

19 the Allocated Insurance Reserves Ac20 count established under paragraph

21 (1)(B) as of the preceding December

22 31; or

23 ‘‘(II) 20 percent of the balance in

24 the Allocated Insurance Reserves Ac-
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1 count established under paragraph

2 (1)(B) on the date of the payment.

3 ‘‘(B) AUTHORITY TO ELIMINATE OR REDUCE

4 PAYMENTS.—The Corporation may eliminate or

5 reduce payments during a calendar year under

6 subparagraph (A) if the Corporation determines,

7 in its sole discretion, that the payments, or other

8 circumstances that might require use of the

9 Farm Credit Insurance Fund, could cause the

10 amount in the Farm Credit Insurance Fund

11 during the calendar year to be less than the se12 cure base amount.

13 ‘‘(C) REIMBURSEMENT FOR FINANCIAL AS14 SISTANCE CORPORATION STOCK.—

15 ‘‘(i) SUFFICIENT FUNDING.—Notwith16 standing paragraph (4)(A), on provision by

17 the Corporation for the accumulation in the

18 Account established under paragraph (1)(B)

19 of funds in an amount equal to $56,000,000

20 (in addition to the amounts described in

21 subparagraph (F)(ii)), the Corporation

22 shall not allocate any further funds to the

23 Account except to replenish the Account if

24 funds are diminished below $56,000,000 by

25 the Corporation under paragraph (5).
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1 ‘‘(ii) WIND DOWN AND TERMINATION.—

2 ‘‘(I) FINAL DISBURSEMENTS.—On

3 disbursement of $53,000,000 (in addi4 tion to the amounts described in sub5 paragraph (F)(ii)) from the Allocated

6 Insurance Reserves Account, the Cor7 poration shall disburse the remaining

8 amounts in the Account, as determined

9 under subparagraph (A)(ii), without

10 regard to the percentage limitations in

11 subclauses (I) and (II) of subpara12 graph (A)(ii).

13 ‘‘(II) TERMINATION OF AC14 COUNT.—On disbursement of

15 $56,000,000 (in addition to the

16 amounts described in subparagraph

17 (F)(ii)) from the Allocated Insurance

18 Reserves Account, the Corporation shall

19 close the Account established under

20 paragraph (1)(B) and transfer any re21 maining funds in the Account to the

22 remaining Allocated Insurance Re23 serves Accounts in accordance with

24 paragraph (4)(B) for the calendar year

25 in which the transfer occurs.
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1 ‘‘(D) DISTRIBUTION OF PAYMENTS RE2 CEIVED.—Not later than 60 days after receipt of

3 a payment made under subparagraph (A)(i),

4 each insured System bank, in consultation with

5 affiliated associations of the insured System

6 bank, and taking into account the direct or indi7 rect payment of insurance premiums by the asso8 ciations, shall develop and implement an equi9 table plan to distribute payments received under

10 subparagraph (A)(i) among the bank and asso11 ciations of the bank.

12 ‘‘(E) EXCEPTION FOR PREVIOUSLY REIM13 BURSED ASSOCIATIONS.—For purposes of sub14 paragraph (A)(ii), in any Farm Credit district

15 in which the funding bank has reimbursed 1 or

16 more affiliated associations of the bank for the

17 previously unreimbursed portion of the Finan18 cial Assistance Corporation stock held by the as19 sociations, the funding bank shall be deemed to

20 be the holder of the shares of Financial Assist21 ance Corporation stock for which the funding

22 bank has provided the reimbursement.

23 ‘‘(F) INITIAL PAYMENT.—Notwithstanding

24 subparagraph (A), the initial payment made to

25 each payee under subparagraph (A) shall be in
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1 such amount determined by the Corporation to

2 be equal to the sum of—

3 ‘‘(i) the total of the amounts that

4 would have been paid if payments under

5 subparagraph (A) had been authorized to

6 begin, under the same terms and conditions,

7 in the first calendar year beginning more

8 than 5 years after the date on which the ag9 gregate of the amounts in the Farm Credit

10 Insurance Fund exceeds the secure base

11 amount and to continue through the 2 im12 mediately subsequent years;

13 ‘‘(ii) interest earned on any amounts

14 that would have been paid as described in

15 clause (i) from the date on which the pay16 ments would have been paid as described in

17 clause (i); and

18 ‘‘(iii) the payment to be made in the

19 initial year described in subparagraph (A),

20 based on the amount in each Account after

21 subtracting the amounts to be paid under

22 clauses (i) and (ii).’’.

