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‘‘(ii) REPORTING
BY
HOUSEHOLDS
WITH
EXCESS
INCOME.—A household re-
quired to report less often than once each 3
months shall, notwithstanding subpara-
graph (B), report in a manner prescribed
by the Secretary if the income of the house-
hold for any month exceeds the standard es-
tablished under section 5(c)(2).’’.
SEC. 421. BENEFITS FOR ADULTS WITHOUT DEPENDENTS.
(a) IN GENERAL.—Section 6(o) of the Food Stamp Act
of 1977 (7 U.S.C. 2015(o)) is amended—
(1) in paragraph (1)—
(A) in subparagraph (B), by striking ‘‘and’’
at the end;
(B) in subparagraph (C)—
(i) by striking ‘‘subsection (d)(4),’’ and
inserting ‘‘subsection (d)(4)’’; and
(ii) by striking the period at the end
and inserting ‘‘; and’’; and
(C) by adding at the end the following:
‘‘(D) a job search program or job search
training program if—
‘‘(i) the program meets standards es-
tablished by the Secretary to ensure that the
participant is continuously and actively
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seeking employment in the private sector;
and
‘‘(ii) no position is currently available
for the participant in an employment or
training program that meets the require-
ments of subparagraph (C).’’;
(2) in paragraph (2)—
(A) by striking ‘‘36-month’’ and inserting
‘‘24-month’’; and
(B) by striking ‘‘3’’ and inserting ‘‘6’’;
(3) by striking paragraph (5) and inserting the
following:
‘‘(5) ELIGIBILITY OF INDIVIDUALS WHILE MEET-
ING
WORK
REQUIREMENT.—Notwithstanding para-
graph (2), an individual who would otherwise be in-
eligible under that paragraph shall be eligible to par-
ticipate in the food stamp program during any pe-
riod in which the individual meets the work require-
ment of subparagraph (A), (B), or (C) of that para-
graph.’’; and
(4) in paragraph (6)(A)(ii)—
(A) in subclause (III), by adding ‘‘and’’ at
the end;
(B) in subclause (IV)—
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(i) by striking ‘‘3’’ and inserting ‘‘6’’;
and
(ii) by striking ‘‘; and’’ and inserting
a period; and
(C) by striking subclause (V).
(b) IMPLEMENTATION OF AMENDMENTS.—For the pur-
pose of implementing the amendments made by subsection
(a), a State agency shall disregard any period during which
an individual received food stamp benefits before the effec-
tive date of this title.
SEC. 422. PRESERVATION OF ACCESS TO ELECTRONIC BEN-
EFITS.
(a) IN GENERAL.—Section 7(i)(1) of the Food Stamp
Act of 1977 (7 U.S.C. 2016(i)(1)) is amended by adding
at the end the following:
‘‘(E) ACCESS TO EBT SYSTEMS.—
‘‘(i) IN GENERAL.—No benefits shall be
taken off-line or otherwise made inaccessible
because of inactivity until at least 180 days
have elapsed since a household last accessed
the account of the household.
‘‘(ii) NOTICE TO HOUSEHOLD.—In a
case in which benefits are taken off-line or
otherwise made inaccessible, the household
shall be sent a notice that—
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‘‘(I) explains how to reactivate the
benefits; and
‘‘(II) offers assistance if the house-
hold is having difficulty accessing the
benefits of the household.’’.
(b) APPLICABILITY.—The amendment made by sub-
section (a) shall apply with respect to each State agency
beginning on the date on which the State agency, after the
date of enactment of this Act, enters into a contract to oper-
ate an electronic benefit transfer system.
SEC. 423. COST NEUTRALITY FOR ELECTRONIC BENEFIT
TRANSFER SYSTEMS.
Section 7(i)(2) of the Food Stamp Act of 1977 (7
U.S.C. 2016(i)(2)) is amended—
(1) by striking subparagraph (A); and
(2) by redesignating subparagraphs (B) through
(I) as subparagraphs (A) through (H), respectively.
SEC. 424. ALTERNATIVE PROCEDURES FOR RESIDENTS OF
CERTAIN GROUP FACILITIES.
(a) IN GENERAL.—Section 8 of the Food Stamp Act
of 1977 (7 U.S.C. 2017) is amended by adding at the end
the following:
‘‘(f) SIMPLIFIED PROCEDURES FOR RESIDENTS OF
CERTAIN GROUP FACILITIES.—
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‘‘(1) IN GENERAL.—At the option of the State
agency, allotments for residents of facilities described
in subparagraph (B), (C), (D), or (E) of section
3(i)(5) may be determined and issued under this sub-
section in lieu of subsection (a).
‘‘(2) AMOUNT
OF
ALLOTMENT.—The allotment
for each eligible resident described in paragraph (1)
shall be calculated in accordance with standardized
procedures established by the Secretary that take into
account the allotments typically received by residents
of facilities described in paragraph (1).
‘‘(3) ISSUANCE OF ALLOTMENT.—
‘‘(A) IN GENERAL.—The State agency shall
issue an allotment determined under this sub-
section to the administration of a facility de-
scribed in paragraph (1) as the authorized rep-
resentative of the residents of the facility.
‘‘(B) ADJUSTMENT.—The Secretary shall es-
tablish procedures to ensure that a facility de-
scribed in paragraph (1) does not receive a
greater proportion of a resident’s monthly allot-
ment than the proportion of the month during
which the resident lived in the facility.
‘‘(4) DEPARTURES OF COVERED RESIDENTS.—
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‘‘(A) NOTIFICATION.—Any facility described
in paragraph (1) that receives an allotment for
a resident under this subsection shall—
‘‘(i) notify the State agency promptly
on the departure of the resident; and
‘‘(ii) notify the resident, before the de-
parture of the resident, that the resident—
‘‘(I) is eligible for continued bene-
fits under the food stamp program;
and
‘‘(II) should contact the State
agency concerning continuation of the
benefits.
‘‘(B) 
ISSUANCE
TO
DEPARTED
RESI-
DENTS.—On receiving a notification under sub-
paragraph (A)(i) concerning the departure of a
resident, the State agency—
‘‘(i) shall promptly issue the departed
resident an allotment for the days of the
month after the departure of the resident
(calculated in a manner prescribed by the
Secretary) unless the departed resident re-
applies to participate in the food stamp
program; and
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‘‘(ii) may issue an allotment for the
month following the month of the departure
(but not any subsequent month) based on
this subsection unless the departed resident
reapplies to participate in the food stamp
program.
‘‘(C) STATE
OPTION.—The State agency
may elect not to issue an allotment under sub-
paragraph (B)(i) if the State agency lacks suffi-
cient information on the location of the departed
resident to provide the allotment.
‘‘(D) EFFECT
OF
REAPPLICATION.—If the
departed resident reapplies to participate in the
food stamp program, the allotment of the de-
parted resident shall be determined without re-
gard to this subsection.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 3(i) of the Food Stamp Act of 1977
(7 U.S.C. 2012(i)) is amended—
(A) by striking ‘‘(i) ‘Household’ means (1)
an’’ and inserting the following:
‘‘(i)(1) ‘Household’ means—
‘‘(A) an’’;
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(B) in the first sentence, by striking ‘‘others,
or (2) a group’’ and inserting the following:
‘‘others; or
‘‘(B) a group’’;
(C) in the second sentence, by striking
‘‘Spouses’’ and inserting the following:
‘‘(2) Spouses’’;
(D) in the third sentence, by striking ‘‘Not-
withstanding’’ and inserting the following:
‘‘(3) Notwithstanding’’;
(E) in paragraph (3) (as designated by sub-
paragraph (D)), by striking ‘‘the preceding sen-
tences’’ and inserting ‘‘paragraphs (1) and (2)’’;
(F) in the fourth sentence, by striking ‘‘In
no event’’ and inserting the following:
‘‘(4) In no event’’;
(G) in the fifth sentence, by striking ‘‘For
the purposes of this subsection, residents’’ and
inserting the following:
‘‘(5) For the purposes of this subsection, the following
persons shall not be considered to be residents of institutions
and shall be considered to be individual households:
‘‘(A) Residents’’; and
(H) in paragraph (5) (as designated by
subparagraph (G))—
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(i) by striking ‘‘Act, or are individ-
uals’’ and inserting the following: ‘‘Act.
‘‘(B) Individuals’’;
(ii) by striking ‘‘such section, tem-
porary’’ and inserting the following: ‘‘that
section.
‘‘(C) Temporary’’;
(iii) by striking ‘‘children, residents’’
and inserting the following: ‘‘children.
‘‘(D) Residents’’;
(iv) by striking ‘‘coupons, and nar-
cotics’’ and inserting the following: ‘‘cou-
pons.
‘‘(E) Narcotics’’; and
(v) by striking ‘‘shall not’’ and all that
follows and inserting a period.
(2) Section 5(a) of the Food Stamp Act of 1977
(7 U.S.C. 2014(a)) is amended by striking ‘‘the third
sentence of section 3(i)’’ each place it appears and in-
serting ‘‘section 3(i)(4)’’.
(3) Section 8(e)(1) of the Food Stamp Act of
1977 (7 U.S.C. 2017(e)(1)) is amended by striking
‘‘the last sentence of section 3(i)’’ and inserting ‘‘sec-
tion 3(i)(5)’’.
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(4) Section 17(b)(1)(B)(iv)(III)(aa) of the Food
Stamp 
Act 
of 
1977 
(7 
U.S.C.
2026(b)(1)(B)(iv)(III)(aa)) is amended by striking
‘‘the last 2 sentences of section 3(i)’’ and inserting
‘‘paragraphs (4) and (5) of section 3(i)’’.
SEC. 425. REDEMPTION OF BENEFITS THROUGH GROUP LIV-
ING ARRANGEMENTS.
Section 10 of the Food Stamp Act of 1977 (7 U.S.C.
2019) is amended by inserting after the first sentence the
following: ‘‘Notwithstanding the preceding sentence, a cen-
ter, organization, institution, shelter, group living arrange-
ment, or establishment described in that sentence may be
authorized to redeem coupons through a financial institu-
tion described in that sentence if the center, organization,
institution, shelter, group living arrangement, or establish-
ment is equipped with 1 or more point-of-sale devices and
is operating in an area in which an electronic benefit trans-
fer system described in section 7(i) has been implemented.’’.
SEC. 426. AVAILABILITY OF FOOD STAMP PROGRAM APPLI-
CATIONS ON THE INTERNET.
Section 11(e)(2)(B)(ii) of the Food Stamp Act of 1977
(7 U.S.C. 2020(e)(2)(B)(ii)) is amended—
(1) by inserting ‘‘(I)’’ after ‘‘(ii)’’;
(2) in subclause (I) (as designated by paragraph
(1)), by adding ‘‘and’’ at the end; and
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(3) by adding at the end the following:
‘‘(II) if the State agency maintains a
website for the State agency, shall make the ap-
plication available on the website in each lan-
guage in which the State agency makes a printed
application available;’’.
SEC. 427. SIMPLIFIED DETERMINATIONS OF CONTINUING
ELIGIBILITY.
(a) IN GENERAL.—Section 11(e) of the Food Stamp
Act of 1977 (7 U.S.C. 2020(e)) is amended—
(1) by striking paragraph (4) and inserting the
following:
‘‘(4)(A) that the State agency shall periodically
require each household to cooperate in a redetermina-
tion of the eligibility of the household.
‘‘(B) A redetermination under subparagraph (A)
shall—
‘‘(i) be based on information supplied by
the household; and
‘‘(ii) conform to standards established by
the Secretary.
‘‘(C) The interval between redeterminations of
eligibility under subparagraph (A) shall not exceed
the eligibility review period;’’ and
(2) in paragraph (10)—
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(A) by striking ‘‘within the household’s cer-
tification period’’; and
(B) by striking ‘‘or until’’ and all that fol-
lows through ‘‘occurs earlier’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 3(c) of the Food Stamp Act of 1977
(7 U.S.C. 2012(c)) is amended—
(A) by striking ‘‘Certification period’’ and
inserting ‘‘Eligibility review period’’; and
(B) by striking ‘‘certification period’’ each
place it appears and inserting ‘‘eligibility review
period’’.
(2) Section 5 of the Food Stamp Act of 1977 (7
U.S.C. 2014) is amended—
(A) in subsection (d)(2), by striking ‘‘in the
certification period which’’ and inserting ‘‘that’’;
and
(B) in subsection (e) (as amended by section
414(b)(1)(B))—
(i) in paragraph (5)(B)(ii)—
(I) in subclause (II), by striking
‘‘certification period’’ and inserting
‘‘eligibility review period’’; and
(II) in subclause (III), by striking
‘‘has been anticipated for the certifi-
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cation period’’ and inserting ‘‘was an-
ticipated when the household applied
or at the most recent redetermination
of eligibility for the household’’; and
(ii) in paragraph (6)(C)(iii)(II), by
striking ‘‘the end of a certification period’’
and inserting ‘‘each redetermination of the
eligibility of the household’’.
(3) Section 6 of the Food Stamp Act of 1977 (7
U.S.C. 2015) is amended—
(A) in subsection (c)(1)(C)(iv), by striking
‘‘certification period’’ each place it appears and
inserting ‘‘interval between required redeter-
minations of eligibility’’; and
(B) in subsection (d)(1)(D)(v)(II), by strik-
ing ‘‘a certification period’’ and inserting ‘‘an
eligibility review period’’.
(4) Section 8(c) of the Food Stamp Act of 1977
(7 U.S.C. 2017(c)) is amended—
(A) in the second sentence of paragraph (1),
by striking ‘‘within a certification period’’; and
(B) in paragraph (2)(B), by striking ‘‘expi-
ration of’’ and all that follows through ‘‘during
a certification period,’’ and inserting ‘‘termi-
nation of benefits to the household,’’.
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(5) Section 11(e)(16) of the Food Stamp Act of
1977 (7 U.S.C. 2020(e)(16)) is amended by striking
‘‘the certification or recertification’’ and inserting
‘‘determining the eligibility’’.
SEC. 428. CLEARINGHOUSE FOR SUCCESSFUL NUTRITION
EDUCATION EFFORTS.
Section 11(f) of the Food Stamp Act of 1977 (7 U.S.C.
2020(f)) is amended by striking paragraph (2) and insert-
ing the following:
‘‘(2) NUTRITION EDUCATION CLEARINGHOUSE.—
The Secretary shall—
‘‘(A) request State agencies to submit to the
Secretary descriptions of successful nutrition
education programs designed for use in the food
stamp program and other nutrition assistance
programs;
‘‘(B) make the descriptions submitted under
subparagraph (A) available on the website of the
Department of Agriculture; and
‘‘(C) inform State agencies of the avail-
ability of the descriptions on the website.’’.
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SEC. 429. TRANSITIONAL FOOD STAMPS FOR FAMILIES
MOVING FROM WELFARE.
(a) IN GENERAL.—Section 11 of the Food Stamp Act
of 1977 (7 U.S.C. 2020) is amended by adding at the end
the following:
‘‘(s) TRANSITIONAL BENEFITS OPTION.—
‘‘(1) IN GENERAL.—A State agency may provide
transitional food stamp benefits to a household that
ceases to receive cash assistance under a State pro-
gram funded under part A of title IV of the Social
Security Act (42 U.S.C. 601 et seq.).
‘‘(2) TRANSITIONAL BENEFITS PERIOD.—Under
paragraph (1), a household may continue to receive
food stamp benefits for a period of not more than 6
months after the date on which cash assistance is ter-
minated.
‘‘(3) AMOUNT OF BENEFITS.—During the transi-
tional benefits period under paragraph (2), a house-
hold shall receive an amount of food stamp benefits
equal to the allotment received in the month imme-
diately preceding the date on which cash assistance
was terminated, adjusted for—
‘‘(A) the change in household income as a
result of the termination of cash assistance; and
‘‘(B) any changes in circumstances that
may result in an increase in the food stamp al-
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lotment of the household and that the household
elects to report.
‘‘(4) 
DETERMINATION
OF
FUTURE
ELIGI-
BILITY.—In the final month of the transitional bene-
fits period under paragraph (2), the State agency
may—
‘‘(A) require the household to cooperate in a
redetermination of eligibility; and
‘‘(B) initiate a new eligibility review period
for the household without regard to whether the
preceding eligibility review period has expired.
‘‘(5) LIMITATION.—A household shall not be eli-
gible for transitional benefits under this subsection if
the household—
‘‘(A) loses eligibility under section 6;
‘‘(B) is sanctioned for a failure to perform
an action required by Federal, State, or local
law relating to a cash assistance program de-
scribed in paragraph (1); or
‘‘(C) is a member of any other category of
households designated by the State agency as in-
eligible for transitional benefits.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 3(c) of the Food Stamp Act of 1977
(7 U.S.C. 2012(c)) is amended by adding at the end
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the following: ‘‘The limits specified in this section
may be extended until the end of any transitional
benefit period established under section 11(s).’’.
(2) Section 6(c) of the Food Stamp Act of 1977
(7 U.S.C. 2015(c)) is amended by striking ‘‘No house-
hold’’ and inserting ‘‘Except in a case in which a
household is receiving transitional benefits during the
transitional benefits period under section 11(s), no
household’’.
SEC. 430. DELIVERY TO RETAILERS OF NOTICES OF AD-
VERSE ACTION.
Section 14(a) of the Food Stamp Act of 1977 (7 U.S.C.
2023(a)) is amended by striking paragraph (2) and insert-
ing the following:
‘‘(2) DELIVERY
OF
NOTICES.—A notice under
paragraph (1) shall be delivered by any form of deliv-
ery that the Secretary determines will provide evi-
dence of the delivery.’’.
SEC. 431. REFORM OF QUALITY CONTROL SYSTEM.
