PUBLIC LAW 103-376—CKTT. 19, 1994 108 STAT. 3497 

Public Law 103-376 

103d CJongress 

An Act 

To amend the FEurm Credit Act of 1971 to enhance the ability of the banks for 

cooperatives to finance agricultural exports, and for other purposes. 

Be it enacted by the Senate and House of Representatives of 

the United States of America in Congress assembled, 

SECTION 1. SHORT TTTLJE. 

This Act may be cited as the "Farm Credit System Agricultural 

Export and Risk Management Act". 

SEC. 2. PARTICIPATION DEFINED. 

Section 3.1(11)(B) of the Farm Credit Act of 1971 (12 U.S.C. 

2122(11)(B)) is amended by adding at the end the following new 

clause: 

"(iv) As used in this subparagraph, the term 'participate' or 

'participation' refers to multilender transactions, including syndications, assignments, loan participations, subparticipations, or other 

forms of the purchase, sale, or transfer of interests in loans, other 

extensions of credit, or other technical and financial assistance.". 

SEC. 3. AGRICULTURAL EXPORT FINANCING. 

Section 3.7(b) of the Farm Credit Act of 1971 (12 U.S.C. 2128(b)) 

is amended— 

(A) in paragraph (1)— 

(i) by striking "assistance to (A)" and inserting "assistance to"; 

(ii) by striking "the export or" and inserting "the"; 

and 

(iii) by striking "and (B)" and aU that follows through 

"subparagraph (A): Provided, That a" and inserting "if the"; 

and 

(B) by striking paragraph (2) and inserting the following 

new paragraph: 

"(2)(A) A bank for cooperatives may make or pgirticipate in 

loans and commitments to, and extend other technical and financial 

assistance to— 

"(i) any domestic or foreign party for the export, including 

(where appHcable) the cost of fi^^ight, of agricultural conmiodities or products thereof, farm suppUes, or aquatic products 

fi:x)m the United States under poHcies and procedures established by the bank to ensure that the conmiodities, products, 

or supplies are originally soiuxed, where reasonably available, 

fix)m one or more ehgible cooperative associations described 

in section 3.8(a) on a priority basis, except that if the total 

Oct. 19,1994 

[H.R. 4379] 

Farm Credit 

System 

Agricultural 

Export and Risk 

Management 

Act. 

12 us e 2001 

note. 
108 STAT. 3498 PUBLIC LAW 103-376—OCT. 19, 1994 

amount of the balances outstanding on loans made by a bank 

under this clause that— 

"(I) are made to finance the escport of commodities, 

products, or suppUes that are not originally sourced fix>m 

a cooperative, and 

(II) are not guaranteed or insured, in an amount 

equal to at least 95 percent of the amount loaned, by 

a department, agency, bureau, board, commission, or 

establishment of the United States or a corporation whollyowned directly or indirectly by the United States, 

exceeds an amount that is equal to 50 percent of the bank's 

capital, then a sufficient interest in the loans shall be sold 

by the bank for cooperatives to commercial banks and other 

non-System lenders to reduce the total amount of such 

outstanding balances to an amount not greater than an amount 

equal to 50 percent of the bank's capital; and 

"(ii) except as provided in subparagraph (B), any domestic 

or foreign party in which an eUgible cooperative association 

described in section 3.8(a) (including, for the purpose of facilitating its domestic business operations only, a cooperative or 

other entity described in section 3.8(b)(1)(A)) has an ownership 

interest, for the purpose of facilitating the domestic or foreign 

business operations of the association, except that if the ownership interest by an eUgible cooperative association, or associations, is less tnan 50 percent, the financing shall be limited 

to the percentage held in the party by the association or associations. 

"(B) A bank for cooperatives shall not use the authority provided 

in subparagraph (A)(ii) to provide financial assistance to a party 

for the purpose of financing the relocation of a plant or facihty 

troTR the Umted States to smother country.". 

SEC. 4. CONFORMING AMENDMENT. 

Section 3.8(b)(1) of the Farm Credit Act of 1971 (12 U.S.C. 

2129(b)(1)) is amended— 

(A) by striking subparagraph (B); 

(B) by redesignatmg subparagraphs (C), (D), and (E) as 

subparagraphs (B), (C), and (D), respectively; and 

(C) Dy aUgning the mar ^ of subparagraph (D) (as so 

redesignated) so as to align with the margin of subparagraph 

(C) (as so redesignated). 