23 (c) TECHNICAL AMENDMENTS.—Section 5.55(d) of the

24 Farm Credit Act of 1971 (12 U.S.C. 2277a–4(d)) is amend25 ed—
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1 (1) in the matter preceding paragraph (1)—

2 (A) by striking ‘‘subsections (a) and (c)’’

3 and inserting ‘‘subsections (a), (c), and (e)’’; and

4 (B) by striking ‘‘a Farm Credit Bank’’ and

5 inserting ‘‘an insured System bank’’; and

6 (2) in paragraphs (1), (2), and (3), by striking

7 ‘‘Farm Credit Bank’’ each place it appears and in8 serting ‘‘insured System bank’’.

9 SEC. 216. EXAMINATIONS BY THE FARM CREDIT SYSTEM IN10 SURANCE CORPORATION.

11 Section 5.59(b)(1)(A) of the Farm Credit Act of 1971

12 (12 U.S.C. 2277a–8(b)(1)(A)) is amended by adding at the

13 end the following: ‘‘Notwithstanding any other provision of

14 this Act, on cancellation of the charter of a System institu15 tion, the Corporation shall have authority to examine the

16 system institution in receivership. An examination shall be

17 performed at such intervals as the Corporation shall deter18 mine.’’.

19 SEC. 217. POWERS WITH RESPECT TO TROUBLED INSURED

20 SYSTEM BANKS.

21 (a) LEAST-COST RESOLUTION.—Section 5.61(a)(3) of

22 the Farm Credit Act of 1971 (12 U.S.C. 2277a–10(a)) is

23 amended—

24 (1) by redesignating subparagraph (B) as sub25 paragraph (F); and
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1 (2) by striking subparagraph (A) and inserting

2 the following:

3 ‘‘(A) LEAST-COST RESOLUTION.—Assistance

4 may not be provided to an insured System bank

5 under this subsection unless the means of provid6 ing the assistance is the least costly means of

7 providing the assistance by the Farm Credit In8 surance Fund of all possible alternatives avail9 able to the Corporation, including liquidation of

10 the bank (including paying the insured obliga11 tions issued on behalf of the bank). Before mak12 ing a least-cost determination under this sub13 paragraph, the Corporation shall accord such

14 other insured System banks as the Corporation

15 determines to be appropriate the opportunity to

16 submit information relating to the determina17 tion.

18 ‘‘(B) DETERMINING LEAST COSTLY AP19 PROACH.—In determining the least costly alter20 native under subparagraph (A), the Corporation

21 shall—

22 ‘‘(i) evaluate alternatives on a present23 value basis, using a realistic discount rate;

24 ‘‘(ii) document the evaluation and the

25 assumptions on which the evaluation is
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1 based, including any assumptions with re2 gard to interest rates, asset recovery rates,

3 asset holding costs, and payment of contin4 gent liabilities; and

5 ‘‘(iii) retain the documentation for not

6 less than 5 years.

7 ‘‘(C) TIME OF DETERMINATION.—

8 ‘‘(i) GENERAL RULE.—For purposes of

9 this subsection, the determination of the

10 costs of providing any assistance under any

11 provision of this section with respect to any

12 insured System bank shall be made as of the

13 date on which the Corporation makes the

14 determination to provide the assistance to

15 the institution under this section.

16 ‘‘(ii) RULE FOR LIQUIDATIONS.—For

17 purposes of this subsection, the determina18 tion of the costs of liquidation of any in19 sured System bank shall be made as of the

20 earliest of—

21 ‘‘(I) the date on which a conserva22 tor is appointed for the insured System

23 bank;
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1 ‘‘(II) the date on which a receiver

2 is appointed for the insured System

3 bank; or

4 ‘‘(III) the date on which the Cor5 poration makes any determination to

6 provide any assistance under this sec7 tion with respect to the insured System

8 bank.

9 ‘‘(D) RULE FOR STAND-ALONE ASSIST10 ANCE.—Before providing any assistance under

11 paragraph (1), the Corporation shall evaluate

12 the adequacy of managerial resources of the in13 sured System bank. The continued service of any

14 director or senior ranking officer who serves in

15 a policymaking role for the assisted insured Sys16 tem bank, as determined by the Corporation,

17 shall be subject to approval by the Corporation

18 as a condition of assistance.

19 ‘‘(E) DISCRETIONARY DETERMINATIONS.—

20 Any determination that the Corporation makes

21 under this paragraph shall be in the sole discre22 tion of the Corporation.’’.