(a) IN GENERAL.—Section 16(c) of the Food Stamp
Act of 1977 (7 U.S.C. 2025(c)) is amended—
(1) in paragraph (1)—
(A) by striking ‘‘enhances payment accu-
racy’’ and all that follows through ‘‘(A) the Sec-
retary’’ and inserting the following: ‘‘enhances
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payment accuracy and that has the following ele-
ments:
‘‘(A) ENHANCED
ADMINISTRATIVE
FUND-
ING.—With respect to fiscal year 2001, the Sec-
retary’’;
(B) in subparagraph (A)—
(i) by striking ‘‘one percentage point to
a maximum of 60’’ and inserting ‘‘1⁄2 of 1
percentage point to a maximum of 55’’; and
(ii) by striking the semicolon at the
end and inserting a period; and
(C) by striking subparagraph (B) and all
that follows and inserting the following:
‘‘(B) INVESTIGATION
AND
INITIAL
SANC-
TIONS.—
‘‘(i) INVESTIGATION.—Except as pro-
vided under subparagraph (C), for any fis-
cal year in which the Secretary determines
that a 95 percent statistical probability ex-
ists that the payment error rate of a State
agency exceeds the national performance
measure for payment error rates announced
under paragraph (6) by more than 1 per-
centage point, other than for good cause
shown, the Secretary shall investigate the
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administration by the State agency of the
food stamp program unless the Secretary
determines that sufficient information is al-
ready available to review the administra-
tion by the State agency.
‘‘(ii) INITIAL SANCTIONS.—If an inves-
tigation under clause (i) results in a deter-
mination that the State agency has been se-
riously negligent (as determined under
standards promulgated by the Secretary),
the State agency shall pay the Secretary an
amount that reflects the extent of such neg-
ligence (as determined under standards pro-
mulgated by the Secretary), not to exceed 5
percent of the amount provided to the State
agency under subsection (a) for the fiscal
year.
‘‘(C) ADDITIONAL SANCTIONS.—If, for any
fiscal year, the Secretary determines that a 95
percent statistical probability exists that the
payment error rate of a State agency exceeds the
national performance measure for payment error
rates announced under paragraph (6) by more
than 1 percentage point, other than for good
cause shown, and that the State agency was
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sanctioned under this paragraph or was the sub-
ject of an investigation or review under subpara-
graph (B)(i) for each of the 2 immediately pre-
ceding fiscal years, the State agency shall pay to
the Secretary an amount equal to the product ob-
tained by multiplying—
‘‘(i) the value of all allotments issued
by the State agency in the fiscal year;
‘‘(ii) the lesser of—
‘‘(I) the ratio that—
‘‘(aa) the amount by which
the payment error rate of the
State agency for the fiscal year
exceeds by more than 1 percentage
point the national performance
measure for the fiscal year; bears
to
‘‘(bb) 10 percent; or
‘‘(II) 1; and
‘‘(iii) the amount by which the pay-
ment error rate of the State agency for the
fiscal year exceeds by more than 1 percent-
age point the national performance measure
for the fiscal year.
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‘‘(D) CORRECTIVE
ACTION
PLANS.—The
Secretary shall foster management improvements
by the States by requiring State agencies to de-
velop and implement corrective action plans to
reduce payment errors.’’;
(2) in paragraph (2)(A), by inserting before the
semicolon the following: ‘‘, as adjusted downward as
appropriate under paragraph (10)’’;
(3) in paragraph (4), by striking ‘‘(4)’’ and all
that follows through the end of the first sentence and
inserting the following:
‘‘(4) REPORTING
REQUIREMENTS.—The Sec-
retary may require a State agency to report any fac-
tors that the Secretary considers necessary to deter-
mine a State agency’s payment error rate, enhanced
administrative funding, claim for payment error
under paragraph (1), or performance under the per-
formance measures under paragraph (11).’’;
(4) in paragraph (5), by striking ‘‘(5)’’ and all
that follows through the end of the second sentence
and inserting the following:
‘‘(5) PROCEDURES.—To facilitate the implemen-
tation of this subsection, each State agency shall expe-
ditiously submit to the Secretary data concerning the
operations of the State agency in each fiscal year suf-
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ficient for the Secretary to establish the payment
error rate for the State agency for the fiscal year, to
comply with paragraph (10), and to determine the
amount of enhanced administrative funding under
paragraph (1)(A), high performance bonus payments
under paragraph (11), or claims under subparagraph
(B) or (C) of paragraph (1).’’;
(5) in paragraph (6)—
(A) in the first and third sentences, by
striking ‘‘paragraph (5)’’ each place it appears
and inserting ‘‘paragraph (8)’’; and
(B) in the first sentence, by inserting ‘‘(but
determined without regard to paragraph (10))’’
before ‘‘times that’’; and
(6) by adding at the end the following:
‘‘(10) 
ADJUSTMENTS
OF
PAYMENT
ERROR
RATE.—
‘‘(A) IN GENERAL.—
‘‘(i) ADJUSTMENT FOR HIGHER PER-
CENTAGE OF HOUSEHOLDS WITH EARNED
INCOME.—With respect to fiscal year 2002
and each fiscal year thereafter, in applying
paragraph (1), the Secretary shall adjust
the payment error rate determined under
paragraph (2)(A) as necessary to take into
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account any increases in errors that result
from the State agency’s having a higher
percentage of participating households that
have earned income than the lesser of—
‘‘(I) the percentage of partici-
pating households in all States that
have earned income; or
‘‘(II) the percentage of partici-
pating households in the State in fiscal
year 1992 that had earned income.
‘‘(ii) ADJUSTMENT FOR HIGHER PER-
CENTAGE
OF
HOUSEHOLDS
WITH
NONCIT-
IZEN MEMBERS.—With respect to fiscal year
2002 and each fiscal year thereafter, in ap-
plying paragraph (1), the Secretary shall
adjust the payment error rate determined
under paragraph (2)(A) as necessary to
take into account any increases in errors
that result from the State agency’s having a
higher percentage of participating house-
holds that have 1 or more members who are
not United States citizens than the lesser
of—
‘‘(I) the percentage of partici-
pating households in all States that
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have 1 or more members who are not
United States citizens; or
‘‘(II) the percentage of partici-
pating households in the State in fiscal
year 1998 that had 1 or more members
who were not United States citizens.
‘‘(B) ADDITIONAL ADJUSTMENTS.—For fis-
cal year 2003 and each fiscal year thereafter, the
Secretary may make such additional adjust-
ments to the payment error rate determined
under paragraph (2)(A) as the Secretary deter-
mines to be consistent with achieving the pur-
poses of this Act.’’.
(b) APPLICABILITY.—Except as otherwise provided in
the amendments made by subsection (a), the amendments
made by subsection (a) shall apply to fiscal year 2001 and
each fiscal year thereafter.
SEC. 432. IMPROVEMENT OF CALCULATION OF STATE PER-
FORMANCE MEASURES.
(a) IN GENERAL.—Section 16(c)(8) of the Food Stamp
Act of 1977 (7 U.S.C. 2025(c)(8)) is amended—
(1) in subparagraph (B), by striking ‘‘180 days
after the end of the fiscal year’’ and inserting ‘‘the
first May 31 after the end of the fiscal year referred
to in subparagraph (A)’’; and
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(2) in subparagraph (C), by striking ‘‘30 days
thereafter’’ and inserting ‘‘the first June 30 after the
end of the fiscal year referred to in subparagraph
(A)’’.
(b) EFFECTIVE DATE.—The amendments made by this
section take effect on the date of enactment of this Act.
SEC. 433. BONUSES FOR STATES THAT DEMONSTRATE HIGH
PERFORMANCE.
(a) IN GENERAL.—Section 16(c) of the Food Stamp
Act of 1977 (7 U.S.C. 2025(c)) (as amended by section
431(a)(6)) is amended by adding at the end the following:
‘‘(11) HIGH PERFORMANCE BONUS PAYMENTS.—
‘‘(A) IN GENERAL.—The Secretary shall—
‘‘(i) with respect to fiscal year 2002
and each fiscal year thereafter, measure the
performance of each State agency with re-
spect to each of the performance measures
specified in subparagraph (B); and
‘‘(ii) in fiscal year 2003 and each fis-
cal year thereafter, subject to subparagraphs
(C) and (D), make high performance bonus
payments to the State agencies with the
highest or most improved performance with
respect to those performance measures.
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‘‘(B) PERFORMANCE MEASURES.—The per-
formance measures specified in this subpara-
graph are—
‘‘(i) the ratio, expressed as a percent-
age, that—
‘‘(I) the number of households in
the State that—
‘‘(aa) receive food stamps;
‘‘(bb) have incomes less than
130 percent of the poverty line (as
defined in section 673 of the Com-
munity Services Block Grant Act
(42 U.S.C. 9902));
‘‘(cc) have annual earnings
equal to at least 1000 times the
Federal minimum hourly rate
under the Fair Labor Standards
Act of 1938 (29 U.S.C. 201 et
seq.); and
‘‘(dd) have children under
age 18; bears to
‘‘(II) the number of households in
the State that meet the criteria speci-
fied in items (bb) through (dd) of sub-
clause (I); and
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‘‘(ii) 4 additional performance meas-
ures, established by the Secretary in con-
sultation with the National Governors Asso-
ciation, the American Public Human Serv-
ices Association, and the National Con-
ference of State Legislatures not later than
180 days after the date of enactment of this
paragraph, of which not less than 1 per-
formance measure shall relate to provision
of timely and appropriate services to appli-
cants for and recipients of food stamp bene-
fits.
‘‘(C) HIGH
PERFORMANCE
BONUS
PAY-
MENTS.—
‘‘(i) DEFINITION
OF
CASELOAD.—In
this subparagraph, the term ‘caseload’ has
the meaning given the term in section
6(o)(6)(A).
‘‘(ii) AMOUNT OF PAYMENTS.—
‘‘(I) IN GENERAL.—In fiscal year
2003 and each fiscal year thereafter,
the Secretary shall—
‘‘(aa) make 1 high perform-
ance bonus payment of $6,000,000
for each of the 5 performance
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measures 
under 
subparagraph
(B); and
‘‘(bb) allocate the high per-
formance bonus payment with re-
spect to each performance measure
in accordance with subclauses (II)
and (III).
‘‘(II) PAYMENTS
FOR
PERFORM-
ANCE MEASURES.—In fiscal year 2003
and each fiscal year thereafter, the Sec-
retary shall allocate, in accordance
with subclause (III), the high perform-
ance bonus payment made for each
performance measure under subpara-
graph (B) among the 6 State agencies
with, as determined by the Secretary
by regulation—
‘‘(aa) the greatest improve-
ment in the level of performance
with respect to the performance
measure between the 2 most recent
years for which the Secretary de-
termines that reliable data are
available;
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‘‘(bb) the highest performance
in the performance measure for
the most recent year for which the
Secretary determines that reliable
data are available; or
‘‘(cc) a combination of the
greatest improvement described in
item (aa) and the highest per-
formance described in item (bb).
‘‘(III) ALLOCATION AMONG STATE
AGENCIES ELIGIBLE FOR PAYMENTS.—
A high performance bonus payment
under subclause (II) made for a per-
formance measure shall be allocated
among the 6 State agencies eligible for
the payment in the ratio that—
‘‘(aa) the caseload of each of
the 6 State agencies eligible for
the payment; bears to
‘‘(bb) the caseloads of the 6
State agencies eligible for the pay-
ment.
‘‘(D) PROHIBITION ON RECEIPT OF HIGH
PERFORMANCE
BONUS
PAYMENTS
BY
STATE
AGENCIES SUBJECT TO SANCTIONS.—If, for any
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fiscal year, a State agency is subject to a sanc-
tion under paragraph (1), the State agency shall
not be eligible for a high performance bonus pay-
ment for the fiscal year.
‘‘(E) PAYMENTS NOT SUBJECT TO JUDICIAL
REVIEW.—A determination by the Secretary
whether, and in what amount, to make a high
performance bonus payment under this para-
graph shall not be subject to judicial review.’’.
(b) APPLICABILITY.—The amendment made by sub-
section (a) takes effect on the date of enactment of this Act.
SEC. 434. EMPLOYMENT AND TRAINING PROGRAM.
(a) LEVELS OF FUNDING.—Section 16(h)(1) of the
Food Stamp Act of 1977 (7 U.S.C. 2025(h)(1)) is
amended—
(1) in subparagraph (A)—
(A) by striking ‘‘, to remain available until
expended,’’; and
(B) by striking clause (vii) and inserting
the following:
‘‘(vii) for each of fiscal years 2002
through 2006, $90,000,000, to remain avail-
able until expended.’’;
(2) by striking subparagraph (B) and inserting
the following:
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‘‘(B) ALLOCATION.—Funds made available
under subparagraph (A) shall be made available
to and reallocated among State agencies under a
reasonable formula that—
‘‘(i) is determined and adjusted by the
Secretary; and
‘‘(ii) takes into account the number of
individuals who are not exempt from the
work requirement under section 6(o).’’; and
(3) by striking subparagraphs (E) through (G)
and inserting the following:
‘‘(E) 
ADDITIONAL
ALLOCATIONS
FOR
STATES THAT ENSURE AVAILABILITY OF WORK
OPPORTUNITIES.—
‘‘(i) IN GENERAL.—In addition to the
allocations under subparagraph (A), from
funds 
made 
available 
under 
section
18(a)(1), the Secretary shall allocate not
more than $25,000,000 for each of fiscal
years 2002 through 2006 to reimburse a
State agency that is eligible under clause
(ii) for the costs incurred in serving food
stamp recipients who—
‘‘(I) are not eligible for an excep-
tion under section 6(o)(3); and
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‘‘(II) are placed in and comply
with a program described in subpara-
graph (B) or (C) of section 6(o)(2).
‘‘(ii) ELIGIBILITY.—To be eligible for
an additional allocation under clause (i), a
State agency shall—
‘‘(I) exhaust the allocation to the
State agency under subparagraph (A)
(including any reallocation that has
been made available under subpara-
graph (C)); and
‘‘(II) make and comply with a
commitment to offer a position in a
program described in subparagraph
(B) or (C) of section 6(o)(2) to each
applicant or recipient who—
‘‘(aa) is in the last month of
the 6-month period described in
section 6(o)(2);
‘‘(bb) is not eligible for an
exception under section 6(o)(3);
‘‘(cc) is not eligible for a
waiver under section 6(o)(4); and
‘‘(dd) is not eligible for an
exemption under section 6(o)(6).’’.
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(b) RESCISSION
OF CARRYOVER FUNDS.—Notwith-
standing any other provision of law, funds provided under
section 16(h)(1)(A) of the Food Stamp Act of 1977 (7
U.S.C. 2025(h)(1)(A)) for any fiscal year before fiscal year
2002 shall cease to be available on the date of enactment
of this Act, unless obligated by a State agency before that
date.
(c) PARTICIPANT EXPENSES.—Section 6(d)(4)(I)(i)(I)
of 
the 
Food 
Stamp 
Act 
of 
1977 
(7 
U.S.C.
2015(d)(4)(I)(i)(I)) is amended by striking ‘‘except that the
State agency may limit such reimbursement to each partici-
pant to $25 per month’’ and inserting ‘‘except that, in the
case of each of fiscal years 2002 through 2009, the State
agency may limit such reimbursement to each participant
to $50 per month’’.
(d) FEDERAL REIMBURSEMENT.—Section 16(h)(3) of
the Food Stamp Act of 1977 (7 U.S.C. 2025(h)(3)) is
amended by striking ‘‘except that such total amount shall
not exceed an amount representing $25 per participant per
month’’ and inserting ‘‘except that, in the case of each of
fiscal years 2002 through 2009, such total amount shall not
exceed an amount representing $50 per participant per
month’’.
(e) EFFECTIVE DATE.—The amendments made by this
section take effect on the date of enactment of this Act.
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SEC. 435. REAUTHORIZATION OF FOOD STAMP PROGRAM
AND FOOD DISTRIBUTION PROGRAM ON IN-
DIAN RESERVATIONS.
(a) REDUCTIONS IN PAYMENTS FOR ADMINISTRATIVE
COSTS.—Section 16(k)(3) of the Food Stamp Act of 1977
(7 U.S.C. 2025(k)(3)) is amended—
(1) in the first sentence of subparagraph (A), by
striking ‘‘2002’’ and inserting ‘‘2006’’; and
(2) in subparagraph (B)(ii), by striking ‘‘2002’’
and inserting ‘‘2006’’.
(b) CASH
PAYMENT
PILOT
PROJECTS.—Section
17(b)(1)(B)(vi) of the Food Stamp Act of 1977 (7 U.S.C.
2026(b)(1)(B)(vi)) is amended by striking ‘‘2002’’ and in-
serting ‘‘2006’’.
(c) GRANTS TO IMPROVE FOOD STAMP PARTICIPA-
TION.—Section 17(i)(1)(A) of the Food Stamp Act of 1977
(7 U.S.C. 2026(i)(1)(A)) is amended in the first sentence
by striking ‘‘2002’’ and inserting ‘‘2006’’.
(d) AUTHORIZATION
OF APPROPRIATIONS.—Section
18(a)(1) of the Food Stamp Act of 1977 (7 U.S.C.
2027(a)(1)) is amended in the first sentence by striking
‘‘2002’’ and inserting ‘‘2006’’.
SEC. 436. COORDINATION OF PROGRAM INFORMATION EF-
FORTS.
Section 16(k)(5) of the Food Stamp Act of 1977 (7
U.S.C. 2025(k)(5)) is amended—
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(1) in subparagraph (A), by striking ‘‘No funds’’
and inserting ‘‘Except as provided in subparagraph
(C), no funds’’; and
(2) by adding at the end the following:
‘‘(C) FOOD STAMP INFORMATIONAL ACTIVI-
TIES.—Subparagraph (A) shall not apply to any
funds or expenditures described in clause (i) or
(ii) of subparagraph (B) used to pay the costs of
any activity that is eligible for reimbursement
under subsection (a)(4).’’.
SEC. 437. EXPANDED GRANT AUTHORITY.
