I

103D CONGRESS

2D SESSION H. R. 4129

To provide needed credit and financial services to rural residents, public

services, and business enterprises, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 24, 1994

Mrs. CLAYTON introduced the following bill which was referred to the

Committee on Agriculture

A BILL

To provide needed credit and financial services to rural residents, public services, and business enterprises, and for

other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Rural Credit and De5 velopment Act of 1994’’.

6 SEC. 2. REFERENCES TO THE FARM CREDIT ACT OF 1971.

7 Whenever in this Act an amendment or repeal is ex8 pressed in terms of an amendment to, or repeal of, a sec9 tion or other provision, the reference shall be considered

10 to be made to a section or other provision of the Farm
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1 Credit Act of 1971 (12 U.S.C. 2001 et seq.), except to

2 the extent otherwise provided.

3 TITLE I—CREDIT FOR RURAL BUSINESS

4 ENTERPRISES

5 SEC. 101. PURCHASES OF LOANS FROM NON-SYSTEM

6 LENDERS.

7 (a) FARM CREDIT BANKS.—Section 1.5(16) U.S.C.

8 2013(16)) is amended by—

9 (1) striking out ‘‘sell to lenders that are not

10 Farm Credit System institutions interests in loans’’

11 and inserting in lieu thereof ‘‘buy from and sell to

12 entities that are not Farm Credit System institu13 tions loans and interests in loans that the bank or

14 the associations in its district are authorized to

15 make under this Act’’; and

16 (2) inserting before the semicolon at the end

17 the following: ‘‘: Provided, That the provisions of

18 section 4.36 and part C of title IV shall not apply

19 to loans and interests in loans purchased from enti20 ties that are not Farm Credit System institutions’’.

21 (b) PRODUCTION CREDIT ASSOCIATIONS.—Section

22 2.2(11) (12 U.S.C. 2073(11)) is amended by—

23 (1) inserting ‘‘and buy from entities that are

24 not Farm Credit System institutions loans and in25 terests in loans that the association is authorized to
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1 make under this title,’’ after ‘‘and nonvoting stock,’’;

2 and

3 (2) inserting before the semicolon at the end

4 thereof the following: ‘‘: Provided, That the provi5 sions of section 4.36 and part C of title IV shall not

6 apply to loans and interests in loans purchased from

7 entities that are not Farm Credit System institu8 tions’’.

9 (c) EXCEPTION TO STOCK PURCHASE REQUIRE10 MENT.—Section 4.3A(c)(1)(E)(i) (12 U.S.C.

11 2154a(c)(1)(E)(i)) is amended by inserting before the

12 semicolon at the end thereof the following: ‘‘: Provided,

13 That no voting stock or participation certificates shall be

14 required for loans or interests in loans purchased by the

15 institution from entities that are not Farm Credit System

16 institutions’’.

17 SEC. 102. IMPROVING THE AVAILABILITY OF CREDIT FOR

18 FARM-RELATED BUSINESSES.

19 (a) IN GENERAL.—

20 (1) FCB BORROWER ELIGIBILITY.—Section

21 1.9(2) (12 U.S.C. 2017(2)) is amended by striking

22 out ‘‘directly related to their on-farm operating

23 needs’’ and by inserting ‘‘goods and’’ immediately

24 before ‘‘services’’.
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1 (2) FCB LOAN PURCHASES.—Section 1.11(c)

2 (12 U.S.C. 2019(c)) is amended by—

3 (A) in paragraph (1), striking out ‘‘directly

4 related to their on-farm operating needs’’ and

5 by inserting ‘‘goods and’’ immediately before

6 ‘‘services’’ each place it appears; and

7 (2) in the title, inserting ‘‘GOODS AND’’ be8 fore ‘‘SERVICES.’’.

9 (3) PRODUCTION CREDIT ASSOCIATIONS.—Sec10 tion 2.4(a)(3) (12 U.S.C. 2075(a)(3)) is amended by

11 striking out ‘‘directly related to their on-farm oper12 ating needs’’ and by inserting ‘‘goods and’’ imme13 diately before ‘‘services’’.

14 (b) RELATED SERVICES.—

15 (1) FARM CREDIT BANKS.—Section 1.12(a) (12

16 U.S.C. 2020(a)) is amended by striking out ‘‘appro17 priate to their on-farm and aquatic operations’’.

18 (2) PRODUCTION CREDIT ASSOCIATIONS.—Sec19 tion 2.5 (12 U.S.C. 2076) is amended by striking

20 out ‘‘appropriate to their on-farm and aquatic oper21 ations’’.