23 (b) CONFORMING AMENDMENTS.—Section 5.61(a) of

24 the Farm Credit Act of 1971 (12 U.S.C. 2277a–10(a)) is

25 amended—
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1 (1) in paragraph (1) by striking ‘‘IN GEN2 ERAL.—’’ and inserting ‘‘STAND-ALONE ASSIST3 ANCE.—’’; and

4 (2) in paragraph (2)—

5 (A) by striking ‘‘ENUMERATED POWERS.—’’

6 and inserting ‘‘FACILITATION OF MERGERS OR

7 CONSOLIDATION.—’’; and

8 (B) in subparagraph (A) by striking ‘‘FA9 CILITATION OF MERGERS OR CONSOLIDATION.—’’

10 and inserting ‘‘IN GENERAL.—’’.

11 SEC. 218. OVERSIGHT AND REGULATORY ACTIONS BY THE

12 FARM CREDIT SYSTEM INSURANCE CORPORA13 TION.

14 The Farm Credit Act of 1971 is amended by inserting

15 after section 5.61 (12 U.S.C. 2279a–10) the following:

16 ‘‘SEC. 5.61A. OVERSIGHT ACTIONS BY THE CORPORATION.

17 ‘‘(a) DEFINITIONS.—In this section, the term ‘institu18 tion’ means—

19 ‘‘(1) an insured System bank; and

20 ‘‘(2) a production credit association or other as21 sociation making loans under section 7.6 with a di22 rect loan payable to the funding bank of the associa23 tion that comprises 20 percent or more of the funding

24 bank’s total loan volume net of nonaccrual loans.
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1 ‘‘(b) CONSULTATION REGARDING PARTICIPATION OF

2 UNDERCAPITALIZED BANKS IN ISSUANCE OF INSURED OB3 LIGATIONS.—The Farm Credit Administration shall consult

4 with the Corporation prior to approving an insured obliga5 tion that is to be issued by or on behalf of, or participated

6 in by, any insured System bank that fails to meet the mini7 mum level for any capital requirement established by the

8 Farm Credit Administration for the bank.

9 ‘‘(c) CONSULTATION REGARDING APPLICATIONS FOR

10 MERGERS AND RESTRUCTURINGS.—

11 ‘‘(1) CORPORATION TO RECEIVE COPY OF TRANS12 ACTION APPLICATIONS.—On receiving an application

13 for a merger or restructuring of an institution, the

14 Farm Credit Administration shall forward a copy of

15 the application to the Corporation.

16 ‘‘(2) CONSULTATION REQUIRED.—If the proposed

17 merger or restructuring involves an institution that

18 fails to meet the minimum level for any capital re19 quirement established by the Farm Credit Adminis20 tration applicable to the institution, the Farm Credit

21 Administration shall allow 30 days within which the

22 Corporation may submit the views and recommenda23 tions of the Corporation, including any conditions for

24 approval. In determining whether to approve or dis25 approve any proposed merger or restructuring, the
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1 Farm Credit Administration shall give due consider2 ation to the views and recommendations of the Cor3 poration.

4 ‘‘SEC. 5.61B. AUTHORITY TO REGULATE GOLDEN PARA5 CHUTE AND INDEMNIFICATION PAYMENTS.

6 ‘‘(a) DEFINITIONS.—In this section:

7 ‘‘(1) GOLDEN PARACHUTE PAYMENT.—The term

8 ‘golden parachute payment’—

9 ‘‘(A) means a payment (or any agreement

10 to make a payment) in the nature of compensa11 tion by any Farm Credit System institution (in12 cluding the Federal Agricultural Mortgage Cor13 poration and any conservator or receiver for the

14 Federal Agricultural Mortgage Corporation) for

15 the benefit of any institution-related party under

16 an obligation of the institution that—

17 ‘‘(i) is contingent on the termination of

18 the party’s relationship with the institution;

19 and

20 ‘‘(ii) is received on or after the date on

21 which—

22 ‘‘(I) the institution is insolvent;

23 ‘‘(II) a conservator or receiver is

24 appointed for the institution;
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1 ‘‘(III) the institution has been as2 signed by the Farm Credit Adminis3 tration a composite CAMEL rating of

4 4 or 5 under the Farm Credit Admin5 istration Rating System, or an equiva6 lent rating; or

7 ‘‘(IV) the Corporation otherwise

8 determines that the institution is in a

9 troubled condition (as defined in regu10 lations issued by the Corporation); and

11 ‘‘(B) includes a payment that would be a

12 golden parachute payment but for the fact that

13 the payment was made before the date referred to

14 in subparagraph (A)(ii) if the payment was

15 made in contemplation of the occurrence of an

16 event described in any subclause of subparagraph

17 (A); but

18 ‘‘(C) does not include—

19 ‘‘(i) a payment made under a retire20 ment plan that is qualified (or is intended

21 to be qualified) under section 401 of the In22 ternal Revenue Code of 1986 or other non23 discriminatory benefit plan;

24 ‘‘(ii) a payment made under a bona

25 fide supplemental executive retirement plan,
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1 deferred compensation plan, or other ar2 rangement that the Corporation determines,

3 by regulation or order, to be permissible; or

4 ‘‘(iii) a payment made by reason of the

5 death or disability of an institution-related

6 party.