Section 17(a)(1) of the Food Stamp Act of 1977 (7
U.S.C. 2026(a)(1)) is amended—
(1) by striking ‘‘, by way of making contracts
with or grants to public or private organizations or
agencies,’’ and inserting ‘‘enter into contracts with or
make grants to public or private organizations or
agencies under this section to’’; and
(2) by adding at the end the following: ‘‘The
waiver authority of the Secretary under subsection (b)
shall extend to all contracts and grants under this
section.’’.
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SEC. 438. ACCESS AND OUTREACH PILOT PROJECTS.
Section 17 of the Food Stamp Act of 1977 (7 U.S.C.
2026) is amended by striking subsection (h) and inserting
the following:
‘‘(h) ACCESS AND OUTREACH PILOT PROJECTS.—
‘‘(1) IN
GENERAL.—The Secretary shall make
grants to State agencies and other entities to pay the
Federal share of the eligible costs of projects to
improve—
‘‘(A) access by eligible individuals to bene-
fits under the food stamp program; or
‘‘(B) outreach to individuals eligible for
those benefits.
‘‘(2) FEDERAL SHARE.—The Federal share shall
be 75 percent.
‘‘(3) TYPES OF PROJECTS.—To be eligible for a
grant under this subsection, a project may consist
of—
‘‘(A) establishing a single site at which in-
dividuals may apply for—
‘‘(i) benefits under the food stamp pro-
gram; and
‘‘(ii)(I) supplemental security income
benefits under title XVI of the Social Secu-
rity Act (42 U.S.C. 1381 et seq.);
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‘‘(II) benefits under the medicaid pro-
gram under title XIX of the Social Security
Act (42 U.S.C. 1396 et seq.);
‘‘(III) benefits under the State chil-
dren’s health insurance program under title
XXI of the Social Security Act (42 U.S.C.
1397aa et seq.);
‘‘(IV) benefits under the special supple-
mental nutrition program for women, in-
fants, and children under section 17 of the
Child Nutrition Act of 1966 (42 U.S.C.
1786); or
‘‘(V) benefits under such other pro-
grams as the Secretary determines to be ap-
propriate;
‘‘(B) developing forms that allow an indi-
vidual to apply for more than 1 of the programs
referred to in subparagraph (A);
‘‘(C) dispatching State agency personnel to
conduct outreach and enroll individuals in the
food stamp program and other programs in non-
traditional venues (such as shopping malls,
schools, community centers, county fairs, clinics,
food banks, and job training centers);
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‘‘(D) developing systems to enable increased
participation in the provision of benefits under
the food stamp program through farmers’ mar-
kets, roadside stands, and other community-sup-
ported agriculture programs, including wireless
electronic benefit transfer systems and other sys-
tems appropriate to open-air settings where
farmers and other vendors sell directly to con-
sumers;
‘‘(E) allowing individuals to submit appli-
cations for the food stamp program by means of
the telephone or the Internet, in particular indi-
viduals who live in rural areas, elderly individ-
uals, and individuals with disabilities;
‘‘(F) encouraging consumption of fruit and
vegetables by developing a cost-effective system
for providing discounts for purchases of fruit
and vegetables made through use of electronic
benefit transfer cards;
‘‘(G) reducing barriers to participation by
individuals, with emphasis on working families,
eligible immigrants, elderly individuals, and in-
dividuals with disabilities;
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‘‘(H) developing training materials, guide-
books, and other resources to improve access and
outreach;
‘‘(I) conforming verification practices under
the food stamp program with verification prac-
tices under other assistance programs; and
‘‘(J) such other activities as the Secretary
determines to be appropriate.
‘‘(4) SELECTION.—
‘‘(A) IN GENERAL.—The Secretary shall de-
velop criteria for selecting recipients of grants
under this subsection that include the consider-
ation of—
‘‘(i) the demonstrated record of a State
agency or other entity in serving low-in-
come individuals;
‘‘(ii) the ability of a State agency or
other entity to reach hard-to-serve popu-
lations;
‘‘(iii) the level of innovative proposals
in the application of a State agency or
other entity for a grant; and
‘‘(iv) the development of partnerships
between public and private sector entities
and linkages with the community.
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‘‘(B) PREFERENCE.—In selecting recipients
of grants under paragraph (1), the Secretary
shall provide a preference to any applicant that
consists of a partnership between a State and a
private entity, such as—
‘‘(i) a food bank;
‘‘(ii) a community-based organization;
‘‘(iii) a public school;
‘‘(iv) a publicly-funded health clinic;
‘‘(v) a publicly-funded day care center;
and
‘‘(vi) a nonprofit health or welfare
agency.
‘‘(C) GEOGRAPHICAL DISTRIBUTION OF RE-
CIPIENTS.—
‘‘(i) IN
GENERAL.—Subject to clause
(ii), the Secretary shall select, from all eligi-
ble applications received, at least 1 recipi-
ent to receive a grant under this subsection
from—
‘‘(I) each region of the Depart-
ment of Agriculture administering the
food stamp program; and
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‘‘(II) each additional rural or
urban area that the Secretary deter-
mines to be appropriate.
‘‘(ii) EXCEPTION.—The Secretary shall
not be required to select grant recipients
under clause (i) to the extent that the Sec-
retary determines that an insufficient num-
ber of eligible grant applications has been
received.
‘‘(5) PROJECT EVALUATIONS.—
‘‘(A) IN
GENERAL.—The Secretary shall
conduct evaluations of projects funded by grants
under this subsection.
‘‘(B) LIMITATION.—Not more than 10 per-
cent of funds made available to carry out this
subsection shall be used for project evaluations
described in subparagraph (A).
‘‘(6) MAINTENANCE OF EFFORT.—A State agency
or other entity shall provide assurances to the Sec-
retary that funds provided to the State agency or
other entity under this subsection will be used only to
supplement, not to supplant, the amount of Federal,
State, and local funds otherwise expended to carry
out access and outreach activities in the State under
this Act.
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‘‘(7) FUNDING.—There is authorized to be appro-
priated to carry out this subsection $3,000,000 for the
period of fiscal years 2003 through 2005.’’.
SEC. 439. CONSOLIDATED BLOCK GRANTS AND ADMINIS-
TRATIVE FUNDS.
(a) CONSOLIDATED FUNDING.—Section 19(a)(1) of the
Food Stamp Act of 1977 (7 U.S.C. 2028(a)(1)) is
amended—
(1) in subparagraph (A)—
(A) by striking ‘‘the Commonwealth of
Puerto Rico’’ and inserting ‘‘governmental enti-
ties specified in subparagraph (D)’’;
(B) in clause (ii), by striking ‘‘and’’ at the
end; and
(C) by striking clause (iii) and all that fol-
lows and inserting the following:
‘‘(iii) for fiscal year 2002, $1,356,000,000; and
‘‘(iv) for each of fiscal years 2003 through 2006,
the amount provided in clause (iii), as adjusted by
the percentage by which the thrifty food plan has been
adjusted under section 3(o)(4) between June 30, 2001,
and June 30 of the immediately preceding fiscal year;
to pay the expenditures for nutrition assistance programs
for needy persons as described in subparagraphs (B) and
(C).’’;
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(2) in subparagraph (B)—
(A) by striking ‘‘(B) The’’ and inserting the
following:
‘‘(B) MAXIMUM
PAYMENTS
TO
COMMON-
WEALTH OF PUERTO RICO.—
‘‘(i) IN GENERAL.—The’’;
(B) by inserting ‘‘of Puerto Rico’’ after
‘‘Commonwealth’’ each place it appears; and
(C) by adding at the end the following:
‘‘(ii) EXCEPTION FOR EXPENDITURES
FOR
CERTAIN
SYSTEMS.—Notwithstanding
subparagraph (A) and clause (i), the Com-
monwealth of Puerto Rico may spend not
more than $6,000,000 of the amount re-
quired to be paid to the Commonwealth for
fiscal year 2002 under subparagraph (A) to
pay 100 percent of the costs of—
‘‘(I) upgrading and modernizing
the electronic data processing system
used to carry out nutrition assistance
programs for needy persons;
‘‘(II) implementing systems to
simplify the determination of eligi-
bility to receive that nutrition assist-
ance; and
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‘‘(III) operating systems to deliver
benefits 
through 
electronic 
benefit
transfers.’’; and
(3) by adding at the end the following:
‘‘(C) AMERICAN
SAMOA.—For each fiscal
year, the Secretary shall reserve 0.4 percent of
the funds made available under subparagraph
(A) for payment to American Samoa to pay 100
percent of the expenditures for a nutrition assist-
ance program extended under section 601(c) of
Public Law 96–597 (48 U.S.C. 1469d(c)).
‘‘(D) GOVERNMENTAL
ENTITY.—A govern-
mental entity specified in this subparagraph
is—
‘‘(i) the Commonwealth of Puerto Rico;
and
‘‘(ii) for fiscal year 2003 and each fis-
cal year thereafter, American Samoa.’’.
(b) REPORT TO CONGRESS AND INCREASED AUTHOR-
IZATION.—
(1) IN GENERAL.—Not later than 270 days after
the date of enactment of this Act, the Comptroller
General of the United States shall develop and submit
to Congress a report that—
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(A) describes the similarities and differences
(in terms of program administration, rules, ben-
efits, and requirements) between—
(i) the food stamp program under the
Food Stamp Act of 1977 (7 U.S.C. 2011 et
seq.), other than section 19 of that Act (7
U.S.C. 2028); and
(ii) the program to provide assistance
to Puerto Rico under section 19 of that Act
(as in effect on the day before the date of en-
actment of this Act);
(B) specifies the costs and savings associ-
ated with each similarity and difference; and
(C) states the recommendation of the Comp-
troller General as to whether additional funding
should be provided to carry out section 19 of that
Act.
(2) INCREASED
AUTHORIZATION.—Effective on
the date of submission to Congress of the report under
paragraph (1), there is authorized to be appropriated
to carry out section 19 of the Food Stamp Act of 1977
(7 U.S.C. 2028) (in addition to amounts made avail-
able to carry out that section under law other than
this subsection) $50,000,000 for each fiscal year.
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(3) LIMITATION.—No amounts may be made
available to carry out paragraph (2) unless specifi-
cally provided by an appropriation Act.
(c) CONFORMING AMENDMENT.—Section 24 of the
Food Stamp Act of 1977 (7 U.S.C. 2033) is repealed.
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section take
effect on October 1, 2002.
(2) EXCEPTION FOR EXPENDITURES FOR CER-
TAIN SYSTEMS.—The amendments made by subsection
(a)(2) take effect on the date of enactment of this Act.
SEC. 440. ASSISTANCE FOR COMMUNITY FOOD PROJECTS.
Section 25 of the Food Stamp Act of 1977 (7 U.S.C.
2034) is amended—
(1) in subsection (b)(2)(B), by striking ‘‘2002’’
and inserting ‘‘2006’’;
(2) in subsection (d)—
(A) in paragraph (3), by striking ‘‘or’’ at
the end; and
(B) by striking paragraph (4) and inserting
the following:
‘‘(4) encourage long-term planning activities,
and multisystem, interagency approaches with multi-
stakeholder collaborations, that build the long-term
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capacity of communities to address the food and agri-
culture problems of the communities, such as food pol-
icy councils and food planning associations; or
‘‘(5) meet, as soon as practicable through the
provision of grants of not to exceed $25,000 each, spe-
cific neighborhood, local, or State food and agri-
culture needs, including needs for—
‘‘(A) infrastructure improvement and devel-
opment (including the purchase of equipment
necessary for the production, handling, or mar-
keting of locally produced food);
‘‘(B) planning for long-term solutions; or
‘‘(C) the creation of innovative marketing
activities that mutually benefit farmers and low-
income consumers.’’; and
(3) in subsection (e)(1), by striking ‘‘50’’ and in-
serting ‘‘75’’.
SEC. 441. AVAILABILITY OF COMMODITIES FOR THE EMER-
GENCY FOOD ASSISTANCE PROGRAM.
(a) IN GENERAL.—Section 27 of the Food Stamp Act
of 1977 (7 U.S.C. 2036) is amended—
(1) in subsection (a)—
(A) by striking ‘‘1997 through 2002’’ and
inserting ‘‘2002 through 2006’’; and
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(B) by striking ‘‘$100,000,000’’ and insert-
ing ‘‘$110,000,000’’; and
(2) by adding at the end the following:
‘‘(c) USE OF FUNDS FOR RELATED COSTS.—
‘‘(1) IN GENERAL.—For each of fiscal years 2002
through 2006, the Secretary shall use $10,000,000 of
the funds made available under subsection (a) to pay
the direct and indirect costs of States relating to the
processing, storing, transporting, and distributing to
eligible recipient agencies of—
‘‘(A) commodities purchased by the Sec-
retary under subsection (a); and
‘‘(B) commodities acquired from other
sources, including commodities acquired by
gleaning (as defined in section 111(a) of the
Hunger Prevention Act of 1988 (7 U.S.C. 612c
note; Public Law 100–435)).
‘‘(2) ALLOCATION OF FUNDS.—The amount re-
quired to be used in accordance with paragraph (1)
shall be allocated in accordance with section 204(a) of
the Emergency Food Assistance Act of 1983 (7 U.S.C.
7508(a)).’’.
(b) EFFECTIVE DATE.—The amendments made by this
section take effect on the date of enactment of this Act.
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SEC. 442. USE OF APPROVED FOOD SAFETY TECHNOLOGY.
(a) IN GENERAL.—Section 27 of the Food Stamp Act
of 1977 (7 U.S.C. 2036) (as amended by section 441) is
amended by adding at the end the following:
‘‘(d) USE
OF
APPROVED
FOOD
SAFETY
TECH-
NOLOGY.—
‘‘(1) IN
GENERAL.—In acquiring commodities
for distribution through a program specified in para-
graph (2), the Secretary shall not prohibit the use of
any technology to improve food safety that has been
approved by the Secretary or the Secretary of Health
and Human Services.
‘‘(2) PROGRAMS.—A program referred to in
paragraph (1) is a program authorized under—
‘‘(A) this Act;
‘‘(B) the Agriculture and Consumer Protec-
tion Act of 1973 (7 U.S.C. 612c note; Public
Law 93–86);
‘‘(C) the Emergency Food Assistance Act of
1983 (7 U.S.C. 7501 et seq.);
‘‘(D) the Richard B. Russell National
School Lunch Act (42 U.S.C. 1751 et seq.); or
‘‘(E) the Child Nutrition Act of 1966 (42
U.S.C. 1771 et seq.).’’.
(b) EFFECTIVE DATE.—The amendment made by this
section takes effect on the date of enactment of this Act.
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SEC. 443. INNOVATIVE PROGRAMS FOR ADDRESSING COM-
MON COMMUNITY PROBLEMS.
(a) IN GENERAL.—The Food Stamp Act of 1977 (7
U.S.C. 2011 et seq.) is amended by adding at the end the
following:
‘‘SEC. 28. INNOVATIVE PROGRAMS FOR ADDRESSING COM-
MON COMMUNITY PROBLEMS.
‘‘(a) IN GENERAL.—The Secretary shall offer to enter
into a contract with a nongovernmental organization de-
scribed in subsection (b) to coordinate with Federal agen-
cies, States, political subdivisions, and nongovernmental or-
ganizations (referred to in this section as ‘targeted entities’)
to develop, and recommend to the targeted entities, innova-
tive programs for addressing common community problems,
including loss of farms, rural poverty, welfare dependency,
hunger, the need for job training, juvenile crime prevention,
and the need for self-sufficiency by individuals and commu-
nities.
‘‘(b) NONGOVERNMENTAL ORGANIZATION.—The non-
governmental organization referred to in subsection (a)—
‘‘(1) shall be selected on a competitive basis; and
‘‘(2) as a condition of entering into the
contract—
‘‘(A) shall be experienced in working with
targeted entities, and in organizing workshops
that demonstrate programs to targeted entities;
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‘‘(B) shall be experienced in identifying
programs that effectively address problems de-
scribed in subsection (a) that can be imple-
mented by other targeted entities;
‘‘(C) shall agree—
‘‘(i) to contribute in-kind resources to-
ward the establishment and maintenance of
programs described in subsection (a); and
‘‘(ii) to provide to targeted entities,
free of charge, information on the programs;
‘‘(D) shall be experienced in, and capable of,
receiving information from, and communicating
with, targeted entities throughout the United
States; and
‘‘(E) shall be experienced in operating a na-
tional information clearinghouse that addresses 1
or more of the problems described in subsection
(a).
‘‘(c) AUDITS.—The Secretary shall establish auditing
procedures and otherwise ensure the effective use of funds
made available under this section.
‘‘(d) FUNDING.—
‘‘(1) IN GENERAL.—Not later than 30 days after
the date of enactment of this section, and on October
1, 2002, out of any funds in the Treasury not other-
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wise appropriated, the Secretary of the Treasury shall
transfer to the Secretary of Agriculture to carry out
this section $200,000, to remain available until ex-
pended.
‘‘(2) RECEIPT AND ACCEPTANCE.—The Secretary
shall be entitled to receive, shall accept, and shall use
to carry out this section the funds transferred under
paragraph (1), without further appropriation.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section takes effect on the date of enactment of this Act.
SEC. 444. REPORT ON USE OF ELECTRONIC BENEFIT
TRANSFER SYSTEMS.
Not later than 1 year after the date of enactment of
this Act, the Secretary of Agriculture shall submit to Con-
gress a report on—
(1) difficulties relating to use of electronic benefit
transfer systems in issuance of food stamp benefits
under the Food Stamp Act of 1977 (7 U.S.C. 2011 et
seq.);
(2) the extent to which there exists fraud, and the
types of fraud that exist, in use of the electronic ben-
efit transfer systems; and
(3) the efforts being made by the Secretary of Ag-
riculture, retailers, electronic benefit transfer system
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contractors, and States to address the problems de-
scribed in paragraphs (1) and (2).
SEC. 445. VITAMIN AND MINERAL SUPPLEMENTS.