22 SEC. 103. COOPERATIVE-RELATED BUSINESS FINANCING.

23 Section 3.7(b) (12 U.S.C. 2128(b)) is amended by—

24 (1) redesignating paragraphs (2) and (3) as

25 paragraphs (3) and (4), respectively;
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1 (2) inserting after paragraph (1) a new para2 graph (2) as follows:

3 ‘‘(2)(A) A bank for cooperatives is authorized to

4 make or participate in loans and commitment to, and ex5 tend other technical and financial assistance to, any legal

6 entity providing any of the farm-related services or prod7 ucts of the type described in subparagraph (B) when such

8 loan, commitment, or assistance will provide a direct and

9 material benefit to an association that is an eligible coop10 erative association under section 3.8(a): Provided, That

11 any such loan or commitment may be made, or assistance

12 extended, to a legal entity only if—

13 ‘‘(i) the eligible cooperative association certifies

14 to the satisfaction of the bank for cooperatives that

15 a material business relationship exists between it

16 and the legal entity and that it receives a direct and

17 material benefit as a result of that relationship; and

18 ‘‘(ii) the cumulative amount of all such loans,

19 commitments, and assistance to the legal entity do

20 not exceed 10 percent of the bank’s total capital,

21 ‘‘(B) The services or products provided by a legal en22 tity that shall enable such legal entity to be eligible for

23 financing under subparagraph (A) are those services or

24 products involved in the processing, preparing for market,

25 handling, or marketing of farm or aquatic products, or
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1 in the purchasing, testing, grading, process, distributing,

2 or furnishing of farm or aquatic supplies, or in the fur3 nishing of farm or aquatic business services to, or in other

4 ways adding value to the products or services of, eligible

5 cooperative associations.’’; and

6 (3) in paragraph (4), as redesignated by para7 graph (1), striking out ‘‘paragraphs (1) and (2)’’

8 and inserting in lieu thereof ‘‘paragraphs (1) and

9 (3)’’.

10 TITLE II—CREDIT FOR RURAL

11 INFRASTRUCTURE

12 SEC. 201. RURAL COMMUNITY FACILITY LENDING BY FARM

13 CREDIT BANKS AND DIRECT LONG-TERM

14 LENDING ASSOCIATIONS.

15 (a) LENDING AUTHORITY.—Section 1.7 (12 U.S.C.

16 2015) is amended by adding at the end a new subsection

17 as follows:

18 ‘‘(c) COMMUNITY FACILITY LOANS.—In order to fa19 cilitate needed improvements in the infrastructure of rural

20 United States, the Farm Credit Banks may make and par21 ticipate with other lenders in community facility loans as

22 described in section 1.11(d).’’.

23 (b) ELIGIBLE BORROWERS.—Section 1.9 (12 U.S.C.

24 2017), as amended by section 102(a)(1) of this Act, is

25 further amended by—
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1 (1) striking out ‘‘or’’ at the end of paragraph

2 (2);

3 (2) striking out the period at the end of para4 graph (3) and inserting in lieu thereof ‘‘; or’’; and

5 (3) adding at the end the following new para6 graph:

7 ‘‘(4) persons or public and quasi-public agencies

8 and bodies, and other public and private entities,

9 that, under authority of State or local law, establish

10 or operate water or waste disposal facilities, pollu11 tion abatement and control facilities and programs,

12 or other essential community facilities in rural

13 areas.’’.

14 (c) LOAN TERMS AND SECURITY.—Section 1.10 (12

15 U.S.C. 2018) is amended by—

16 (1) in subsection (a)(2), striking out ‘‘this sec17 tion’’ and inserting in lieu thereof ‘‘section 1.7(a)’’;

18 (2) in subsection (b), inserting ‘‘and loans made

19 under the authority of section 1.7(c)’’ after ‘‘other

20 than real estate loans’’; and

21 (3) adding at the end a new subsection as fol22 lows:

23 ‘‘(c) COMMUNITY FACILITY LOANS.—Loans made

24 under the authority of section 1.7(c) shall be for such
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1 terms and on such security (if any) as made be prescribed

2 by policies adopted by the board of directors of the bank.’’.

3 (d) PURPOSES FOR EXTENSION OF CREDIT.—Section

4 1.11 (12 U.S.C. 2019) is amended by—

5 (1) in subsection (a)(1), inserting ‘‘, other than

6 loans under section 1.7(c),’’ after ‘‘Loans’’;

7 (2) in subsection (b)(2), striking out ‘‘this title’’

8 and inserting in lieu thereof ‘‘section 1.7(a)’’; and

9 (3) adding at the end a new subsection as fol10 lows:

11 ‘‘(d) COMMUNITY FACILITIES.—The Farm Credit

12 Banks may make and participate with other lenders in

13 loans for the purpose of constructing, installing, maintain14 ing, expanding, improving, or operating water or waste

15 disposal facilities, pollution abatement and control facili16 ties and programs, or other essential community facilities,

17 including necessary related equipment, in rural areas: Pro18 vided, That, for purposes of this subsection, the term

19 ‘‘rural area’’ means all territory of a State that is not

20 within the outer boundary of any city or town having a

21 population of more than 20,000 based on the latest decen22 nial census of the United States.’’.