7 ‘‘(2) INDEMNIFICATION PAYMENT.—The term ‘in8 demnification payment’ means a payment (or any

9 agreement to make a payment) by any Farm Credit

10 System institution for the benefit of any person who

11 is or was an institution-related party, to pay or re12 imburse the person for any liability or legal expense

13 with regard to any administrative proceeding or civil

14 action instituted by the Farm Credit Administration

15 that results in a final order under which the person—

16 ‘‘(A) is assessed a civil money penalty; or

17 ‘‘(B) is removed or prohibited from partici18 pating in the conduct of the affairs of the insti19 tution.

20 ‘‘(3) INSTITUTION-RELATED PARTY.—The term

21 ‘institution-related party’ means—

22 ‘‘(A) a director, officer, employee, or agent

23 for a Farm Credit System institution;

24 ‘‘(B) a stockholder (other than another

25 Farm Credit System institution), consultant,
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1 joint venture partner, or any other person deter2 mined by the Farm Credit Administration to be

3 a participant in the conduct of the affairs of a

4 Farm Credit System institution; and

5 ‘‘(C) an independent contractor (including

6 any attorney, appraiser, or accountant) that

7 knowingly or recklessly participates in any vio8 lation of any law or regulation, any breach of fi9 duciary duty, or any unsafe or unsound practice

10 that caused or is likely to cause more than a

11 minimal financial loss to, or a significant ad12 verse effect on, the Farm Credit System institu13 tion.

14 ‘‘(4) LIABILITY OR LEGAL EXPENSE.—The term

15 ‘liability or legal expense’ means—

16 ‘‘(A) a legal or other professional expense

17 incurred in connection with any claim, proceed18 ing, or action;

19 ‘‘(B) the amount of, and any cost incurred

20 in connection with, any settlement of any claim,

21 proceeding, or action; and

22 ‘‘(C) the amount of, and any cost incurred

23 in connection with, any judgment or penalty im24 posed with respect to any claim, proceeding, or

25 action.
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1 ‘‘(5) PAYMENT.—The term ‘payment’ means—

2 ‘‘(A) a direct or indirect transfer of any

3 funds or any asset; and

4 ‘‘(B) any segregation of any funds or assets

5 for the purpose of making, or under an agree6 ment to make, any payment after the date on

7 which the funds or assets are segregated, without

8 regard to whether the obligation to make the

9 payment is contingent on—

10 ‘‘(i) the determination, after that date,

11 of the liability for the payment of the

12 amount; or

13 ‘‘(ii) the liquidation, after that date, of

14 the amount of the payment.

15 ‘‘(b) PROHIBITION.—The Corporation may prohibit or

16 limit, by regulation or order, any golden parachute pay17 ment or indemnification payment by a Farm Credit Sys18 tem institution (including the Federal Agricultural Mort19 gage Corporation) in troubled condition (as defined in regu20 lations issued by the Corporation).

21 ‘‘(c) FACTORS TO BE TAKEN INTO ACCOUNT.—The

22 Corporation shall prescribe, by regulation, the factors to be

23 considered by the Corporation in taking any action under

24 subsection (b). The factors may include—
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1 ‘‘(1) whether there is a reasonable basis to believe

2 that an institution-related party has committed any

3 fraudulent act or omission, breach of trust or fidu4 ciary duty, or insider abuse with regard to the Farm

5 Credit System institution involved that has had a

6 material effect on the financial condition of the insti7 tution;

8 ‘‘(2) whether there is a reasonable basis to believe

9 that the institution-related party is substantially re10 sponsible for the insolvency of the Farm Credit Sys11 tem institution, the appointment of a conservator or

12 receiver for the institution, or the institution’s trou13 bled condition (as defined in regulations prescribed by

14 the Corporation);

15 ‘‘(3) whether there is a reasonable basis to believe

16 that the institution-related party has materially vio17 lated any applicable law or regulation that has had

18 a material effect on the financial condition of the in19 stitution;

20 ‘‘(4) whether there is a reasonable basis to believe

21 that the institution-related party has violated or con22 spired to violate—

23 ‘‘(A) section 215, 657, 1006, 1014, or 1344

24 of title 18, United States Code; or
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1 ‘‘(B) section 1341 or 1343 of title 18, Unit2 ed States Code, affecting a Farm Credit System

3 institution;

4 ‘‘(5) whether the institution-related party was in

5 a position of managerial or fiduciary responsibility;

6 and

7 ‘‘(6) the length of time that the party was related

8 to the Farm Credit System institution and the degree

9 to which—

10 ‘‘(A) the payment reasonably reflects com11 pensation earned over the period of employment;

12 and

13 ‘‘(B) the compensation represents a reason14 able payment for services rendered.