(a) IN GENERAL.—Section 3(g)(1) of the Food Stamp
Act of 1977 (7 U.S.C. 2012(g)(1)) is amended by striking
‘‘or food product’’ and inserting ‘‘, food product, or dietary
supplement that provides exclusively 1 or more vitamins
or minerals’’.
(b) IMPACT STUDY.—
(1) IN GENERAL.—Not later than April 1, 2003,
the Secretary of Agriculture shall enter into a con-
tract with a scientific research organization to study
and develop a report on the technical issues, economic
impacts, and health effects associated with allowing
individuals to use benefits under the Food Stamp Act
of 1977 (7 U.S.C. 2011 et seq.) to purchase dietary
supplements that provide exclusively 1 or more vita-
mins or minerals (referred to in this subsection as
‘‘vitamin-mineral supplements’’).
(2) REQUIRED ELEMENTS.—At a minimum, the
study shall examine—
(A) the extent to which problems arise in
the purchase of vitamin-mineral supplements
with electronic benefit transfer cards;
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(B) the extent of any difficulties in distin-
guishing 
vitamin-mineral 
supplements 
from
herbal and botanical supplements for which food
stamp benefits may not be used;
(C) whether participants in the food stamp
program spend more on vitamin-mineral supple-
ments than nonparticipants;
(D) to what extent vitamin-mineral supple-
ments are substituted for other foods purchased
with use of food stamp benefits;
(E) the proportion of the average food
stamp allotment that is being used to purchase
vitamin-mineral supplements; and
(F) the extent to which the quality of the
diets of participants in the food stamp program
has changed as a result of allowing participants
to use food stamp benefits to purchase vitamin-
mineral supplements.
(3) REPORT.—The report required under para-
graph (1) shall be submitted to the Secretary of Agri-
culture not later than 2 years after the date on which
the contract referred to in that paragraph is entered
into.
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(4) AUTHORIZATION
OF
APPROPRIATIONS.—
There is authorized to be appropriated $3,000,000 to
carry out this subsection.
Subtitle B—Miscellaneous
Provisions
SEC. 451. REAUTHORIZATION OF COMMODITY PROGRAMS.
(a) COMMODITY DISTRIBUTION PROGRAM.—Section
4(a) of the Agriculture and Consumer Protection Act of
1973 (7 U.S.C. 612c note; Public Law 93–86) is amended
in the first sentence by striking ‘‘2002’’ and inserting
‘‘2006’’.
(b) COMMODITY SUPPLEMENTAL FOOD PROGRAM.—
Section 5 of the Agriculture and Consumer Protection Act
of 1973 (7 U.S.C. 612c note; Public Law 93–86) is
amended—
(1) by striking subsection (a) and inserting the
following:
‘‘(a) GRANTS PER ASSIGNED CASELOAD SLOT.—
‘‘(1) IN GENERAL.—In carrying out the program
under section 4 (referred to in this section as the
‘commodity supplemental food program’), for each of
fiscal years 2003 through 2006, the Secretary shall
provide to each State agency from funds made avail-
able to carry out that section (including any such
funds remaining available from the preceding fiscal
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year), a grant per assigned caseload slot for adminis-
trative costs incurred by the State agency and local
agencies in the State in operating the commodity sup-
plemental food program.
‘‘(2) AMOUNT OF GRANTS.—
‘‘(A) FISCAL
YEAR
2003.—For fiscal year
2003, the amount of each grant per caseload slot
shall be equal to $50, adjusted by the percentage
change between—
‘‘(i) the value of the State and local
government price index, as published by the
Bureau of Economic Analysis of the De-
partment of Commerce, for the 12-month
period ending June 30, 2001; and
‘‘(ii) the value of that index for the 12-
month period ending June 30, 2002.
‘‘(B) FISCAL YEARS 2004 THROUGH 2006.—
For each of fiscal years 2004 through 2006, the
amount of each grant per caseload slot shall be
equal to the amount of the grant per caseload
slot for the preceding fiscal year, adjusted by the
percentage change between—
‘‘(i) the value of the State and local
government price index, as published by the
Bureau of Economic Analysis of the De-
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partment of Commerce, for the 12-month
period ending June 30 of the second pre-
ceding fiscal year; and
‘‘(ii) the value of that index for the 12-
month period ending June 30 of the pre-
ceding fiscal year.’’;
(2) in subsection (d)(2), by striking ‘‘2002’’ each
place it appears and inserting ‘‘2006’’; and
(3) by striking subsection (l).
(c) DISTRIBUTION OF SURPLUS COMMODITIES TO SPE-
CIAL NUTRITION PROJECTS.—Section 1114(a)(2)(A) of the
Agriculture and Food Act of 1981 (7 U.S.C. 1431e(2)(A))
is amended in the first sentence by striking ‘‘2002’’ and
inserting ‘‘2006’’.
(d) 
EMERGENCY
FOOD
ASSISTANCE.—Section
204(a)(1) of the Emergency Food Assistance Act of 1983
(7 U.S.C. 7508(a)(1)) is amended in the first sentence—
(1) by striking ‘‘2002’’ and inserting ‘‘2006’’;
(2) by striking ‘‘administrative’’; and
(3) by inserting ‘‘storage,’’ after ‘‘processing,’’.
SEC. 452. PARTIAL RESTORATION OF BENEFITS TO LEGAL
IMMIGRANTS.
(a) RESTORATION OF BENEFITS TO ALL QUALIFIED
ALIEN CHILDREN.—
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(1) IN GENERAL.—Section 402(a)(2)(J) of the
Personal Responsibility and Work Opportunity Rec-
onciliation Act of 1996 (8 U.S.C. 1612(a)(2)(J)) is
amended by striking ‘‘who’’ and all that follows
through ‘‘is under’’ and inserting ‘‘who is under’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 403(c)(2) of the Personal Re-
sponsibility and Work Opportunity Reconcili-
ation Act of 1996 (8 U.S.C. 1613(c)(2)) is
amended by adding at the end the following:
‘‘(L) Assistance or benefits under the Food
Stamp Act of 1977 (7 U.S.C. 2011 et seq.).’’.
(B) Section 421(d) of the Personal Respon-
sibility and Work Opportunity Reconciliation
Act of 1996 (8 U.S.C. 1631(d)) is amended by
adding at the end the following:
‘‘(3) This section shall not apply to assistance or
benefits under the Food Stamp Act of 1977 (7 U.S.C.
2011 et seq.) to the extent that a qualified alien is eli-
gible under section 402(a)(2)(J).’’.
(C) Section 5(i)(2)(E) of the Food Stamp
Act of 1977 (7 U.S.C. 2014(i)(2)(E)) is amended
by inserting before the period at the end the fol-
lowing: ‘‘, or to any alien who is under 18 years
of age’’.
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(3) APPLICABILITY.—The amendments made by
this subsection shall apply to fiscal year 2004 and
each fiscal year thereafter.
(b) WORK REQUIREMENT FOR LEGAL IMMIGRANTS.—
(1) WORKING
IMMIGRANT
FAMILIES.—Section
402(a)(2)(B)(ii)(I) of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 (8
U.S.C. 1612(a)(2)(B)(ii)(I)) is amended by striking
‘‘40’’ and inserting ‘‘40 (or 16, in the case of the spec-
ified Federal program described in paragraph
(3)(B))’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 213A(a)(3)(A) of the Immigra-
tion 
and 
Nationality 
Act 
(8 
U.S.C.
1183a(a)(3)(A)) is amended by striking ‘‘40’’
and inserting ‘‘40 (or 16, in the case of the speci-
fied Federal program described in section
402(a)(3)(B) of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 (8
U.S.C. 1612(a)(3)(B)))’’.
(B) Section 421(b)(2)(A) of the Personal
Responsibility and Work Opportunity Reconcili-
ation Act of 1996 (8 U.S.C. 1631(b)(2)(A)) is
amended by striking ‘‘40’’ and inserting ‘‘40 (or
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16, in the case of the specified Federal program
described in section 402(a)(3)(B))’’.
(c) RESTORATION OF BENEFITS TO REFUGEES AND
ASYLEES.—Section 402(a)(2) of the Personal Responsi-
bility and Work Opportunity Reconciliation Act of 1996
(8 U.S.C. 1612(a)(2)) is amended—
(1) in subparagraph (A), by striking ‘‘programs
described in paragraph (3)’’ and inserting ‘‘program
described in paragraph (3)(A)’’; and
(2) by adding at the end the following:
‘‘(L) FOOD STAMP EXCEPTION FOR REFU-
GEES AND ASYLEES.—With respect to eligibility
for benefits for the specified Federal program de-
scribed in paragraph (3)(B), paragraph (1) shall
not apply to an alien with respect to which an
action described in subparagraph (A) was taken
and was not revoked.’’.
(d) RESTORATION
OF
BENEFITS
TO
DISABLED
ALIENS.—Section 402(a)(2)(F) of the Personal Responsi-
bility and Work Opportunity Reconciliation Act of 1996
(8 U.S.C. 1612(a)(2)(F)) is amended by striking ‘‘(i) was’’
and all that follows through ‘‘(II) in the case’’ and inserting
the following:
‘‘(i) in the case of the specified Federal
program described in paragraph (3)(A)—
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‘‘(I) was lawfully residing in the
United States on August 22, 1996; and
‘‘(II) is blind or disabled, as de-
fined in paragraph (2) or (3) of section
1614(a) of the Social Security Act (42
U.S.C. 1382c(a)); and
‘‘(ii) in the case’’.
SEC. 453. COMMODITIES FOR SCHOOL LUNCH PROGRAMS.
(a) IN GENERAL.—Section 6(e)(1)(B) of the Richard
B. Russell National School Lunch Act (42 U.S.C.
1755(e)(1)(B)) is amended by striking ‘‘2001’’ and insert-
ing ‘‘2003’’.
(b) EFFECTIVE DATE.—The amendment made by this
section takes effect on the date of enactment of this Act.
SEC. 454. ELIGIBILITY FOR FREE AND REDUCED PRICE
MEALS.
(a) IN GENERAL.—Section 9(b) of the Richard B. Rus-
sell National School Lunch Act (42 U.S.C. 1758(b)) is
amended by adding at the end the following:
‘‘(7) EXCLUSION OF CERTAIN MILITARY HOUSING
ALLOWANCES.—For each of fiscal years 2002 and
2003, the amount of a basic allowance provided under
section 403 of title 37, United States Code, on behalf
of a member of a uniformed service for housing that
is acquired or constructed under subchapter IV of
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chapter 169 of title 10, United States Code, or any
related provision of law, shall not be considered to be
income for the purpose of determining the eligibility
of a child who is a member of the household of the
member of a uniformed service for free or reduced
price lunches under this Act.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section takes effect on the date of enactment of this Act.
SEC. 455. ELIGIBILITY FOR ASSISTANCE UNDER THE SPE-
CIAL SUPPLEMENTAL NUTRITION PROGRAM
FOR WOMEN, INFANTS, AND CHILDREN.
(a) IN GENERAL.—Section 17(d)(2)(B)(i) of the Child
Nutrition Act of 1966 (42 U.S.C. 1786(d)(2)(B)(i)) is
amended—
(1) by striking ‘‘basic allowance for housing’’
and inserting the following: ‘‘basic allowance—
‘‘(I) for housing’’;
(2) by striking ‘‘and’’ at the end and inserting
‘‘or’’; and
(3) by adding at the end the following:
‘‘(II) provided under section 403
of title 37, United States Code, for
housing that is acquired or constructed
under subchapter IV of chapter 169 of
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title 10, United States Code, or any re-
lated provision of law; and’’.
(b) EFFECTIVE DATE.—The amendments made by this
section take effect on the date of enactment of this Act.
SEC. 456. REPORT ON CONVERSION OF WIC PROGRAM INTO
AN INDIVIDUAL ENTITLEMENT PROGRAM.
(a) FINDINGS.—Congress finds that the special supple-
mental nutrition program for woman, infants, and children
established by section 17 of the Child Nutrition Act of 1966
(42 U.S.C. 1786) (referred to in this section as the ‘WIC
program’)—
(1) safeguards the health of low-income pregnant,
postpartum, and breast-feeding women, infants, and
children up to 5 years of age who are at nutritional
risk through the delivery of individualized food pack-
ages, nutrition education, and health referrals;
(2) is associated with a variety of desirable out-
comes, including lower incidence of infant mortality,
reduced prevalence of very low birth weights, im-
proved nutrient intake among children, improved cog-
nitive development among children, and lower Med-
icaid costs for women who participate;
(3) is recognized generally as a leading national
health and nutrition program;
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(4) as a discretionary program, can have inap-
propriate funding because funding levels must be de-
termined early in the year by the President and the
Committees on Appropriations of the House of Rep-
resentatives and the Senate (referred to in this sub-
section as the ‘‘Committees’’);
(5) can have funding shortfalls in some years be-
cause the economy worsens between the time that
funding levels are established and the fiscal year is
underway;
(6) may have to deny service or reduce benefits
to eligible women, infants, and children in some
States as a result of these funding shortfalls;
(7) may be provided with more funding than is
required in those years in which the economy im-
proves between the time that funding levels are estab-
lished and the fiscal year is underway, with the result
that the President and the Committees will have com-
mitted funds to the WIC program that could have
been devoted to other priorities; and
(8) would not have this funding uncertainty if
the WIC program were an entitlement program that
provided benefits to every eligible woman, infant, and
child seeking benefits.
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(b) REPORT.—Not later than December 31, 2002, the
Secretary of Agriculture shall submit to the Committee on
Education and the Workforce of the House of Representa-
tives and the Committee on Agriculture, Nutrition and For-
estry of the Senate a report that analyzes the conversion
of the WIC program from a discretionary program into an
individual entitlement program.
(c) CONTENTS.—The report shall—
(1) analyze the conversion of the WIC program
into an individual entitlement program, rather than
a capped entitlement program for States;
(2) analyze the conversion using at least 3 sepa-
rate scenarios, including—
(A) 1 scenario under which the costs to the
Federal Government approximate current pro-
jected funding levels;
(B) 1 scenario under which the costs to the
Federal Government approximate current pro-
jected funding levels plus 5 percent; and
(C) 1 scenario under which the costs to the
Federal Government approximate current pro-
jected funding levels plus 7 percent; and
(3) address—
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(A) the levels at which, and manner by
which, States will be reimbursed for food package
costs and administrative costs;
(B) how current cost containment savings
will be preserved;
(C) how reimbursement rates will be ad-
justed annually to reflect inflation or other fac-
tors affecting food prices;
(D) how program benefits and services will
be affected by the conversion to an individual en-
titlement program; and
(E) any other issues that arise from con-
verting the WIC program to an individual enti-
tlement program, as determined by the Secretary
of Agriculture.
(d) CONSULTATION.—In preparing the report, the Sec-
retary of Agriculture shall consult with—
(1) the Committee on Education and the Work-
force of the House of Representatives;
(2) the Committee on Agriculture, Nutrition and
Forestry of the Senate;
(3) membership organizations representing State
directors and local agencies administering the WIC
program;
(4) Governors and other State officials;
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(5) research and policy organizations that have
a history of carrying out activities on issues affecting
the WIC program; and
(6) advocacy organizations representing the
needs of the population that is eligible to participate
in the WIC program.
(e) FUNDING.—Notwithstanding any other provision
of law, the Secretary shall carry out this section using funds
made available for necessary expenses to carry out the WIC
program.
SEC. 457. COMMODITY DONATIONS.
The Commodity Distribution Reform Act and WIC
Amendments of 1987 (7 U.S.C. 612c note; Public Law 100–
237) is amended—
(1) by redesignating sections 17 and 18 as sec-
tions 18 and 19, respectively; and
(2) by inserting after section 16 the following:
‘‘SEC. 17. COMMODITY DONATIONS.
‘‘(a) IN GENERAL.—Notwithstanding any other provi-
sion of law concerning commodity donations, any commod-
ities acquired in the conduct of the operations of the Com-
modity Credit Corporation and any commodities acquired
under section 32 of the Act of August 24, 1935 (7 U.S.C.
612c), to the extent that the commodities are in excess of
the quantities of commodities needed to carry out other au-
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thorized activities of the Commodity Credit Corporation
and the Secretary (including any quantity specifically re-
served for a specific purpose), may be used for any program
authorized to be carried out by the Secretary that involves
the acquisition of commodities for use in a domestic feeding
program, including any program conducted by the Sec-
retary that provides commodities to individuals in cases of
hardship.
‘‘(b) PROGRAMS.—A program described in subsection
(a) includes a program authorized by—
‘‘(1) the Emergency Food Assistance Act of 1983
(7 U.S.C. 7501 et seq.);
‘‘(2) the Richard B. Russell National School
Lunch Act (42 U.S.C. 1751 et seq.);
‘‘(3) the Child Nutrition Act of 1966 (42 U.S.C.
1771 et seq.);
‘‘(4) the Older Americans Act of 1965 (42 U.S.C.
3001 et seq.); or
‘‘(5) such other laws as the Secretary determines
to be appropriate.’’.
SEC. 458. PURCHASES OF LOCALLY PRODUCED FOODS.
(a) IN
GENERAL.—The Secretary of Agriculture
shall—
(1) encourage institutions participating in the
national school lunch program authorized under the
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Richard B. Russell National School Lunch Act (42
U.S.C. 1751 et seq.) and the school breakfast program
established by section 4 of the Child Nutrition Act of
1966 (42 U.S.C. 1773) to purchase, in addition to
other food purchases, locally produced foods for school
meal programs to the maximum extent practicable
and appropriate;
(2) advise institutions participating in a pro-
gram described in paragraph (1) of the policy de-
scribed in that paragraph and post information con-
cerning the policy on the website maintained by the
Secretary; and
(3) in accordance with requirements established
by the Secretary, provide start-up grants to not more
than 200 institutions to defray the initial costs of
equipment, materials, and storage facilities, and
similar costs, incurred in carrying out the policy de-
scribed in paragraph (1).
(b) AUTHORIZATION OF APPROPRIATIONS.—
(1) IN GENERAL.—There is authorized to be ap-
propriated to carry out this section $400,000 for each
of fiscal years 2002 through 2006.