23 (e) CONFORMING AMENDMENTS.—Section 7.6 (12

24 U.S.C. 2279b) is amended by—
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1 (1) in the material preceding paragraph (1) of

2 subsection (a), inserting ‘‘direct lending’’ before ‘‘au3 thority’’, and striking out ‘‘, to make and participate

4 in long-term real estate mortgage loans’’;

5 (2) in paragraph (1) of subsection (b)—

6 (A) striking out ‘‘long-term real estate

7 mortgage loan authority,’’ and inserting in lieu

8 thereof ‘‘lending authority’’; and

9 (B) inserting after ‘‘transferring bank,’’

10 the following: ‘‘and shall possess the powers de11 scribed in paragraphs (12) and (16) of section

12 1.5 in connection with such lending authority,’’;

13 and

14 (3) adding at the end the following new sub15 section as follows:

16 ‘‘(e) TRANSFERS OF ADDITIONAL AUTHORITIES.—

17 Whenever a transfer of direct lending authority under sub18 section (a) or (d) has occurred prior to the date of enact19 ment of this subsection, including a transfer of direct lend20 ing authority to an association resulting from a merger

21 under section 411 of the Agricultural Credit Act of 1987,

22 any direct lending authority conferred on any bank de23 scribed in subsection (a) or (d) on or after the date of

24 enactment of this subsection shall automatically transfer
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1 to the transferee association at the time the authority is

2 conferred on the bank.’’.

3 SEC. 202. BANK FOR COOPERATIVE FINANCING OF UTILITY4 RELATED SERVICES.

5 Section 3.7(a) (12 U.S.C. 2128(a)) is amended by

6 adding before the period at the end of the third sentence

7 the following: ‘‘; and each bank may make or participate

8 in loans or commitments and extend other technical and

9 financial assistance to other parties for electric power gen10 eration and transmission operations and projects that pro11 vide, to entities eligible to borrow from the bank under

12 section 3.8, power, power generation byproducts, or other

13 related benefits or services that are of material economic

14 benefit to such eligible entities’’.

15 TITLE III—CREDIT FOR RURAL HOUSING

16 SEC. 301. IMPROVING THE AVAILABILITY OF CREDIT FOR

17 RURAL HOME BUYERS.

18 (a) POPULATION LIMITATIONS.—

19 (1) FARM CREDIT BANKS.—Section 1.11(b)(3)

20 (12 U.S.C. 2019(b)(3)) is amended by striking out

21 ‘‘2,500 inhabitants’’ and inserting in lieu thereof

22 ‘‘20,000 inhabitants’’.

23 (2) PRODUCTION CREDIT ASSOCIATIONS.—Sec24 tion 2.4(b)(3) (12 U.S.C. 2075(b)(3)) is amended by
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1 striking out ‘‘2,500 inhabitants’’ and inserting in

2 lieu thereof ‘‘20,000 inhabitants’’.

3 (3) CONFORMING CHANGE.—Section

4 8.0(1)(B)(i) (12 U.S.C. 2279aa(1)(B)(i)) is amend5 ed by striking out ‘‘2,500 inhabitants’’ and inserting

6 in lieu thereof ‘‘20,000 inhabitants’’.

7 (b) PERCENTAGE OF LOAN PORTFOLIO.—

8 (1) FARM CREDIT BANKS.—Section 1.11(b)(2)

9 (12 U.S.C. 2019(b)(2)) is amended by striking out

10 ‘‘15 percent’’ and inserting in lieu thereof ‘‘20 per11 cent’’.

12 (2) PRODUCTION CREDIT ASSOCIATIONS.—Sec13 tion 2.4(b)(2) (12 U.S.C. 2075(b)(2)) is amended by

14 striking out ‘‘15 percent’’ each place it appears and

15 inserting in lieu thereof ‘‘20 percent’’.

16 (c) HOME EQUITY FINANCING.—

17 (1) FARM CREDIT BANKS.—

18 (A) FIRST LIEN REQUIREMENT.—Section

19 1.10(a)(2) (12 U.S.C. 2018(a)(2)), as amended

20 by section 201(c)(1) of this Act, is further

21 amended by striking out ‘‘All’’ and inserting in

22 lieu thereof ‘‘Except with respect to loans made

23 to rural residents for personal, family, or house24 hold needs other than rural housing financing,

25 all’’.
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1 (B) LENDING AUTHORITY.—Section

2 1.11(b)(1) (12 U.S.C. 2019(b)(1)) is amended

3 by inserting ‘‘and other personal, family, or

4 household needs’’ after ‘‘housing financing’’.

5 (2) PRODUCTION CREDIT ASSOCIATIONS.—Sec6 tion 2.4(a)(2) (12 U.S.C. 2075(a)(2)) is amended by

7 inserting ‘‘and other personal, family, or household

8 needs’’ after ‘‘housing financing’’.

Æ