15 ‘‘(d) CERTAIN PAYMENTS PROHIBITED.—No Farm

16 Credit System institution may prepay the salary or any

17 liability or legal expense of any institution-related party

18 if the payment is made—

19 ‘‘(1) in contemplation of the insolvency of the in20 stitution or after the commission of an act of insol21 vency; and

22 ‘‘(2) with a view to, or with the result of—

23 ‘‘(A) preventing the proper application of

24 the assets of the institution to creditors; or
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1 ‘‘(B) preferring 1 creditor over another

2 creditor.

3 ‘‘(e) RULE OF CONSTRUCTION.—Nothing in this sec4 tion—

5 ‘‘(1) prohibits any Farm Credit System institu6 tion from purchasing any commercial insurance pol7 icy or fidelity bond, so long as the insurance policy

8 or bond does not cover any legal or liability expense

9 of an institution described in subsection (a)(2); or

10 ‘‘(2) limits the powers, functions, or responsibil11 ities of the Farm Credit Administration.’’.

12 SEC. 219. FARM CREDIT SYSTEM INSURANCE CORPORATION

13 BOARD OF DIRECTORS.

14 Section 201 of the Farm Credit Banks and Associa15 tions Safety and Soundness Act of 1992 (106 Stat. 4104)

16 is repealed.

17 SEC. 220. INTEREST RATE REDUCTION PROGRAM.

18 Section 351(a) of the Consolidated Farm and Rural

19 Development Act (7 U.S.C. 1999) is amended—

20 (A) by striking ‘‘SEC. 351. (a) The’’ and in21 serting the following:

22 ‘‘SEC. 351. INTEREST RATE REDUCTION PROGRAM.

23 ‘‘(a) ESTABLISHMENT OF PROGRAM.—

24 ‘‘(1) IN GENERAL.—The’’; and

25 (B) by adding at the end the following:
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1 ‘‘(2) TERMINATION OF AUTHORITY.—The author2 ity provided by this subsection shall terminate on

3 September 30, 2002.’’.

4 SEC. 221. LIABILITY FOR MAKING CRIMINAL REFERRALS.

5 (a) IN GENERAL.—Any institution of the Farm Credit

6 System, or any director, officer, employee, or agent of a

7 Farm Credit System institution, that discloses to a Govern8 ment authority information proffered in good faith that

9 may be relevant to a possible violation of any law or regula10 tion shall not be liable to any person under any law of

11 the United States or any State—

12 (1) for the disclosure; or

13 (2) for any failure to notify the person involved

14 in the possible violation.

15 (b) NO PROHIBITION ON DISCLOSURE.—Any institu16 tion of the Farm Credit System, or any director, officer,

17 employee, or agent of a Farm Credit System institution,

18 may disclose information to a Government authority that

19 may be relevant to a possible violation of any law or regula20 tion.
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1 TITLE III—NATIONAL NATURAL

2 RESOURCES CONSERVATION

3 FOUNDATION

4 SEC. 301. SHORT TITLE.

5 This title may be cited as the ‘‘National Natural Re6 sources Conservation Foundation Act’’.

7 SEC. 302. DEFINITIONS.

8 In this title (unless the context otherwise requires):

9 (1) BOARD.—The term ‘‘Board’’ means the

10 Board of Trustees established under section 304.

11 (2) DEPARTMENT.—The term ‘‘Department’’

12 means the United States Department of Agriculture.

13 (3) FOUNDATION.—The term ‘‘Foundation’’

14 means the National Natural Resources Conservation

15 Foundation established by section 303(a).

16 (4) SECRETARY.—The term ‘‘Secretary’’ means

17 the Secretary of Agriculture.