(2) LIMITATION.—No amounts may be made
available to carry out this section unless specifically
provided by an appropriation Act.
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SEC. 459. SENIORS FARMERS’ MARKET NUTRITION PRO-
GRAM.
(a) ESTABLISHMENT.—The Secretary of Agriculture
shall carry out and expand a seniors farmers’ market nutri-
tion program.
(b) PROGRAM PURPOSE.—The purpose of the seniors
farmers’ market nutrition program is to provide to low-in-
come seniors resources in the form of fresh, nutritious, un-
prepared, locally grown fruits, vegetables, and herbs from
farmers’ markets, roadside stands, and community-sup-
ported agriculture programs.
(c) REGULATIONS.—The Secretary of Agriculture may
promulgate such regulations as the Secretary considers nec-
essary to carry out the seniors farmers’ market nutrition
program under this section.
(d) FUNDING.—
(1) IN GENERAL.—Not later than 30 days after
the date of enactment of this Act, and on October 1,
2002, and each October 1 thereafter through October
1, 2005, out of any funds in the Treasury not other-
wise appropriated, the Secretary of the Treasury shall
transfer to the Secretary of Agriculture to carry out
this section $15,000,000.
(2) RECEIPT AND ACCEPTANCE.—The Secretary
of Agriculture shall be entitled to receive, shall accept,
and shall use to carry out this section the funds
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transferred under paragraph (1), without further ap-
propriation.
(e) AUTHORITY.—The authority provided by this sec-
tion is in addition to, and not in lieu of, the authority
of the Secretary of Agriculture to carry out any similar
program under the Commodity Credit Corporation Charter
Act (15 U.S.C. 714 et seq.).
SEC. 460. FARMERS’ MARKET NUTRITION PROGRAM.
Section 17(m)(9) of the Child Nutrition Act of 1966
(42 U.S.C. 1786(m)(9)) is amended—
(1) by striking ‘‘(9)(A) There’’ and inserting the
following:
‘‘(9) FUNDING.—
‘‘(A) IN GENERAL.—
‘‘(i) AUTHORIZATION
OF
APPROPRIA-
TIONS.—There’’; and
(2) in subparagraph (A), by adding at the end
the following:
‘‘(ii) MANDATORY FUNDING.—
‘‘(I) IN GENERAL.—Not later than
30 days after the date of enactment of
the Agriculture, Conservation, and
Rural Enhancement Act of 2001, out of
any funds in the Treasury not other-
wise appropriated, the Secretary of the
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Treasury shall transfer to the Sec-
retary to carry out this subsection
$15,000,000.
‘‘(II) 
RECEIPT
AND
ACCEPT-
ANCE.—The Secretary shall be entitled
to receive, shall accept, and shall use to
carry out this subsection the funds
transferred under subclause (I), with-
out further appropriation.’’.
SEC. 461. FRUIT AND VEGETABLE PILOT PROGRAM.
(a) IN GENERAL.—In the school year beginning July
2002, the Secretary of Agriculture shall use funds made
available under section 32 of the Act of August 24, 1935
(7 U.S.C. 612c), to conduct a pilot program to make avail-
able to students, in 25 elementary or secondary schools in
each of 4 States, and in elementary or secondary schools
on 1 Indian reservation, free fruits and vegetables through-
out the school day in—
(1) a cafeteria;
(2) a student lounge; or
(3) another designated room of the school.
(b) PUBLICITY.—A school that participates in the pilot
program shall widely publicize within the school the avail-
ability of free fruits and vegetables under the pilot program.
(c) EVALUATION OF PILOT PROGRAM.—
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(1) IN GENERAL.—Not later than 1 year after
the implementation of the pilot program required by
subsection (a), the Secretary (acting through the Eco-
nomic Research Service) shall submit to the Com-
mittee on Education and the Workforce of the House
of Representatives and the Committee on Agriculture,
Nutrition, and Forestry of the Senate an evaluation
of the results of the pilot program to determine—
(A) whether students took advantage of the
pilot program;
(B) whether interest in the pilot program
increased or lessened over time;
(C) what effect, if any, the pilot program
had on vending machine sales; and
(D) what effect, if any, the pilot program
had on the sale of meals served under the Child
Nutrition Act of 1966 (42 U.S.C. 1771 et seq.)
and the Richard B. Russell National School
Lunch Act (42 U.S.C. 1751 et seq.).
(2) FUNDING.—The Secretary shall use $200,000
of the funds described in subsection (a) to carry out
the evaluation under this subsection.
SEC. 462. CONGRESSIONAL HUNGER FELLOWS PROGRAM.
(a) SHORT TITLE.—This section may be cited as the
‘‘Congressional Hunger Fellows Act of 2002’’.
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(b) FINDINGS.—Congress finds that—
(1) there are—
(A) a critical need for compassionate indi-
viduals who are committed to assisting people
who suffer from hunger; and
(B) a need for those individuals to initiate
and administer solutions to the hunger problem;
(2) Bill Emerson, the distinguished late Rep-
resentative from the 8th District of Missouri,
demonstrated—
(A) his commitment to solving the problem
of hunger in a bipartisan manner;
(B) his commitment to public service; and
(C) his great affection for the institution
and the ideals of Congress;
(3) George T. (Mickey) Leland, the distinguished
late Representative from the 18th District of Texas,
demonstrated—
(A) his compassion for individuals in need;
(B) his high regard for public service; and
(C) his lively exercise of political talents;
(4) the special concern that Mr. Emerson and
Mr. Leland demonstrated during their lives for the
hungry and poor was an inspiration for others to
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work toward the goals of equality and justice for all;
and
(5) since those 2 outstanding leaders maintained
a special bond of friendship regardless of political af-
filiation and worked together to encourage future
leaders to recognize and provide service to others, it
is especially appropriate to honor the memory of Mr.
Emerson and Mr. Leland by establishing a fellowship
program to develop and train the future leaders of the
United States to pursue careers in humanitarian
service.
(c) DEFINITIONS.—In this section:
(1) 
APPROPRIATE
CONGRESSIONAL
COMMIT-
TEES.—The term ‘‘appropriate congressional commit-
tees’’ means—
(A) the Committee on Agriculture and the
Committee on International Relations of the
House of Representatives; and
(B) the Committee on Agriculture, Nutri-
tion, and Forestry and the Committee on For-
eign Relations of the Senate.
(2) BOARD.—The term ‘‘Board’’ means the
Board of Trustees of the Program.
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(3) FUND.—The term ‘‘Fund’’ means the Con-
gressional Hunger Fellows Trust Fund established by
subsection (g).
(4) PROGRAM.—The term ‘‘Program’’ means the
Congressional Hunger Fellows Program established by
subsection (d).
(d) ESTABLISHMENT.—There is established as an inde-
pendent entity of the legislative branch of the United States
Government an entity to be known as the ‘‘Congressional
Hunger Fellows Program’’.
(e) BOARD OF TRUSTEES.—
(1) IN GENERAL.—The Program shall be subject
to the supervision and direction of a Board of Trust-
ees.
(2) MEMBERS OF THE BOARD.—
(A) APPOINTMENT.—
(i) IN GENERAL.—The Board shall be
composed of 6 voting members appointed
under clause (ii) and 1 nonvoting ex officio
member designated by clause (iii).
(ii) VOTING
MEMBERS.—The voting
members of the Board shall be the following:
(I) 2 members appointed by the
Speaker of the House of Representa-
tives.
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(II) 1 member appointed by the
minority leader of the House of Rep-
resentatives.
(III) 2 members appointed by the
majority leader of the Senate.
(IV) 1 member appointed by the
minority leader of the Senate.
(iii) NONVOTING MEMBER.—The Exec-
utive Director of the Program shall serve as
a nonvoting ex officio member of the Board.
(B) TERMS.—
(i) IN GENERAL.—Each member of the
Board shall serve for a term of 4 years.
(ii) INCOMPLETE TERM.—If a member
of the Board does not serve the full term of
the member, the individual appointed to fill
the resulting vacancy shall be appointed for
the remainder of the term of the predecessor
of the individual.
(C) VACANCY.—A vacancy on the Board—
(i) shall not affect the powers of the
Board; and
(ii) shall be filled in the same manner
as the original appointment was made.
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(D) CHAIRPERSON.—As the first order of
business of the first meeting of the Board, the
members shall elect a Chairperson.
(E) COMPENSATION.—
(i) IN
GENERAL.—Subject to clause
(ii), a member of the Board shall not receive
compensation for service on the Board.
(ii) TRAVEL.—A member of the Board
shall be allowed travel expenses, including
per diem in lieu of subsistence, at rates au-
thorized for an employee of an agency under
subchapter I of chapter 57 of title 5, United
States Code, while away from the home or
regular place of business of the member in
the performance of the duties of the Board.
(3) DUTIES.—
(A) BYLAWS.—
(i) ESTABLISHMENT.—The Board shall
establish such bylaws and other regulations
as are appropriate to enable the Board to
carry out this section, including the duties
described in this paragraph.
(ii) CONTENTS.—Bylaws and other
regulations established under clause (i) shall
include provisions—
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(I) for appropriate fiscal control,
accountability for funds, and operating
principles;
(II) to prevent any conflict of in-
terest, or the appearance of any con-
flict of interest, in—
(aa) the procurement and
employment actions taken by the
Board or by any officer or em-
ployee of the Board; and
(bb) the selection and place-
ment of individuals in the fellow-
ships developed under the Pro-
gram;
(III) for the resolution of a tie
vote of the members of the Board; and
(IV) for authorization of travel for
members of the Board.
(iii) SUBMISSION TO CONGRESS.—Not
later than 90 days after the date of the first
meeting of the Board, the Chairperson of the
Board shall submit to the appropriate con-
gressional committees a copy of the bylaws
established by the Board.
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(B) BUDGET.—For each fiscal year in
which the Program is in operation—
(i) the Board shall determine a budget
for the Program for the fiscal year; and
(ii) all spending by the Program shall
be in accordance with the budget unless a
change is approved by the Board.
(C) PROCESS FOR SELECTION AND PLACE-
MENT
OF
FELLOWS.—The Board shall review
and approve the process established by the Exec-
utive Director for the selection and placement of
individuals in the fellowships developed under
the Program.
(D) ALLOCATION
OF
FUNDS
TO
FELLOW-
SHIPS.—The Board shall determine—
(i) the priority of the programs to be
carried out under this section; and
(ii) the amount of funds to be allocated
for the fellowships established under sub-
section (f)(3)(A).
(f) PURPOSES; AUTHORITY OF PROGRAM.—
(1) PURPOSES.—The purposes of the Program
are—
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(A) to encourage future leaders of the
United States to pursue careers in humanitarian
service;
(B) to recognize the needs of people who are
hungry and poor;
(C) to provide assistance and compassion
for people in need;
(D) to increase awareness of the importance
of public service; and
(E) to provide training and development
opportunities for the leaders through placement
in programs operated by appropriate entities.
(2) AUTHORITY.—The Program may develop fel-
lowships to carry out the purposes of the Program, in-
cluding the fellowships described in paragraph (3).
(3) FELLOWSHIPS.—
(A) IN GENERAL.—The Program shall es-
tablish and carry out the Bill Emerson Hunger
Fellowship and the Mickey Leland Hunger Fel-
lowship.
(B) CURRICULUM.—
(i) IN GENERAL.—The fellowships es-
tablished under subparagraph (A) shall pro-
vide experience and training to develop the
skills and understanding necessary to im-
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prove the humanitarian conditions and the
lives of individuals who suffer from hunger,
including—
(I) training in direct service to
the hungry in conjunction with com-
munity-based organizations through a
program of field placement; and
(II) experience in policy develop-
ment through placement in a govern-
mental entity or nonprofit organiza-
tion.
(ii) FOCUS.—
(I) BILL EMERSON HUNGER FEL-
LOWSHIP.—The Bill Emerson Hunger
Fellowship shall address hunger and
other 
humanitarian 
needs 
in 
the
United States.
(II) MICKEY
LELAND
HUNGER
FELLOWSHIP.—The 
Mickey 
Leland
Hunger Fellowship shall address inter-
national hunger and other humani-
tarian needs.
(iii) WORK PLAN.—To carry out clause
(i) and to assist in the evaluation of the fel-
lowships under paragraph (4), the Program
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shall, for each fellow, approve a work plan
that identifies the target objectives for the
fellow in the fellowship, including the spe-
cific duties and responsibilities relating to
the objectives.
(C) PERIOD OF FELLOWSHIP.—
(i) EMERSON
FELLOWSHIP.—A Bill
Emerson Hunger Fellowship awarded under
this paragraph shall be for a period of not
more than 1 year.
(ii) LELAND FELLOWSHIP.—A Mickey
Leland Hunger Fellowship awarded under
this paragraph shall be for a period of not
more than 2 years, of which not less than
1 year shall be dedicated to fulfilling the re-
quirement of subparagraph (B)(i)(I).
(D) SELECTION OF FELLOWS.—
(i) IN GENERAL.—A fellowship shall be
awarded through a nationwide competition
established by the Program.
(ii) QUALIFICATION.—A successful ap-
plicant shall be an individual who has
demonstrated—
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(I) an intent to pursue a career
in humanitarian service and out-
standing potential for such a career;
(II) leadership potential or leader-
ship experience;
(III) diverse life experience;
(IV) proficient writing and speak-
ing skills;
(V) an ability to live in poor or
diverse communities; and
(VI) such other attributes as the
Board determines to be appropriate.
(iii) AMOUNT OF AWARD.—
(I) IN
GENERAL.—Each indi-
vidual awarded a fellowship under this
paragraph shall receive a living allow-
ance and, subject to subclause (II), an
end-of-service award as determined by
the Program.
(II) REQUIREMENT FOR SUCCESS-
FUL
COMPLETION
OF
FELLOWSHIP.—
Each individual awarded a fellowship
under this paragraph shall be entitled
to receive an end-of-service award at
an appropriate rate for each month of
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satisfactory service as determined by
the Executive Director.
(iv) RECOGNITION
OF
FELLOWSHIP
AWARD.—
(I) EMERSON FELLOW.—An indi-
vidual awarded a Bill Emerson Hun-
ger Fellowship shall be known as an
‘‘Emerson Fellow’’.
(II) LELAND FELLOW.—An indi-
vidual awarded a Mickey Leland Hun-
ger Fellowship shall be known as a
‘‘Leland Fellow’’.
(4) EVALUATIONS.—
(A) IN GENERAL.—The Program shall con-
duct periodic evaluations of the Bill Emerson
and Mickey Leland Hunger Fellowships.
(B) REQUIRED ELEMENTS.—Each evalua-
tion shall include—
(i) an assessment of the successful com-
pletion of the work plan of each fellow;
(ii) an assessment of the impact of the
fellowship on the fellows;
(iii) an assessment of the accomplish-
ment of the purposes of the Program; and
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(iv) an assessment of the impact of
each fellow on the community.
(g) TRUST FUND.—
(1) ESTABLISHMENT.—There is established in
the Treasury of the United States a fund to be known
as the ‘‘Congressional Hunger Fellows Trust Fund’’,
consisting of—
(A) amounts appropriated to the Fund
under subsection (k);
(B) any amounts earned on investment of
amounts in the Fund under paragraph (2); and
(C) amounts received under subsection
(i)(3)(A).
(2) INVESTMENT OF AMOUNTS.—
(A) IN GENERAL.—
(i) AUTHORITY TO INVEST.—The Sec-
retary of the Treasury shall invest such por-
tion of the Fund as is not, in the judgment
of the Secretary of the Treasury, required to
meet current withdrawals.
(ii) TYPES
OF
INVESTMENTS.—Each
investment may be made only in an inter-
est-bearing obligation of the United States
or an obligation guaranteed as to principal
and interest by the United States that, as
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determined by the Secretary of the Treasury
in consultation with the Board, has a matu-
rity suitable for the Fund.
(B) ACQUISITION
OF
OBLIGATIONS.—For
the purpose of investments under subparagraph
(A), obligations may be acquired—
(i) on original issue at the issue price;
or
(ii) by purchase of outstanding obliga-
tions at the market price.
(C) SALE OF OBLIGATIONS.—Any obligation
acquired by the Fund may be sold by the Sec-
retary of the Treasury at the market price.
(D) CREDITS TO FUND.—The interest on,
and the proceeds from the sale or redemption of,
any obligations held in the Fund shall be cred-
ited to and form a part of the Fund.
(3) TRANSFERS OF AMOUNTS.—
(A) IN GENERAL.—The amounts required to
be transferred to the Fund under this subsection
shall be transferred at least monthly from the
general fund of the Treasury to the Fund on the
basis of estimates made by the Secretary of the
Treasury.
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(B) 
ADJUSTMENTS.—Proper 
adjustment
shall be made in amounts subsequently trans-
ferred to the extent prior estimates were in excess
of or less than the amounts required to be trans-
ferred.
(h) EXPENDITURES; AUDITS.—
(1) IN GENERAL.—The Secretary of the Treasury
shall transfer to the Program from the amounts de-
scribed in subsections (g)(2)(D) and (i)(3)(A) such
sums as the Board determines to be necessary to en-
able the Program to carry out this section.
(2) LIMITATION.—The Secretary may not trans-
fer to the Program the amounts appropriated to the
Fund under subsection (k).
(3) USE OF FUNDS.—Funds transferred to the
Program under paragraph (1) shall be used—
(A) to provide a living allowance for the fel-
lows;
(B) to defray the costs of transportation of
the fellows to the fellowship placement sites;
(C) to defray the costs of appropriate insur-
ance of the fellows, the Program, and the Board;
(D) to defray the costs of preservice and
midservice education and training of fellows;
(E) to pay staff described in subsection (i);
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(F) to make end-of-service awards under
subsection (f)(3)(D)(iii)(II); and
(G) for such other purposes as the Board de-
termines to be appropriate to carry out the Pro-
gram.
