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 resi-
dents, public services, and business enterprises, and for
other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Rural Credit and De-
velopment Act of 1994’’.
SEC. 2. REFERENCES TO THE FARM CREDIT ACT OF 1971.
Whenever in this Act an amendment or repeal is ex-
pressed in terms of an amendment to, or repeal of, a sec-
tion or other provision, the reference shall be considered
to be made to a section or other provision of the Farm
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Credit Act of 1971 (12 U.S.C. 2001 et seq.), except to
the extent otherwise provided.
TITLE I—CREDIT FOR RURAL BUSINESS
ENTERPRISES
SEC. 101. PURCHASES OF LOANS FROM NON-SYSTEM
LENDERS.
(a) FARM CREDIT BANKS.—Section 1.5(16) U.S.C.
2013(16)) is amended by—
(1) striking out ‘‘sell to lenders that are not
Farm Credit System institutions interests in loans’’
and inserting in lieu thereof ‘‘buy from and sell to
entities that are not Farm Credit System institu-
tions loans and interests in loans that the bank or
the associations in its district are authorized to
make under this Act’’; and
(2) inserting before the semicolon at the end
the following: ‘‘: Provided, That the provisions of
section 4.36 and part C of title IV shall not apply
to loans and interests in loans purchased from enti-
ties that are not Farm Credit System institutions’’.
(b) PRODUCTION CREDIT ASSOCIATIONS.—Section
2.2(11) (12 U.S.C. 2073(11)) is amended by—
(1) inserting ‘‘and buy from entities that are
not Farm Credit System institutions loans and in-
terests in loans that the association is authorized to
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make under this title,’’ after ‘‘and nonvoting stock,’’;
and
(2) inserting before the semicolon at the end
thereof the following: ‘‘: Provided, That the provi-
sions of section 4.36 and part C of title IV shall not
apply to loans and interests in loans purchased from
entities that are not Farm Credit System institu-
tions’’.
(c) EXCEPTION
TO STOCK PURCHASE REQUIRE-
MENT.—Section 
4.3A(c)(1)(E)(i) 
(12 
U.S.C.
2154a(c)(1)(E)(i)) is amended by inserting before the
semicolon at the end thereof the following: ‘‘: Provided,
That no voting stock or participation certificates shall be
required for loans or interests in loans purchased by the
institution from entities that are not Farm Credit System
institutions’’.
SEC. 102. IMPROVING THE AVAILABILITY OF CREDIT FOR
FARM-RELATED BUSINESSES.
(a) IN GENERAL.—
(1) FCB 
BORROWER
ELIGIBILITY.—Section
1.9(2) (12 U.S.C. 2017(2)) is amended by striking
out ‘‘directly related to their on-farm operating
needs’’ and by inserting ‘‘goods and’’ immediately
before ‘‘services’’.
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(2) FCB LOAN
PURCHASES.—Section 1.11(c)
(12 U.S.C. 2019(c)) is amended by—
(A) in paragraph (1), striking out ‘‘directly
related to their on-farm operating needs’’ and
by inserting ‘‘goods and’’ immediately before
‘‘services’’ each place it appears; and
(2) in the title, inserting ‘‘GOODS AND’’ be-
fore ‘‘SERVICES.’’.
(3) PRODUCTION CREDIT ASSOCIATIONS.—Sec-
tion 2.4(a)(3) (12 U.S.C. 2075(a)(3)) is amended by
striking out ‘‘directly related to their on-farm oper-
ating needs’’ and by inserting ‘‘goods and’’ imme-
diately before ‘‘services’’.
(b) RELATED SERVICES.—
(1) FARM CREDIT BANKS.—Section 1.12(a) (12
U.S.C. 2020(a)) is amended by striking out ‘‘appro-
priate to their on-farm and aquatic operations’’.
(2) PRODUCTION CREDIT ASSOCIATIONS.—Sec-
tion 2.5 (12 U.S.C. 2076) is amended by striking
out ‘‘appropriate to their on-farm and aquatic oper-
ations’’.
SEC. 103. COOPERATIVE-RELATED BUSINESS FINANCING.
Section 3.7(b) (12 U.S.C. 2128(b)) is amended by—
(1) redesignating paragraphs (2) and (3) as
paragraphs (3) and (4), respectively;
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(2) inserting after paragraph (1) a new para-
graph (2) as follows:
‘‘(2)(A) A bank for cooperatives is authorized to
make or participate in loans and commitment to, and ex-
tend other technical and financial assistance to, any legal
entity providing any of the farm-related services or prod-
ucts of the type described in subparagraph (B) when such
loan, commitment, or assistance will provide a direct and
material benefit to an association that is an eligible coop-
erative association under section 3.8(a): Provided, That
any such loan or commitment may be made, or assistance
extended, to a legal entity only if—
‘‘(i) the eligible cooperative association certifies
to the satisfaction of the bank for cooperatives that
a material business relationship exists between it
and the legal entity and that it receives a direct and
material benefit as a result of that relationship; and
‘‘(ii) the cumulative amount of all such loans,
commitments, and assistance to the legal entity do
not exceed 10 percent of the bank’s total capital,
‘‘(B) The services or products provided by a legal en-
tity that shall enable such legal entity to be eligible for
financing under subparagraph (A) are those services or
products involved in the processing, preparing for market,
handling, or marketing of farm or aquatic products, or
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in the purchasing, testing, grading, process, distributing,
or furnishing of farm or aquatic supplies, or in the fur-
nishing of farm or aquatic business services to, or in other
ways adding value to the products or services of, eligible
cooperative associations.’’; and
(3) in paragraph (4), as redesignated by para-
graph (1), striking out ‘‘paragraphs (1) and (2)’’
and inserting in lieu thereof ‘‘paragraphs (1) and
(3)’’.