18 SEC. 303. NATIONAL NATURAL RESOURCES CONSERVATION

19 FOUNDATION.

20 (a) ESTABLISHMENT.—A National Natural Resources

21 Conservation Foundation is established as a charitable and

22 nonprofit corporation for charitable, scientific, and edu23 cational purposes specified in subsection (b). The Founda24 tion is not an agency or instrumentality of the United

25 States.
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1 (b) PURPOSES.—The purposes of the Foundation are

2 to—

3 (1) promote innovative solutions to the problems

4 associated with the conservation of natural resources

5 on private lands, particularly with respect to agri6 culture and soil and water conservation;

7 (2) promote voluntary partnerships between gov8 ernment and private interests in the conservation of

9 natural resources;

10 (3) conduct research and undertake educational

11 activities, conduct and support demonstration

12 projects, and make grants to State and local agencies

13 and nonprofit organizations;

14 (4) provide such other leadership and support as

15 may be necessary to address conservation challenges,

16 such as the prevention of excessive soil erosion, en17 hancement of soil and water quality, and the protec18 tion of wetlands, wildlife habitat, and strategically

19 important farmland subject to urban conversion and

20 fragmentation;

21 (5) encourage, accept, and administer private

22 gifts of money and real and personal property for the

23 benefit of, or in connection with, the conservation and

24 related activities and services of the Department, par25 ticularly the Natural Resources Conservation Service;
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1 (6) undertake, conduct, and encourage edu2 cational, technical, and other assistance, and other

3 activities, that support the conservation and related

4 programs administered by the Department (other

5 than activities carried out on National Forest System

6 lands), particularly the Natural Resources Conserva7 tion Service, except that the Foundation may not en8 force or administer a regulation of the Department;

9 and

10 (7) raise private funds to promote the purposes

11 of the Foundation.

12 (c) LIMITATIONS AND CONFLICTS OF INTERESTS.—

13 (1) POLITICAL ACTIVITIES.—The Foundation

14 shall not participate or intervene in a political cam15 paign on behalf of any candidate for public office.

16 (2) CONFLICTS OF INTEREST.—No director, offi17 cer, or employee of the Foundation shall participate,

18 directly or indirectly, in the consideration or deter19 mination of any question before the Foundation af20 fecting—

21 (A) the financial interests of the director, of22 ficer, or employee; or

23 (B) the interests of any corporation, part24 nership, entity, organization, or other person in

25 which the director, officer, or employee—
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1 (i) is an officer, director, or trustee; or

2 (ii) has any direct or indirect finan3 cial interest.

4 (3) LEGISLATION OR GOVERNMENT ACTION OR

5 POLICY.—No funds of the Foundation may be used in

6 any manner for the purpose of influencing legislation

7 or government action or policy.

8 (4) LITIGATION.—No funds of the Foundation

9 may be used to bring or join an action against the

10 United States.

11 (d) TAX EXEMPT STATUS.—

12 (1) 1996 TAXABLE YEAR.—In the case of the

13 1996 taxable year, the Foundation shall be treated as

14 organized and operated exclusively for charitable pur15 poses for purposes of section 501(c)(3) of the Internal

16 Revenue Code of 1986.

17 (2) 1997 AND SUBSEQUENT TAXABLE YEARS.—In

18 the case of the 1997 and subsequent taxable years, the

19 Foundation shall be required to maintain the tax ex20 empt status of the Foundation in the manner pre21 scribed by the Secretary of the Treasury for similar

22 tax exempt organizations.

23 SEC. 304. COMPOSITION AND OPERATION.

24 (a) COMPOSITION.—The Foundation shall be adminis25 tered by a Board of Trustees that shall consist of 9 voting
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1 members, each of whom shall be a United States citizen and

2 not a Federal officer. The Board shall be composed of—

3 (1) individuals with expertise in agricultural

4 conservation policy matters;

5 (2) a representative of private sector organiza6 tions with a demonstrable interest in natural re7 sources conservation;

8 (3) a representative of statewide conservation or9 ganizations;

10 (4) a representative of soil and water conserva11 tion districts;

12 (5) a representative of organizations outside the

13 Federal Government that are dedicated to natural re14 sources conservation education; and

15 (6) a farmer or rancher.

16 (b) NONGOVERNMENTAL EMPLOYEES.—Service as a

17 member of the Board shall not constitute employment by,

18 or the holding of, an office of the United States for the pur19 poses of any Federal law.

20 (c) MEMBERSHIP.—

21 (1) INITIAL MEMBERS.—The Secretary shall ap22 point 9 persons who meet the criteria established

23 under subsection (a) as the initial members of the

24 Board and designate 1 of the members as the initial

25 chairperson for a 2-year term.
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1 (2) TERMS OF OFFICE.—

2 (A) IN GENERAL.—A member of the Board

3 shall serve for a term of 3 years, except that the

4 members appointed to the initial Board shall

5 serve, proportionately, for terms of 1, 2, and 3

6 years, as determined by the Secretary.