SEC. 5. LOAN PARTICIPATION AUTHORITY FOR FARM CREDIT BANES 

AND DIRECT LENDER ASSOCIATIONS. 

IN GENERAL.—Title IV of the Farm Credit Act of 1971 (12 

U.S.C. 2151 et seq.) is amended by inserting after section 4.18 

(12 U.S.C. 2206) the following new section: 

12 us e 2206a. "SEC. 4.18A. AUTHORITY OF FARM CREDIT BANKS AND DIRECT LENDER 

ASSOCIATIONS TO PARTICIPATE IN LOANS TO SIMILAR 

ENTITIES FOR RISK MANAGEMENT PURPOSES. 

"(a) DEFINITIONS.—^As used in this section: 

"(1) PARTICIPATE AND PARTICIPATION.—The terms 'participate' £m.d 'participation' shall have the meaning provided in 

section 3. l(ll)(B)(iv). 

"(2) SIMILAR ENTITY.—The term 'similar entity' means a 

person that— 
PUBLIC LAW 103-376—OCT. 19, 1994 108 STAT. 3499 

"(A) is not eligible for a loan fi:t)m the Farm Credit 

Bank or association; and 

"(B) has operations that are functionally similar to 

a person that is ehgible for a loan from the Farm Credit 

Bank or association in that the person derives a majority 

of the income of the person from, or has a msgority of 

the assets of the person invested in, the conduct of activities 

that are functionally similar to the activities that are conducted by an eligible person. 

"(b) LOAN PARTICIPATION AUTHORITY—Notwithstanding any 

other provision of this Act, any Farm Credit Bank or direct lender 

association chartered under this Act may participate in £uiy loan 

of a type otherwise authorized imder title I or II made to a similar 

entity by any person in the business of extending credit, except 

that a Farm Credit Bank or direct lender association may not 

participate in a loan under this section if— 

"(1) the participation would cause the total amount of aU 

participations by the Farm Credit Bank or association under 

this section involving a single credit risk to exceed 10 percent 

(or the appUcable higher lending limit authorized under regulations issued by the Farm Credit Administration if the stockholders of the respective Farm Credit Bank or association so 

approve) of the total capital of the Farm Credit Bank or association; 

"(2) the participation by the Farm Credit Bank or association would equal or exceed 50 percent of the principal of the 

loan or, when taken together with participations in the loan 

by other Farm Credit System institutions, would cause the 

cumulative amount of the participations by all Farm Credit 

System institutions in the loan to equal or exceed 50 percent 

of the principal of the loan; 

"(3) the participation would cause the cumulative amount 

of participations that the Farm Credit Bank or association 

has outstanding under this section to exceed 15 percent of 

the total assets of the Farm Credit Bank or association; or 

"(4) the loan is of the type authorized under section 1.11(b) 

or 2.4(a)(2). 

"(c) PRIOR APPROVAL REQUIRED.— 

"(1) IN GENERAL,.—^With respect to a similar entity that 

is eUgible to borrow from a bank for cooperatives under titie 

III, tihe authority of a Farm Credit Bank or association to 

participate in a loan to the entity \mder this section shall 

be subject to the prior approval of the bank for cooperatives 

having, at the time tlie loan is made, the greatest losin volimie 

in the State in which the headquarters office of the similar 

entity is located. 

"(2) TERMS AND CONDITIONS.—Approval under paragraph 

(1) may be granted on an annual basis and under such terms 

and conditions as may be agreed on between the Farm Credit 

Bank or association, as the case may be, sind the bank for 

cooperatives granting the approval. 

"(3) APPROVAL BY SUPERVISING FARM CREDIT BANK.—An 

association may not participate in a loan to a similar entity 

under this section without the approval of the supervising 

Farm Credit Bank of the association.". 
108 STAT. 3500 PUBLIC LAW 103-376—OCT. 19, 1994 

SEC. 6. CONFORMING AMENDMENTS. 

Section 3.1(ll)(B)(i)(I)(bb) of the Farm Credit Act of 1971 (12 

U.S.C. 2122(ll)(B)(i)(I)(bb)) is amended— 

(A) by striking "the other banks for cooperatives under 

this subparagraph and inserting "other Farm Credit System 

institutions"; and 

(B) by striking "aU banks for cooperatives" and inserting 

"all Farm Credit System institutions". 

Approved October 19, 1994. 

LEGISLATIVE HISTORY—H.R. 4379: 

CONGRESSIONAL RECORD, Vol. 140 (1994): 

Sept. 29, considered and passed House. 

Oct. 5, considered and passed Senate.