(4) AUDIT BY COMPTROLLER GENERAL.—
(A) IN GENERAL.—The Comptroller General
of the United States shall conduct an annual
audit of the accounts of the Program.
(B) BOOKS.—The Program shall make
available to the Comptroller General all books,
accounts, financial records, reports, files, and
other papers, things, or property belonging to or
in use by the Program and necessary to facilitate
the audit.
(C) REPORT
TO
CONGRESS.—The Comp-
troller General shall submit to the appropriate
congressional committees a copy of the results of
each audit under subparagraph (A).
(i) STAFF; POWERS OF PROGRAM.—
(1) EXECUTIVE DIRECTOR.—
(A) IN GENERAL.—The Board shall appoint
an Executive Director of the Program who
shall—
(i) administer the Program; and
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(ii) carry out such other functions con-
sistent with this section as the Board shall
prescribe.
(B) RESTRICTION.—The Executive Director
may not serve as Chairperson of the Board.
(C) COMPENSATION.—The Executive Direc-
tor shall be paid at a rate not to exceed the rate
payable for level V of the Executive Schedule
under section 5316 of title 5, United States Code.
(2) STAFF.—
(A) IN GENERAL.—With the approval of a
majority of the Board, the Executive Director
may appoint and fix the pay of such additional
personnel as the Executive Director considers
necessary to carry out this section.
(B) COMPENSATION.—An individual ap-
pointed under subparagraph (A) shall be paid at
a rate not to exceed the rate payable for level
GS–15 of the General Schedule.
(3) POWERS.—
(A) GIFTS.—
(i) IN GENERAL.—The Program may
solicit, accept, use, and dispose of gifts, be-
quests, or devises of services or property,
both real and personal, for the purpose of
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aiding or facilitating the work of the Pro-
gram.
(ii) USE OF GIFTS.—Gifts, bequests, or
devises of money and proceeds from sales of
other property received as gifts, bequests, or
devises shall—
(I) be deposited in the Fund; and
(II) be available for disbursement
on order of the Board.
(B) PROCUREMENT
OF
TEMPORARY
AND
INTERMITTENT
SERVICES.—To carry out this
section, the Program may procure temporary
and intermittent services in accordance with sec-
tion 3109(b) of title 5, United States Code, at
rates for individuals that do not exceed the daily
equivalent of the annual rate of basic pay pay-
able for level GS–15 of the General Schedule.
(C) CONTRACT AUTHORITY.—To carry out
this section, the Program may, with the approval
of a majority of the members of the Board, con-
tract with and compensate Government and pri-
vate agencies or persons without regard to sec-
tion 3709 of the Revised Statutes (41 U.S.C. 5).
(D) OTHER NECESSARY EXPENDITURES.—
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(i) IN
GENERAL.—Subject to clause
(ii), the Program may make such other ex-
penditures as the Program considers nec-
essary to carry out this section.
(ii) PROHIBITION.—The Program may
not expend funds to develop new or ex-
panded projects at which fellows may be
placed.
(j) REPORT.—Not later than December 31 of each year,
the Board shall submit to the appropriate congressional
committees a report on the activities of the Program carried
out during the preceding fiscal year that includes—
(1) an analysis of the evaluations conducted
under subsection (f)(4) during the fiscal year; and
(2) a statement of—
(A) the total amount of funds attributable
to gifts received by the Program in the fiscal
year under subsection (i)(3)(A); and
(B) the total amount of funds described in
subparagraph (A) that were expended to carry
out the Program in the fiscal year.
(k) AUTHORIZATION OF APPROPRIATIONS.—There is
authorized to be appropriated to carry out this section
$18,000,000.
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(l) EFFECTIVE DATE.—This section takes effect on Oc-
tober 1, 2002.
SEC. 463. NUTRITION INFORMATION AND AWARENESS
PILOT PROGRAM.
(a) ESTABLISHMENT.—The Secretary of Agriculture
may establish, in not more than 15 States, a pilot program
to increase the domestic consumption of fresh fruits and
vegetables.
(b) PURPOSE.—The purpose of the program shall be
to provide funds to States to assist eligible public and pri-
vate sector entities with cost-share assistance to carry out
demonstration projects—
(1) to increase fruit and vegetable consumption;
and
(2) to convey related health promotion messages.
(c) PRIORITY.—To the maximum extent practicable,
the Secretary shall—
(1) establish the program in States in which the
production of fruits or vegetables is a significant in-
dustry, as determined by the Secretary; and
(2) base the program on strategic initiatives,
including—
(A) health promotion and education inter-
ventions;
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(B) public service and paid advertising or
marketing activities;
(C) health promotion campaigns relating to
locally grown fruits and vegetables; and
(D) social marketing campaigns.
(d) PARTICIPANT ELIGIBILITY.—In selecting States to
participate in the program, the Secretary shall take into
consideration, with respect to projects and activities pro-
posed to be carried out by the State under the program—
(1) experience in carrying out similar projects or
activities;
(2) innovation; and
(3) the ability of the State—
(A) to conduct marketing campaigns for,
promote, and track increases in levels of, produce
consumption; and
(B) to optimize the availability of produce
through distribution of produce.
(e) FEDERAL SHARE.—The Federal share of the cost
of any project or activity carried out using funds provided
under this section shall be 50 percent.
(f) USE OF FUNDS.—Funds made available to carry
out this section shall not be made available to any foreign
for-profit corporation.
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(g) AUTHORIZATION OF APPROPRIATIONS.—There is
authorized to be appropriated to carry out this section
$25,000,000 for each of fiscal years 2002 through 2006.
SEC. 464. EFFECTIVE DATE.
Except as otherwise provided in this title, the amend-
ments made by this title take effect on September 1, 2002,
except that a State agency may, at the option of the State
agency, elect not to implement any or all of the amendments
until October 1, 2002.
TITLE V—CREDIT
Subtitle A—Farm Ownership Loans
SEC. 501. DIRECT LOANS.
Section 302(b)(1) of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1922(b)(1)) is amended by strik-
ing ‘‘operated’’ and inserting ‘‘participated in the business
operations of’’.
SEC. 502. FINANCING OF BRIDGE LOANS.
Section 303(a)(1) of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1923(a)(1)) is amended—
(1) in subparagraph (C), by striking ‘‘or’’ at the
end;
(2) in subparagraph (D), by striking the period
at the end and inserting ‘‘; or’’; and
(3) by adding at the end the following:
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‘‘(E) refinancing, during a fiscal year, a
short-term, temporary bridge loan made by a
commercial or cooperative lender to a beginning
farmer or rancher for the acquisition of land for
a farm or ranch, if—
‘‘(i) the Secretary approved an appli-
cation for a direct farm ownership loan to
the beginning farmer or rancher for acquisi-
tion of the land; and
‘‘(ii) funds for direct farm ownership
loans under section 346(b) were not avail-
able at the time at which the application
was approved.’’.
SEC. 503. LIMITATIONS ON AMOUNT OF FARM OWNERSHIP
LOANS.
Section 305 of the Consolidated Farm and Rural De-
velopment Act (7 U.S.C. 1925) is amended by striking sub-
section (a) and inserting the following:
‘‘(a) IN GENERAL.—The Secretary shall not make or
insure a loan under section 302, 303, 304, 310D, or 310E
that would cause the unpaid indebtedness under those sec-
tions of any 1 borrower to exceed the lesser of—
‘‘(1) the value of the farm or other security; or
‘‘(2)(A) in the case of a loan made by the
Secretary—
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‘‘(i) to a beginning farmer or rancher,
$250,000, as adjusted (beginning with fiscal year
2003) by the inflation percentage applicable to
the fiscal year in which the loan is made; or
‘‘(ii) to a borrower other than a beginning
farmer or rancher, $200,000; or
‘‘(B) in the case of a loan guaranteed by the Sec-
retary, $700,000, as—
‘‘(i) adjusted (beginning with fiscal year
2000) by the inflation percentage applicable to
the fiscal year in which the loan is guaranteed;
and
‘‘(ii) reduced by the amount of any unpaid
indebtedness of the borrower on loans under sub-
title B that are guaranteed by the Secretary.’’.
SEC. 504. JOINT FINANCING ARRANGEMENTS.
Section 307(a)(3)(D) of the Consolidated Farm and
Rural Development Act (7 U.S.C. 1927(a)(3)(D)) is
amended—
(1) by striking ‘‘If’’ and inserting the following:
‘‘(i) IN
GENERAL.—Subject to clause
(ii), if’’; and
(2) by adding at the end the following:
‘‘(ii) 
BEGINNING
FARMERS
AND
RANCHERS.—The interest rate charged a be-
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ginning farmer or rancher for a loan de-
scribed in clause (i) shall be 50 basis points
less than the rate charged farmers and
ranchers that are not beginning farmers or
ranchers.’’.
SEC. 505. GUARANTEE PERCENTAGE FOR BEGINNING FARM-
ERS AND RANCHERS.
Section 309(h)(6) of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1929(h)(6)) is amended by strik-
ing ‘‘GUARANTEED UP’’ and all that follows through ‘‘more
than’’ and inserting ‘‘GUARANTEED AT 95 PERCENT.—The
Secretary shall guarantee’’.
SEC. 506. GUARANTEE OF LOANS MADE UNDER STATE BE-
GINNING FARMER OR RANCHER PROGRAMS.
Section 309 of the Consolidated Farm and Rural De-
velopment Act (7 U.S.C. 1929) is amended by adding at
the end the following:
‘‘(j) GUARANTEE OF LOANS MADE UNDER STATE BE-
GINNING FARMER
OR RANCHER PROGRAMS.—The Sec-
retary may guarantee under this title a loan made under
a State beginning farmer or rancher program, including
a loan financed by the net proceeds of a qualified small
issue agricultural bond for land or property described in
section 144(a)(12)(B)(ii) of the Internal Revenue Code of
1986.’’.
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SEC. 507. DOWN PAYMENT LOAN PROGRAM.
Section 310E of the Consolidated Farm and Rural De-
velopment Act (7 U.S.C. 1935) is amended—
(1) in subsection (b)—
(A) in paragraph (1), by striking ‘‘30 per-
cent’’ and inserting ‘‘40 percent’’; and
(B) in paragraph (3), by striking ‘‘10
years’’ and inserting ‘‘20 years’’; and
(2) in subsection (c)(3)(B), by striking ‘‘10-year’’
and inserting ‘‘20-year’’.
SEC. 508. BEGINNING FARMER AND RANCHER CONTRACT
LAND SALES PROGRAM.
Subtitle A of the Consolidated Farm and Rural Devel-
opment Act (7 U.S.C. 1922 et seq.) is amended by adding
at the end the following:
‘‘SEC. 310F. BEGINNING FARMER AND RANCHER CONTRACT
LAND SALES PROGRAM.
‘‘(a) IN GENERAL.—Not later than October 1, 2002,
the Secretary shall carry out a pilot program in not fewer
than 10 geographically dispersed States, as determined by
the Secretary, to guarantee up to 5 loans per State in each
of fiscal years 2003 through 2006 made by a private seller
of a farm or ranch to a qualified beginning farmer or
rancher on a contract land sale basis, if the loan meets ap-
plicable underwriting criteria and a commercial lending
institution agrees to serve as escrow agent.
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‘‘(b) DATE OF COMMENCEMENT OF PROGRAM.—The
Secretary shall commence the pilot program on making a
determination that guarantees of contract land sales present
a risk that is comparable with the risk presented in the
case of guarantees to commercial lenders.’’.
Subtitle B—Operating Loans
SEC. 511. DIRECT LOANS.
Section 311(c)(1)(A) of the Consolidated Farm and
Rural Development Act (7 U.S.C. 1941(c)(1)(A)) is amend-
ed by striking ‘‘who has not’’ and all that follows through
‘‘5 years’’.
SEC. 512. AMOUNT OF GUARANTEE OF LOANS FOR TRIBAL
FARM OPERATIONS; WAIVER OF LIMITATIONS
FOR TRIBAL OPERATIONS AND OTHER OPER-
ATIONS.
(a) AMOUNT OF GUARANTEE OF LOANS FOR TRIBAL
OPERATIONS.—Section 309(h) of the Consolidated Farm
and Rural Development Act (7 U.S.C. 1929(h)) is
amended—
(1) in paragraph (4), by striking ‘‘paragraphs
(5) and (6)’’ and inserting ‘‘paragraphs (5), (6), and
(7)’’; and
(2) by adding at the end the following:
‘‘(7) AMOUNT
OF
GUARANTEE
OF
LOANS
FOR
TRIBAL OPERATIONS.—In the case of an operating
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loan made to a farmer or rancher who is a member
of an Indian tribe and whose farm or ranch is within
an Indian reservation (as defined in section
335(e)(1)(A)(ii)), the Secretary shall guarantee 95
percent of the loan.’’.
(b) WAIVER OF LIMITATIONS.—Section 311(c) of the
Consolidated Farm and Rural Development Act (7 U.S.C.
1941(c)) is amended—
(1) in paragraph (1), by striking ‘‘paragraph
(3)’’ and inserting ‘‘paragraphs (3) and (4)’’; and
(2) by adding at the end the following:
‘‘(4) WAIVERS.—
‘‘(A) TRIBAL
FARM
AND
RANCH
OPER-
ATIONS.—The Secretary shall waive the limita-
tion under paragraph (1)(C) or (3) for a direct
loan made under this subtitle to a farmer or
rancher who is a member of an Indian tribe and
whose farm or ranch is within an Indian res-
ervation (as defined in section 335(e)(1)(A)(ii))
if the Secretary determines that commercial cred-
it is not generally available for such farm or
ranch operations.
‘‘(B) OTHER
FARM
AND
RANCH
OPER-
ATIONS.—On a case-by-case determination not
subject to administrative appeal, the Secretary
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may grant a borrower a waiver, 1 time only for
a period of 2 years, of the limitation under
paragraph (1)(C) or (3) for a direct operating
loan if the borrower demonstrates to the satisfac-
tion of the Secretary that—
‘‘(i) the borrower has a viable farm or
ranch operation;
‘‘(ii) the borrower applied for commer-
cial credit from at least 2 commercial lend-
ers;
‘‘(iii) the borrower was unable to ob-
tain a commercial loan (including a loan
guaranteed by the Secretary); and
‘‘(iv) the borrower successfully has
completed, or will complete within 1 year,
borrower training under section 359 (from
which requirement the Secretary shall not
grant a waiver under section 359(f)).’’.
Subtitle C—Administrative
Provisions
SEC. 521. ELIGIBILITY OF LIMITED LIABILITY COMPANIES
FOR FARM OWNERSHIP LOANS, FARM OPER-
ATING LOANS, AND EMERGENCY LOANS.
(a) IN
GENERAL.—Sections 302(a), 311(a), and
321(a) of the Consolidated Farm and Rural Development
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Act (7 U.S.C. 1922(a), 1941(a), 1961(a)) are amended by
striking ‘‘and joint operations’’ each place it appears and
inserting ‘‘joint operations, and limited liability compa-
nies’’.
(b) CONFORMING AMENDMENT.—Section 321(a) of the
Consolidated Farm and Rural Development Act (7 U.S.C.
1961(a)) is amended by striking ‘‘or joint operations’’ each
place it appears and inserting ‘‘joint operations, or limited
liability companies’’.
SEC. 522. DEBT SETTLEMENT.
Section 331(b)(4) of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1981(b)(4)) is amended by strik-
ing ‘‘carried out—’’ and all that follows through ‘‘(B) after’’
and inserting ‘‘carried out after’’.
SEC. 523. TEMPORARY AUTHORITY TO ENTER INTO CON-
TRACTS; PRIVATE COLLECTION AGENCIES.
(a) IN GENERAL.—Section 331 of the Consolidated
Farm and Rural Development Act (7 U.S.C. 1981) is
amended by striking subsections (d) and (e).
(b) APPLICATION.—The amendment made by sub-
section (a) shall not apply to a contract entered into before
the effective date of this Act.
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SEC. 524. INTEREST RATE OPTIONS FOR LOANS IN SERV-
ICING.
Section 331B of the Consolidated Farm and Rural De-
velopment Act (7 U.S.C. 1981b) is amended—
(1) by striking ‘‘lower of (1) the’’ and inserting
the following: ‘‘lowest of—
‘‘(1) the’’; and
(2) by striking ‘‘original loan or (2) the’’ and in-
serting the following: ‘‘original loan;
‘‘(2) the rate being charged by the Secretary for
loans, other than guaranteed loans, of the same type
at the time at which the borrower applies for a defer-
ral, consolidation, rescheduling, or reamortization; or
‘‘(3) the’’.
SEC. 525. ANNUAL REVIEW OF BORROWERS.
Section 333 of the Consolidated Farm and Rural De-
velopment Act (7 U.S.C. 1983) is amended by striking
paragraph (2) and inserting the following:
‘‘(2) except with respect to a loan under section
306, 310B, or 314—
‘‘(A) an annual review of the credit history
and business operation of the borrower; and
‘‘(B) an annual review of the continued eli-
gibility of the borrower for the loan;’’.
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SEC. 526. SIMPLIFIED LOAN APPLICATIONS.
Section 333A(g)(1) of the Consolidated Farm and
Rural Development Act (7 U.S.C. 1983a(g)(1)) is amended
by striking ‘‘of loans the principal amount of which is
$50,000 or less’’ and inserting ‘‘of farmer program loans
the principal amount of which is $100,000 or less’’.
SEC. 527. INVENTORY PROPERTY.