7 (B) LIMITATION ON TERMS.—No individual

8 may serve more than 2 consecutive 3-year terms

9 as a member.

10 (3) SUBSEQUENT MEMBERS.—The initial mem11 bers of the Board shall adopt procedures in the con12 stitution of the Foundation for the nomination and

13 selection of subsequent members of the Board. The

14 procedures shall require that each member, at a mini15 mum, meets the criteria established under subsection

16 (a) and shall provide for the selection of an individ17 ual, who is not a Federal officer or a member of the

18 Board, to be provided with the power to select subse19 quent members of the Board.

20 (d) CHAIRPERSON.—After the appointment of an ini21 tial chairperson under subsection (c)(1), each succeeding

22 chairperson of the Board shall be elected by the members

23 of the Board for a 2-year term.
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1 (e) VACANCIES.—A vacancy on the Board shall be

2 filled by the Board not later than 60 days after the occur3 rence of the vacancy.

4 (f) COMPENSATION.—A member of the Board shall re5 ceive no compensation from the Foundation for the service

6 of the member on the Board.

7 (g) TRAVEL EXPENSES.—While away from the home

8 or regular place of business of a member of the Board in

9 the performance of services for the Board, the member shall

10 be allowed travel expenses paid by the Foundation, includ11 ing per diem in lieu of subsistence, at the same rate as a

12 person employed intermittently in the Government service

13 would be allowed under section 5703 of title 5, United

14 States Code.

15 SEC. 305. OFFICERS AND EMPLOYEES.

16 (a) IN GENERAL.—The Board may—

17 (1) appoint, hire, and discharge the officers and

18 employees of the Foundation, other than the appoint19 ment of the initial Executive Director of the Founda20 tion;

21 (2) adopt a constitution and bylaws for the

22 Foundation that are consistent with the purposes of

23 the Foundation and this title; and

24 (3) undertake any other activities that may be

25 necessary to carry out this title.
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1 (b) OFFICERS AND EMPLOYEES.—

2 (1) APPOINTMENT AND HIRING.—An officer or

3 employee of the Foundation—

4 (A) shall not, by virtue of the appointment

5 or employment of the officer or employee, be con6 sidered a Federal employee for any purpose, in7 cluding the provisions of title 5, United States

8 Code, governing appointments in the competitive

9 service, except that such an individual may par10 ticipate in the Federal employee retirement sys11 tem as if the individual were a Federal em12 ployee; and

13 (B) may not be paid by the Foundation a

14 salary in excess of $125,000 per year.

15 (2) EXECUTIVE DIRECTOR.—

16 (A) INITIAL DIRECTOR.—The Secretary

17 shall appoint an individual to serve as the ini18 tial Executive Director of the Foundation who

19 shall serve, at the direction of the Board, as the

20 chief operating officer of the Foundation.

21 (B) SUBSEQUENT DIRECTORS.—The Board

22 shall appoint each subsequent Executive Director

23 of the Foundation who shall serve, at the direc24 tion of the Board, as the chief operating officer

25 of the Foundation.
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1 (C) QUALIFICATIONS.—The Executive Di2 rector shall be knowledgeable and experienced in

3 matters relating to natural resources conserva4 tion.

5 SEC. 306. CORPORATE POWERS AND OBLIGATIONS OF THE

6 FOUNDATION.

7 (a) IN GENERAL.—The Foundation—

8 (1) may conduct business throughout the United

9 States and the territories and possessions of the Unit10 ed States; and

11 (2) shall at all times maintain a designated

12 agent who is authorized to accept service of process

13 for the Foundation, so that the serving of notice to,

14 or service of process on, the agent, or mailed to the

15 business address of the agent, shall be considered as

16 service on or notice to the Foundation.

17 (b) SEAL.—The Foundation shall have an official seal

18 selected by the Board that shall be judicially noticed.

19 (c) POWERS.—To carry out the purposes of the Foun20 dation under section 303(b), the Foundation shall have, in

21 addition to the powers otherwise provided under this title,

22 the usual powers of a corporation, including the power—

23 (1) to accept, receive, solicit, hold, administer,

24 and use any gift, devise, or bequest, either absolutely

25 or in trust, of real or personal property or any in-
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1 come from, or other interest in, the gift, devise, or be2 quest;

3 (2) to acquire by purchase or exchange any real

4 or personal property or interest in property;

5 (3) unless otherwise required by instrument of

6 transfer, to sell, donate, lease, invest, reinvest, retain,

7 or otherwise dispose of any property or income from

8 property;