TITLE II—CREDIT FOR RURAL
INFRASTRUCTURE
SEC. 201. RURAL COMMUNITY FACILITY LENDING BY FARM
CREDIT BANKS AND DIRECT LONG-TERM
LENDING ASSOCIATIONS.
(a) LENDING AUTHORITY.—Section 1.7 (12 U.S.C.
2015) is amended by adding at the end a new subsection
as follows:
‘‘(c) COMMUNITY FACILITY LOANS.—In order to fa-
cilitate needed improvements in the infrastructure of rural
United States, the Farm Credit Banks may make and par-
ticipate with other lenders in community facility loans as
described in section 1.11(d).’’.
(b) ELIGIBLE BORROWERS.—Section 1.9 (12 U.S.C.
2017), as amended by section 102(a)(1) of this Act, is
further amended by—
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(1) striking out ‘‘or’’ at the end of paragraph
(2);
(2) striking out the period at the end of para-
graph (3) and inserting in lieu thereof ‘‘; or’’; and
(3) adding at the end the following new para-
graph:
‘‘(4) persons or public and quasi-public agencies
and bodies, and other public and private entities,
that, under authority of State or local law, establish
or operate water or waste disposal facilities, pollu-
tion abatement and control facilities and programs,
or other essential community facilities in rural
areas.’’.
(c) LOAN TERMS AND SECURITY.—Section 1.10 (12
U.S.C. 2018) is amended by—
(1) in subsection (a)(2), striking out ‘‘this sec-
tion’’ and inserting in lieu thereof ‘‘section 1.7(a)’’;
(2) in subsection (b), inserting ‘‘and loans made
under the authority of section 1.7(c)’’ after ‘‘other
than real estate loans’’; and
(3) adding at the end a new subsection as fol-
lows:
‘‘(c) COMMUNITY FACILITY LOANS.—Loans made
under the authority of section 1.7(c) shall be for such
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terms and on such security (if any) as made be prescribed
by policies adopted by the board of directors of the bank.’’.
(d) PURPOSES FOR EXTENSION OF CREDIT.—Section
1.11 (12 U.S.C. 2019) is amended by—
(1) in subsection (a)(1), inserting ‘‘, other than
loans under section 1.7(c),’’ after ‘‘Loans’’;
(2) in subsection (b)(2), striking out ‘‘this title’’
and inserting in lieu thereof ‘‘section 1.7(a)’’; and
(3) adding at the end a new subsection as fol-
lows:
‘‘(d) COMMUNITY FACILITIES.—The Farm Credit
Banks may make and participate with other lenders in
loans for the purpose of constructing, installing, maintain-
ing, expanding, improving, or operating water or waste
disposal facilities, pollution abatement and control facili-
ties and programs, or other essential community facilities,
including necessary related equipment, in rural areas: Pro-
vided, That, for purposes of this subsection, the term
‘‘rural area’’ means all territory of a State that is not
within the outer boundary of any city or town having a
population of more than 20,000 based on the latest decen-
nial census of the United States.’’.
(e) CONFORMING AMENDMENTS.—Section 7.6 (12
U.S.C. 2279b) is amended by—
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(1) in the material preceding paragraph (1) of
subsection (a), inserting ‘‘direct lending’’ before ‘‘au-
thority’’, and striking out ‘‘, to make and participate
in long-term real estate mortgage loans’’;
(2) in paragraph (1) of subsection (b)—
(A) striking out ‘‘long-term real estate
mortgage loan authority,’’ and inserting in lieu
thereof ‘‘lending authority’’; and
(B) inserting after ‘‘transferring bank,’’
the following: ‘‘and shall possess the powers de-
scribed in paragraphs (12) and (16) of section
1.5 in connection with such lending authority,’’;
and
(3) adding at the end the following new sub-
section as follows:
‘‘(e) TRANSFERS OF ADDITIONAL AUTHORITIES.—
Whenever a transfer of direct lending authority under sub-
section (a) or (d) has occurred prior to the date of enact-
ment of this subsection, including a transfer of direct lend-
ing authority to an association resulting from a merger
under section 411 of the Agricultural Credit Act of 1987,
any direct lending authority conferred on any bank de-
scribed in subsection (a) or (d) on or after the date of
enactment of this subsection shall automatically transfer
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to the transferee association at the time the authority is
conferred on the bank.’’.
SEC. 202. BANK FOR COOPERATIVE FINANCING OF UTILITY-
RELATED SERVICES.
Section 3.7(a) (12 U.S.C. 2128(a)) is amended by
adding before the period at the end of the third sentence
the following: ‘‘; and each bank may make or participate
in loans or commitments and extend other technical and
financial assistance to other parties for electric power gen-
eration and transmission operations and projects that pro-
vide, to entities eligible to borrow from the bank under
section 3.8, power, power generation byproducts, or other
related benefits or services that are of material economic
benefit to such eligible entities’’.
TITLE III—CREDIT FOR RURAL HOUSING
SEC. 301. IMPROVING THE AVAILABILITY OF CREDIT FOR
RURAL HOME BUYERS.
(a) POPULATION LIMITATIONS.—
(1) FARM CREDIT BANKS.—Section 1.11(b)(3)
(12 U.S.C. 2019(b)(3)) is amended by striking out
‘‘2,500 inhabitants’’ and inserting in lieu thereof
‘‘20,000 inhabitants’’.
(2) PRODUCTION CREDIT ASSOCIATIONS.—Sec-
tion 2.4(b)(3) (12 U.S.C. 2075(b)(3)) is amended by