Section 335(c) of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1985(c)) is amended—
(1) in paragraph (1)—
(A) in subparagraph (B)—
(i) in clause (i), by striking ‘‘75 days’’
and inserting ‘‘135 days’’; and
(ii) by adding at the end the following:
‘‘(iv) COMBINING
AND
DIVIDING
OF
PROPERTY.—To the maximum extent prac-
ticable, the Secretary shall maximize the op-
portunity for beginning farmers and ranch-
ers to purchase real property acquired by
the Secretary under this title by combining
or dividing inventory parcels of the prop-
erty in such manner as the Secretary deter-
mines to be appropriate.’’; and
(B) in subparagraph (C)—
(i) by striking ‘‘75 days’’ and inserting
‘‘135 days’’; and
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(ii) by striking ‘‘75-day period’’ and
inserting ‘‘135-day period’’;
(2) by striking paragraph (2) and inserting the
following:
‘‘(2) PREVIOUS LEASE.—In the case of real prop-
erty acquired before April 4, 1996, that the Secretary
leased before April 4, 1996, not later than 60 days
after the lease expires, the Secretary shall offer to sell
the property in accordance with paragraph (1).’’; and
(3) in paragraph (3)—
(A) in subparagraph (A), by striking ‘‘sub-
paragraph (B)’’ and inserting ‘‘subparagraphs
(B) and (C)’’; and
(B) by adding at the end the following:
‘‘(C) OFFER TO SELL OR GRANT FOR FARM-
LAND PRESERVATION.—For the purpose of farm-
land preservation, the Secretary shall—
‘‘(i) in consultation with the State
Conservationist of each State in which in-
ventory property is located, identify each
parcel of inventory property in the State
that should be preserved for agricultural
use; and
‘‘(ii) offer to sell or grant an easement,
restriction, development right, or similar
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legal right to each parcel identified under
clause (i) to a State, a political subdivision
of a State, or a private nonprofit organiza-
tion separately from the underlying fee or
other rights to the property owned by the
United States.’’.
SEC. 528. DEFINITIONS.
(a) QUALIFIED BEGINNING FARMER OR RANCHER.—
Section 343(a)(11)(F) of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1991(a)(11)(F)) is amended by
striking ‘‘25 percent’’ and inserting ‘‘30 percent’’.
(b) DEBT FORGIVENESS.—Section 343(a)(12) of the
Consolidated Farm and Rural Development Act (7 U.S.C.
1991(a)(12)) is amended by striking subparagraph (B) and
inserting the following:
‘‘(B) EXCEPTIONS.—The term ‘debt forgive-
ness’ does not include—
‘‘(i) consolidation, rescheduling, re-
amortization, or deferral of a loan; or
‘‘(ii) any write-down provided as part
of a resolution of a discrimination com-
plaint against the Secretary.’’.
SEC. 529. LOAN AUTHORIZATION LEVELS.
Section 346 of the Consolidated Farm and Rural De-
velopment Act (7 U.S.C. 1994) is amended—
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(1) in subsection (b)—
(A) by striking paragraph (1) and inserting
the following:
‘‘(1) IN GENERAL.—The Secretary may make or
guarantee loans under subtitles A and B from the Ag-
ricultural Credit Insurance Fund provided for in sec-
tion 309 for not more than $3,750,000,000 for each of
fiscal years 2002 through 2006, of which, for each fis-
cal year—
‘‘(A) $750,000,000 shall be for direct loans,
of which—
‘‘(i) $200,000,000 shall be for farm
ownership loans under subtitle A; and
‘‘(ii) $550,000,000 shall be for oper-
ating loans under subtitle B; and
‘‘(B) $3,000,000,000 shall be for guaranteed
loans, of which—
‘‘(i) $1,000,000,000 shall be for guar-
antees of farm ownership loans under sub-
title A; and
‘‘(ii) $2,000,000,000 shall be for guar-
antees of operating loans under subtitle B.’’;
and
(B) in paragraph (2)(A)(ii), by striking
‘‘farmers and ranchers’’ and all that follows and
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inserting ‘‘farmers and ranchers 35 percent for
each of fiscal years 2002 through 2006.’’; and
(2) in subsection (c), by striking the last sen-
tence.
SEC. 530. INTEREST RATE REDUCTION PROGRAM.
Section 351 of the Consolidated Farm and Rural De-
velopment Act (7 U.S.C. 1999) is amended—
(1) in subsection (a)—
(A) by striking ‘‘PROGRAM.—’’ and all that
follows through ‘‘The Secretary’’ and inserting
‘‘PROGRAM.—The Secretary’’; and
(B) by striking paragraph (2);
(2) by striking subsection (c) and inserting the
following:
‘‘(c) AMOUNT OF INTEREST RATE REDUCTION.—
‘‘(1) IN GENERAL.—In return for a contract en-
tered into by a lender under subsection (b) for the re-
duction of the interest rate paid on a loan, the Sec-
retary shall make payments to the lender in an
amount equal to not more than 100 percent of the cost
of reducing the annual rate of interest payable on the
loan, except that such payments shall not exceed the
cost of reducing the rate by more than—
‘‘(A) in the case of a borrower other than a
beginning farmer or rancher, 3 percent; and
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‘‘(B) in the case of a beginning farmer or
rancher, 4 percent.
‘‘(2) BEGINNING FARMERS AND RANCHERS.—The
percentage reduction of the interest rate for which
payments are authorized to be made for a beginning
farmer or rancher under paragraph (1) shall be 1
percent more than the percentage reduction for farm-
ers and ranchers that are not beginning farmers or
ranchers.’’; and
(3) in subsection (e), by striking paragraph (2)
and inserting the following:
‘‘(2) MAXIMUM AMOUNT OF FUNDS.—
‘‘(A) IN
GENERAL.—The total amount of
funds used by the Secretary to carry out this sec-
tion 
for 
a 
fiscal 
year 
shall 
not 
exceed
$750,000,000.
‘‘(B) BEGINNING
FARMERS
AND
RANCH-
ERS.—
‘‘(i) IN GENERAL.—The Secretary shall
reserve not less than 25 percent of the funds
used by the Secretary under subparagraph
(A) to make payments for guaranteed loans
made to beginning farmers and ranchers.
‘‘(ii) DURATION OF RESERVATION OF
FUNDS.—Funds 
reserved 
for 
beginning
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farmers or ranchers under clause (i) for a
fiscal year shall be reserved only until April
1 of the fiscal year.’’.
SEC. 531. OPTIONS FOR SATISFACTION OF OBLIGATION TO
PAY RECAPTURE AMOUNT FOR SHARED AP-
PRECIATION AGREEMENTS.
(a) IN GENERAL.—Section 353(e)(7) of the Consoli-
dated Farm and Rural Development Act (7 U.S.C.
2001(e)(7)) is amended—
(1) in subparagraph (C), by redesignating
clauses (i) and (ii) as subclauses (I) and (II), respec-
tively, and adjusting the margins appropriately;
(2) by redesignating subparagraphs (A) through
(C) as clauses (i) through (iii), respectively, and ad-
justing the margins appropriately;
(3) by striking the paragraph heading and in-
serting the following:
‘‘(7) OPTIONS FOR SATISFACTION OF OBLIGATION
TO PAY RECAPTURE AMOUNT.—
‘‘(A) IN GENERAL.—As an alternative to re-
paying the full recapture amount at the end of
the term of the shared appreciation agreement
(as determined by the Secretary in accordance
with this subsection), a borrower may satisfy the
obligation to pay the amount of recapture by—
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‘‘(i) financing the recapture payment
in accordance with subparagraph (B); or
‘‘(ii) granting the Secretary an agri-
cultural use protection and conservation
easement on the property subject to the
shared appreciation agreement in accord-
ance with subparagraph (C).
‘‘(B) 
FINANCING
OF
RECAPTURE
PAY-
MENT.—’’; and
(4) by adding at the end the following:
‘‘(C) AGRICULTURAL USE PROTECTION AND
CONSERVATION EASEMENT.—
‘‘(i) IN
GENERAL.—Subject to clause
(iii), the Secretary shall accept an agricul-
tural use protection and conservation ease-
ment from the borrower for all of the real
security property subject to the shared ap-
preciation agreement in lieu of payment of
the recapture amount.
‘‘(ii) TERM.—The term of an easement
accepted by the Secretary under this sub-
paragraph shall be 25 years.
‘‘(iii) 
CONDITIONS.—The 
easement
shall require that the property subject to the
easement shall continue to be used or con-
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served for agricultural and conservation
uses in accordance with sound farming and
conservation practices, as determined by the
Secretary.
‘‘(iv) REPLACEMENT
OF
METHOD
OF
SATISFYING OBLIGATION.—A borrower that
has begun financing of a recapture payment
under subparagraph (B) may replace that
financing with an agricultural use protec-
tion and conservation easement under this
subparagraph.’’.
(b) APPLICABILITY.—The amendments made by sub-
section (a) shall apply to a shared appreciation agreement
entered into under section 353(e) of the Consolidated Farm
and Rural Development Act (7 U.S.C. 2001(e)) that—
(1) matures on or after the date of enactment of
this Act; or
(2) matured before the date of enactment of this
Act, if—
(A) the recapture amount was reamortized
under section 353(e)(7) of the Consolidated Farm
and 
Rural 
Development 
Act 
(7 
U.S.C.
2001(e)(7)) (as in effect on the day before the
date of enactment of this Act); or
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(B)(i) the recapture amount had not been
paid before the date of enactment of this Act be-
cause of circumstances beyond the control of the
borrower; and
(ii) the borrower acted in good faith (as de-
termined by the Secretary) in attempting to
repay the recapture amount.
SEC. 532. WAIVER OF BORROWER TRAINING CERTIFICATION
REQUIREMENT.
Section 359 of the Consolidated Farm and Rural De-
velopment Act (7 U.S.C. 2006a) is amended by striking sub-
section (f) and inserting the following:
‘‘(f) WAIVERS.—
‘‘(1) IN GENERAL.—The Secretary may waive
the requirements of this section for an individual bor-
rower if the Secretary determines that the borrower
demonstrates adequate knowledge in areas described
in this section.
‘‘(2) CRITERIA.—The Secretary shall establish
criteria providing for the application of paragraph
(1) consistently in all counties nationwide.’’.
SEC. 533. ANNUAL REVIEW OF BORROWERS.
Section 360(d)(1) of the Consolidated Farm and Rural
Development Act (7 U.S.C. 2006b(d)(1)) is amended by
striking ‘‘biannual’’ and inserting ‘‘annual’’.
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Subtitle D—Farm Credit
SEC. 541. REPEAL OF BURDENSOME APPROVAL REQUIRE-
MENTS.
(a) BANKS FOR COOPERATIVES.—Section 3.1(11)(B)
of the Farm Credit Act of 1971 (12 U.S.C. 2122(11)(B))
is amended—
(1) by striking clause (iii); and
(2) by redesignating clause (iv) as clause (iii).
(b) OTHER SYSTEM BANKS; ASSOCIATIONS.—Section
4.18A of the Farm Credit Act of 1971 (12 U.S.C. 2206a)
is amended—
(1) 
in 
subsection 
(a)(1), 
by 
striking
‘‘3.1(11)(B)(iv)’’ and inserting ‘‘3.1(11)(B)(iii)’’; and
(2) by striking subsection (c).
SEC. 542. BANKS FOR COOPERATIVES.
Section 3.7(b) of the Farm Credit Act of 1971 (12
U.S.C. 2128(b)) is amended—
(1) in paragraphs (1) and (2)(A)(i), by striking
‘‘farm supplies’’ each place it appears and inserting
‘‘agricultural supplies’’; and
(2) by adding at the end the following:
‘‘(4) DEFINITION OF AGRICULTURAL SUPPLY.—
In this subsection, the term ‘agricultural supply’
includes—
‘‘(A) a farm supply; and
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‘‘(B)(i) agriculture-related processing equip-
ment;
‘‘(ii) agriculture-related machinery; and
‘‘(iii) other capital goods related to the stor-
age or handling of agricultural commodities or
products.’’.
SEC. 543. INSURANCE CORPORATION PREMIUMS.
(a) REDUCTION IN PREMIUMS FOR GSE-GUARANTEED
LOANS.—
(1) IN
GENERAL.—Section 5.55 of the Farm
Credit Act of 1971 (12 U.S.C. 2277a–4) is amended—
(A) in subsection (a)—
(i) in paragraph (1)—
(I) in subparagraph (A), by strik-
ing ‘‘government-guaranteed loans pro-
vided for in subparagraph (C)’’ and
inserting ‘‘loans provided for in sub-
paragraphs (C) and (D)’’;
(II) in subparagraph (B), by
striking ‘‘and’’ at the end;
(III) in subparagraph (C), by
striking the period at the end and in-
serting ‘‘; and’’; and
(IV) by adding at the end the fol-
lowing:
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‘‘(D) the annual average principal out-
standing for such year on the guaranteed por-
tions of Government Sponsored Enterprise-guar-
anteed loans made by the bank that are in ac-
crual status, multiplied by a factor, not to exceed
0.0015, determined by the Corporation at the
sole discretion of the Corporation.’’; and
(ii) by adding at the end the following:
‘‘(4) DEFINITION OF GOVERNMENT SPONSORED
ENTERPRISE-GUARANTEED LOAN.—In this section and
sections 1.12(b) and 5.56(a), the term ‘Government
Sponsored Enterprise-guaranteed loan’ means a loan
or credit, or portion of a loan or credit, that is guar-
anteed by an entity that is chartered by Congress to
serve a public purpose and the debt obligations of
which are not explicitly guaranteed by the United
States, including the Federal National Mortgage Asso-
ciation, the Federal Home Loan Mortgage Corpora-
tion, the Federal Home Loan Bank System, and the
Federal Agricultural Mortgage Corporation, but not
including any other institution of the Farm Credit
System.’’; and
(B) in subsection (e)(4)(B), by striking
‘‘government-guaranteed loans described in sub-
section (a)(1)(C)’’ and inserting ‘‘loans described
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in subparagraph (C) or (D) of subsection
(a)(1)’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 1.12(b) of the Farm Credit Act
of 1971 (12 U.S.C. 2020(b)) is amended—
(i) in paragraph (1), by inserting
‘‘and Government Sponsored Enterprise-
guaranteed loans (as defined in section
5.55(a)(4)) provided for in paragraph (4)’’
after ‘‘government-guaranteed loans (as de-
fined in section 5.55(a)(3)) provided for in
paragraph (3)’’;
(ii) in paragraph (2), by striking
‘‘and’’ at the end;
(iii) in paragraph (3), by striking the
period at the end and inserting ‘‘; and’’;
and
(iv) by adding at the end the following:
‘‘(4) the annual average principal outstanding
for such year on the guaranteed portions of Govern-
ment Sponsored Enterprise-guaranteed loans (as so
defined) made by the association, or by the other fi-
nancing institution and funded by or discounted with
the Farm Credit Bank, that are in accrual status,
multiplied by a factor, not to exceed 0.0015, deter-
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mined by the Corporation for the purpose of setting
the premium for such guaranteed portions of loans
under section 5.55(a)(1)(D).’’.
(B) Section 5.56(a) of the Farm Credit Act
of 1971 (12 U.S.C. 2277a–5(a)) is amended—
(i) in paragraph (1), by inserting
‘‘and Government Sponsored Enterprise-
guaranteed loans (as defined in section
5.55(a)(4))’’ after ‘‘government-guaranteed
loans’’;
(ii) by redesignating paragraphs (4)
and (5) as paragraphs (5) and (6), respec-
tively; and
(iii) by inserting after paragraph (3)
the following:
‘‘(4) the annual average principal outstanding
on the guaranteed portions of Government Sponsored
Enterprise-guaranteed loans (as defined in section
5.55(a)(4)) that are in accrual status;’’.
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) take effect on the date on which Farm Credit
System Insurance Corporation premiums are due from in-
sured Farm Credit System banks under section 5.55 of the
Farm Credit Act of 1971 (12 U.S.C. 2277a–4) for calendar
year 2001.
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SEC. 544. BOARD OF DIRECTORS OF THE FEDERAL AGRI-
CULTURAL MORTGAGE CORPORATION.
Section 8.2(b) of the Farm Credit Act of 1971 (12
U.S.C. 2279aa–2(b)) is amended—
(1) in paragraph (2)—
(A) by striking ‘‘15’’ and inserting ‘‘17’’;
(B) in subparagraph (A), by striking ‘‘com-
mon stock’’ and all that follows and inserting
‘‘Class A voting common stock;’’;
(C) in subparagraph (B), by striking ‘‘com-
mon stock’’ and all that follows and inserting
‘‘Class B voting common stock;’’;
(D) by redesignating subparagraph (C) as
subparagraph (D); and
(E) by inserting after subparagraph (B) the
following:
‘‘(C) 2 members shall be elected by holders
of Class A voting common stock and Class B vot-
ing common stock, 1 of whom shall be the chief
executive officer of the Corporation and 1 of
whom shall be another executive officer of the
Corporation; and’’;
(2) in paragraph (3), by striking ‘‘(2)(C)’’ and
inserting ‘‘(2)(D)’’;
(3) in paragraph (4)—
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(A) in subparagraph (A), by striking ‘‘(A)
or (B)’’ and inserting ‘‘(A), (B), or (C)’’; and
(B) in subparagraph (B), by striking
‘‘(2)(C)’’ and inserting ‘‘(2)(D)’’;
(4) in paragraph (5)(A)—
(A) by inserting ‘‘executive officers of the
Corporation or’’ after ‘‘from among persons who
are’’; and
(B) by striking ‘‘such a representative’’ and
inserting ‘‘such an executive officer or represent-
ative’’;
(5) in paragraph (6)(B), by striking ‘‘(A) and
(B)’’ and inserting ‘‘(A), (B), and (C)’’;
(6) in paragraph (7), by striking ‘‘8 members’’
and inserting ‘‘Nine members’’;
(7) in paragraph (8)—
(A) in the paragraph heading, by inserting
‘‘OR
EXECUTIVE
OFFICERS
OF
THE
CORPORA-
TION’’ after ‘‘EMPLOYEES’’; and
(B) by inserting ‘‘or executive officers of the
Corporation’’ after ‘‘United States’’; and
(8) by striking paragraph (9) and inserting the
following:
‘‘(9) CHAIRPERSON.—
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‘‘(A) ELECTION.—The permanent board
shall annually elect a chairperson from among
the members of the permanent board.
‘‘(B) TERM.—The term of the chairperson
shall coincide with the term served by elected
members of the permanent board under para-
graph (6)(B).’’.