9 (4) to borrow money from private sources and

10 issue bonds, debentures, or other debt instruments,

11 subject to section 309, except that the aggregate

12 amount of the borrowing and debt instruments out13 standing at any time may not exceed $1,000,000;

14 (5) to sue and be sued, and complain and defend

15 itself, in any court of competent jurisdiction, except

16 that a member of the Board shall not be personally

17 liable for an action in the performance of services for

18 the Board, except for gross negligence;

19 (6) to enter into a contract or other agreement

20 with an agency of State or local government, edu21 cational institution, or other private organization or

22 person and to make such payments as may be nec23 essary to carry out the functions of the Foundation;

24 and
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1 (7) to do any and all acts that are necessary to

2 carry out the purposes of the Foundation.

3 (d) INTEREST IN PROPERTY.—

4 (1) IN GENERAL.—The Foundation may acquire,

5 hold, and dispose of lands, waters, or other interests

6 in real property by donation, gift, devise, purchase, or

7 exchange.

8 (2) INTERESTS IN REAL PROPERTY.—For pur9 poses of this title, an interest in real property shall

10 be treated, among other things, as including an ease11 ment or other right for the preservation, conservation,

12 protection, or enhancement of agricultural, natural,

13 scenic, historic, scientific, educational, inspirational,

14 or recreational resources.

15 (3) GIFTS.—A gift, devise, or bequest may be ac16 cepted by the Foundation even though the gift, devise,

17 or bequest is encumbered, restricted, or subject to a

18 beneficial interest of a private person if any current

19 or future interest in the gift, devise, or bequest is for

20 the benefit of the Foundation.

21 SEC. 307. ADMINISTRATIVE SERVICES AND SUPPORT.

22 The Secretary may provide, without reimbursement,

23 personnel, facilities, and other administrative services of the

24 Department to the Foundation.
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1 SEC. 308. AUDITS AND PETITION OF ATTORNEY GENERAL

2 FOR EQUITABLE RELIEF.

3 (a) AUDITS.—

4 (1) IN GENERAL.—The accounts of the Founda5 tion shall be audited in accordance with Public Law

6 88–504 (36 U.S.C. 1101 et seq.), including an audit

7 of lobbying and litigation activities carried out by the

8 Foundation.

9 (2) CONFORMING AMENDMENT.—The first section

10 of Public Law 88–504 (36 U.S.C. 1101) is amended

11 by adding at the end the following:

12 ‘‘(77) The National Natural Resources Conserva13 tion Foundation.’’.

14 (b) RELIEF WITH RESPECT TO CERTAIN FOUNDATION

15 ACTS OR FAILURE TO ACT.—The Attorney General may pe16 tition in the United States District Court for the District

17 of Columbia for such equitable relief as may be necessary

18 or appropriate, if the Foundation—

19 (1) engages in, or threatens to engage in, any

20 act, practice, or policy that is inconsistent with this

21 title; or

22 (2) refuses, fails, neglects, or threatens to refuse,

23 fail, or neglect, to discharge the obligations of the

24 Foundation under this title.
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1 SEC. 309. RELEASE FROM LIABILITY.

2 (a) IN GENERAL.—The United States shall not be lia3 ble for any debt, default, act, or omission of the Foundation.

4 The full faith and credit of the United States shall not ex5 tend to the Foundation.

6 (b) STATEMENT.—An obligation issued by the Founda7 tion, and a document offering an obligation, shall include

8 a prominent statement that the obligation is not directly

9 or indirectly guaranteed, in whole or in part, by the United

10 States (or an agency or instrumentality of the United

11 States).

12 SEC. 310. AUTHORIZATION OF APPROPRIATIONS.

13 There are authorized to be appropriated to the Depart14 ment to be made available to the Foundation such sums

15 as are necessary for each of fiscal years 1997 through 1999

16 to initially establish and carry out activities of the Founda17 tion.

18 TITLE IV—IMPLEMENTATION

19 AND EFFECTIVE DATE

20 SEC. 401. IMPLEMENTATION.

21 The Secretary of Agriculture and the Farm Credit Ad22 ministration shall promulgate regulations and take other

23 required actions to implement the provisions of this Act not

24 later than 90 days after the effective date of this Act.
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1 SEC. 402. EFFECTIVE DATE.

2 Except as otherwise provided in this Act, this Act and

3 the amendments made by this Act shall become effective on

4 the date of enactment.

Amend the title so as to read: ‘‘An Act to amend the

Farm Credit Act of 1971 to provide regulatory relief, and

for other purposes.’’.

Attest:

Secretary.
104TH CONGRESS

1ST SESSION H. R. 2029

AMENDMENTS
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