Subtitle E—General Provisions
SEC. 551. INAPPLICABILITY OF FINALITY RULE.
Section 281(a)(1) of the Department of Agriculture Re-
organization Act of 1994 (7 U.S.C. 7001(a)(1)) is
amended—
(1) by striking ‘‘This subsection’’ and inserting
the following:
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), this subsection’’; and
(2) by adding at the end the following:
‘‘(B) AGRICULTURAL CREDIT DECISIONS.—
This subsection shall not apply with respect to
an agricultural credit decision made by such a
State, county, or area committee, or employee of
such a committee, under the Consolidated Farm
and Rural Development Act (7 U.S.C. 1921 et
seq.).’’.
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SEC. 552. TECHNICAL AMENDMENTS.
(a) Section 321(a) of the Consolidated Farm and
Rural Development Act (7 U.S.C. 1961(a)) is amended by
striking ‘‘Disaster Relief and Emergency Assistance Act’’
each place it appears and inserting ‘‘Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C.
5121 et seq.)’’.
(b) Section 336(b) of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1986(b)) is amended in the sec-
ond sentence by striking ‘‘provided for in section 332 of this
title’’.
(c) Section 359(c)(1) of the Consolidated Farm and
Rural Development Act (7 U.S.C. 2006a(c)(1)) is amended
by striking ‘‘established pursuant to section 332,’’.
(d) Section 360(a) of the Consolidated Farm and
Rural Development Act (7 U.S.C. 2006b(a)) is amended by
striking ‘‘established pursuant to section 332’’.
SEC. 553. EFFECTIVE DATE.
(a) IN GENERAL.—Except as provided in subsection
(b) and section 543(b), this title and the amendments made
by this title take effect on October 1, 2001.
(b) BOARD OF DIRECTORS OF THE FEDERAL AGRICUL-
TURAL MORTGAGE CORPORATION.—The amendments made
by section 544 take effect on the date of enactment of this
Act.
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TITLE VI—RURAL DEVELOPMENT
Subtitle A—Empowerment of Rural
America
SEC. 601. NATIONAL RURAL COOPERATIVE AND BUSINESS
EQUITY FUND.
The Consolidated Farm and Rural Development Act
(7 U.S.C. 1921 et seq.) is amended by adding at the end
the following:
‘‘Subtitle G—National Rural Coop-
erative 
and 
Business 
Equity
Fund
‘‘SEC. 383A. SHORT TITLE.
‘‘This subtitle may be cited as the ‘National Rural Co-
operative and Business Equity Fund Act’.
‘‘SEC. 383B. PURPOSE.
‘‘The purpose of this subtitle is to revitalize rural com-
munities and enhance farm income through sustainable
rural business development by providing Federal funds and
credit enhancements to a private equity fund in order to
encourage investments by institutional and noninstitu-
tional investors for the benefit of rural America.
‘‘SEC. 383C. DEFINITIONS.
‘‘In this subtitle:
‘‘(1) AUTHORIZED
PRIVATE
INVESTOR.—The
term ‘authorized private investor’ means an indi-
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vidual, legal entity, or affiliate or subsidiary of an
individual or legal entity that—
‘‘(A) is eligible to receive a loan guarantee
under this title;
‘‘(B) is eligible to receive a loan guarantee
under the Rural Electrification Act of 1936 (7
U.S.C. 901 et seq.);
‘‘(C) is created under the National Con-
sumer Cooperative Bank Act (12 U.S.C. 3011 et
seq.);
‘‘(D) is an insured depository institution
subject to section 383E(b)(2);
‘‘(E) is a Farm Credit System institution
described in section 1.2(a) of the Farm Credit
Act of 1971 (12 U.S.C. 2002(a)); or
‘‘(F) is determined by the Board to be an
appropriate investor in the Fund.
‘‘(2) BOARD.—The term ‘Board’ means the board
of directors of the Fund established under section
383G.
‘‘(3) FUND.—The term ‘Fund’ means the Na-
tional Rural Cooperative and Business Equity Fund
established under section 383D.
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‘‘(4) GROUP OF SIMILAR AUTHORIZED PRIVATE
INVESTORS.—The term ‘group of similar investors’
means any 1 of the following:
‘‘(A) Insured depository institutions with
total assets of more than $250,000,000.
‘‘(B) Insured depository institutions with
total assets equal to or less than $250,000,000.
‘‘(C) Farm Credit System institutions de-
scribed in section 1.2(a) of the Farm Credit Act
of 1971 (12 U.S.C. 2002(a)).
‘‘(D) 
Cooperative 
financial 
institutions
(other than Farm Credit System institutions).
‘‘(E) Private investors, other than those de-
scribed in subparagraphs (A) through (D), au-
thorized by the Secretary.
‘‘(F) Other nonprofit organizations, includ-
ing credit unions.
‘‘(5) INSURED
DEPOSITORY
INSTITUTION.—The
term ‘insured depository institution’ means any bank
or savings association the deposits of which are in-
sured under the Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.).
‘‘(6) RURAL BUSINESS.—The term ‘rural busi-
ness’ means a rural cooperative, a value-added agri-
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cultural enterprise, or any other business located or
locating in a rural area.
‘‘SEC. 383D. ESTABLISHMENT.
‘‘(a) AUTHORITY.—
‘‘(1) IN GENERAL.—On certification by the Sec-
retary that, to the maximum extent practicable, the
parties proposing to establish a fund provide a broad
representation of all of the groups of similar author-
ized private investors described in subparagraphs (A)
through (F) of section 383C(4), the parties may estab-
lish a non-Federal entity under State law to purchase
shares of, and manage a fund to be known as the ‘Na-
tional Rural Cooperative and Business Equity Fund’,
to generate and provide equity capital to rural busi-
nesses.
‘‘(2) OWNERSHIP.—
‘‘(A) IN GENERAL.—To the maximum ex-
tent practicable, equity ownership of the Fund
shall be distributed among authorized private in-
vestors representing all of the groups of similar
authorized private investors described in sub-
paragraphs (A) through (F) of section 383C(4).
‘‘(B) EXCLUSION OF GROUPS.—No group of
authorized private investors shall be excluded
from equity ownership of the Fund during any
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period during which the Fund is in existence if
an authorized private investor representative of
the group is able and willing to invest in the
Fund.
‘‘(b) PURPOSES.—The purposes of the Fund shall be—
‘‘(1) to strengthen the economy of rural areas;
‘‘(2) to further sustainable rural business devel-
opment;
‘‘(3) to encourage—
‘‘(A) start-up rural businesses;
‘‘(B) increased opportunities for small and
minority-owned rural businesses; and
‘‘(C) the formation of new rural businesses;
‘‘(4) to enhance rural employment opportunities;
‘‘(5) to provide equity capital to rural busi-
nesses, many of which have difficulty obtaining eq-
uity capital; and
‘‘(6) to leverage non-Federal funds for rural busi-
nesses.
‘‘(c) ARTICLES OF INCORPORATION AND BYLAWS.—The
articles of incorporation and bylaws of the Fund shall set
forth purposes of the Fund that are consistent with the pur-
poses described in subsection (b).
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‘‘SEC. 383E. INVESTMENT IN THE FUND.
‘‘(a) IN GENERAL.—Of the funds made available under
section 383H, the Secretary shall—
‘‘(1) subject to subsection (b)(1), make available
to the Fund $150,000,000;
‘‘(2) subject to subsection (c), guarantee 50 per-
cent of each investment made by an authorized pri-
vate investor in the Fund; and
‘‘(3) subject to subsection (d), guarantee the re-
payment of principal of, and accrued interest on, de-
bentures issued by the Fund to authorized private in-
vestors.
‘‘(b) PRIVATE INVESTMENT.—
‘‘(1) MATCHING
REQUIREMENT.—Under sub-
section (a)(1), the Secretary shall make an amount
available to the Fund only after an equal amount has
been invested in the Fund by authorized private in-
vestors in accordance with this subtitle and the terms
and conditions set forth in the bylaws of the Fund.
‘‘(2) INSURED DEPOSITORY INSTITUTIONS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C)—
‘‘(i) an insured depository institution
may be an authorized private investor in
the Fund; and
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‘‘(ii) an investment in the Fund may
be considered to be part of the record of an
institution in meeting the credit needs of
the community in which the institution is
located under any applicable Federal law.
‘‘(B) INVESTMENT LIMIT.—The total invest-
ment in the Fund of an insured depository insti-
tution shall not exceed 5 percent of the capital
and surplus of the institution.
‘‘(C) REGULATORY AUTHORITY.—An appro-
priate Federal banking agency may, by regula-
tion or order, impose on any insured depository
institution investing in the Fund, any safeguard,
limitation, or condition (including an invest-
ment limit that is lower than the investment
limit under subparagraph (B)) that the Federal
banking agency considers to be appropriate to
ensure that the institution operates—
‘‘(i) in a financially sound manner;
and
‘‘(ii) in compliance with all applicable
law.
‘‘(c) GUARANTEE OF PRIVATE INVESTMENTS.—
‘‘(1) IN
GENERAL.—The Secretary shall guar-
antee, under terms and conditions determined by the
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Secretary, 50 percent of any loss of the principal of
an investment made in the Fund by an authorized
private investor.
‘‘(2) MAXIMUM TOTAL GUARANTEE.—The aggre-
gate potential liability of the Secretary with respect
to all guarantees under paragraph (1) shall not apply
to more than $300,000,000 in private investments in
the Fund.
‘‘(3) REDEMPTION OF GUARANTEE.—
‘‘(A) DATE.—An authorized private inves-
tor in the Fund may redeem a guarantee under
paragraph (1), with respect to the total invest-
ments in the Fund and the total losses of the au-
thorized private investor as of the date of
redemption—
‘‘(i) on the date that is 5 years after
the date of the initial investment by the au-
thorized private investor; or
‘‘(ii) annually thereafter.
‘‘(B) EFFECT
OF
REDEMPTION.—On re-
demption of a guarantee under subparagraph
(A)—
‘‘(i) the shares in the Fund of the au-
thorized private investor shall be redeemed;
and
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‘‘(ii) the authorized private investor
shall be prohibited from making any future
investment in the Fund.
‘‘(d) DEBT SECURITIES.—
‘‘(1) IN GENERAL.—The Fund may, at the dis-
cretion of the Board, generate additional capital
through—
‘‘(A) the issuance of debt securities; and
‘‘(B) other means determined to be appro-
priate by the Board.
‘‘(2) GUARANTEE OF DEBT BY SECRETARY.—
‘‘(A) IN
GENERAL.—The Secretary shall
guarantee 100 percent of the principal of, and
accrued interest on, debentures issued by the
Fund that are approved by the Secretary.
‘‘(B) MAXIMUM DEBT GUARANTEED BY SEC-
RETARY.—The outstanding value of debentures
issued by the Fund and guaranteed by the Sec-
retary shall not exceed the lesser of—
‘‘(i) the amount equal to twice the
value of the assets held by the Fund; or
‘‘(ii) $500,000,000.
‘‘(C) RECAPTURE
OF
GUARANTEE
PAY-
MENTS.—If the Secretary makes a payment on a
debt security issued by the Fund as a result of
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a guarantee of the Secretary under this para-
graph, the Secretary shall have priority over
other creditors for repayment of the debt secu-
rity.
‘‘(3) AUTHORIZED PRIVATE INVESTORS.—An au-
thorized private investor may purchase debt securities
issued by the Fund.
‘‘SEC. 383F. INVESTMENTS AND OTHER ACTIVITIES OF THE
FUND.
‘‘(a) INVESTMENTS.—
‘‘(1) IN GENERAL.—
‘‘(A) TYPES.—Subject to subparagraphs (B)
and (C), the Fund may—
‘‘(i) make equity investments in a
rural business that meets—
‘‘(I) the requirements of para-
graph (6); and
‘‘(II) such other requirements as
the Board may establish; and
‘‘(ii) extend credit to the rural business
in—
‘‘(I) the form of mezzanine debt or
subordinated debt; or
‘‘(II) any other form of quasi-eq-
uity.
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‘‘(B) LIMITATIONS ON INVESTMENTS.—
‘‘(i) TOTAL INVESTMENTS BY A SINGLE
RURAL
BUSINESS.—Subject to clause (ii),
investment by the Fund in a single rural
business shall not exceed the greater of—
‘‘(I) an amount equal to 7 percent
of the capital of the Fund; or
‘‘(II) $2,000,000.
‘‘(ii) WAIVER.—The Secretary may
waive the limitation in clause (i) in any
case in which an investment exceeding the
limits specified in clause (i) is necessary to
preserve prior investments in the rural
business.
‘‘(iii) 
TOTAL
NONEQUITY
INVEST-
MENTS.—Except in the case of a project to
assist a rural cooperative, the total amount
of nonequity investments described in sub-
paragraph (A)(ii) that may be provided by
the Fund shall not exceed 20 percent of the
total investments of the Fund in the project.
‘‘(C) LIMITATION.—Notwithstanding sub-
paragraph (B), the amount of any investment by
the Fund in a rural business shall not exceed the
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aggregate amount invested in like securities by
other private entities in that rural business.
‘‘(2) PROCEDURES.—The Fund shall implement
procedures to ensure that—
‘‘(A) the financing arrangements of the
Fund meet the Fund’s primary focus of pro-
viding equity capital; and
‘‘(B) the Fund does not compete with con-
ventional sources of credit.
‘‘(3) DIVERSITY OF PROJECTS.—The Fund—
‘‘(A) shall seek to make equity investments
in a variety of viable projects, with a significant
share of investments—
‘‘(i) in smaller enterprises (as defined
in section 384A) in rural communities of
diverse sizes; and
‘‘(ii) in cooperative and noncooperative
enterprises; and
‘‘(B) shall be managed in a manner that di-
versifies the risks to the Fund among a variety
of projects.
‘‘(4) LIMITATION
ON
RURAL
BUSINESSES
AS-
SISTED.—The Fund shall not invest in any rural
business that is primarily retail in nature (as deter-
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mined by the Board), other than a purchasing cooper-
ative.
‘‘(5) INTEREST RATE LIMITATIONS.—Returns on
investments in and by the Fund and returns on the
extension of credit by participants in projects assisted
by the Fund, shall not be subject to any State or Fed-
eral law establishing a maximum allowable interest
rate.
‘‘(6) REQUIREMENTS FOR RECIPIENTS.—
‘‘(A) OTHER INVESTMENTS.—Any recipient
of amounts from the Fund shall make or obtain
a significant investment from a source of capital
other than the Fund.
‘‘(B) SPONSORSHIP.—To be considered for
an equity investment from the Fund, a rural
business investment project shall be sponsored by
a regional, State, or local sponsoring or endors-
ing organization such as—
‘‘(i) a financial institution;
‘‘(ii) a development organization; or
‘‘(iii) any other established entity en-
gaging or assisting in rural business devel-
opment, including a rural cooperative.
‘‘(b) TECHNICAL
ASSISTANCE.—The Fund, under
terms and conditions established by the Board, shall use not
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less than 2 percent of capital provided by the Federal Gov-
ernment to provide technical assistance to rural businesses
seeking an equity investment from the Fund.
‘‘(c) ANNUAL AUDIT.—
‘‘(1) IN GENERAL.—The Board shall authorize
an annual audit of the financial statements of the
Fund by a nationally recognized auditing firm using
generally accepted accounting principles.
‘‘(2) AVAILABILITY OF AUDIT RESULTS.—The re-
sults of the audit required by paragraph (1) shall be
made available to investors in the Fund.
‘‘(d) ANNUAL REPORT.—The Board shall prepare and
make available to the public an annual report that—
‘‘(1) describes the projects funded with amounts
from the Fund;
‘‘(2) specifies the recipients of amounts from the
Fund;
‘‘(3) specifies the coinvestors in all projects that
receive amounts from the Fund; and
‘‘(4) meets the reporting requirements, if any, of
the State under the law of which the Fund is estab-
lished.
‘‘(e) OTHER AUTHORITIES.—
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‘‘(1) IN GENERAL.—The Board may exercise such
other authorities as are necessary to carry out this
subtitle.
‘‘(2) OVERSIGHT.—The Secretary shall enter in
to a contract with the Administrator of the Small
Business Administration under which the Adminis-
trator of the Small Business Administration shall be
responsible for the routine duties of the Secretary in
regard to the Fund.
‘‘SEC. 383G. GOVERNANCE OF THE FUND.
‘‘(a) IN GENERAL.—The Fund shall be governed by a
board of directors that represents all of the authorized pri-
vate investors in the Fund and the Federal Government and
that consists of—
‘‘(1) a designee of the Secretary;
‘‘(2) 2 members who are appointed by the Sec-
retary and are not Federal employees, including—
‘‘(A) 1 member with expertise in venture
capital investment; and
‘‘(B) 1 member with expertise in coopera-
tive development;
‘‘(3) 8 members who are elected by the authorized
private investors with investments in the Fund; and
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‘‘(4) 1 member who is appointed by the Board
and who is a community banker from an insured de-
pository institution that has—
‘‘(A) total assets equal to or less than
$250,000,000; and
‘‘(B) an investment in the Fund.
‘‘(b) LIMITATION
ON VOTING CONTROL.—No indi-
vidual investor or group of authorized investors may control
more than 25 percent of the votes on the Board.
‘‘SEC. 383H. AUTHORIZATION OF APPROPRIATIONS.
‘‘There are authorized to be appropriated such sums
as are necessary to carry out this subtitle.’’.
SEC. 602. RURAL BUSINESS INVESTMENT PROGRAM.
The Consolidated Farm and Rural Development Act
(as amended by section 601) is amended by adding at the
end the following:
‘‘Subtitle H—Rural Business
Investment Program
‘‘SEC. 384A. DEFINITIONS.
‘‘In this subtitle:
‘‘(1) ARTICLES.—The term ‘articles’ means arti-
cles of incorporation for an incorporated body or the
functional equivalent or other similar documents
specified by the Secretary for other business entities.
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‘‘(2) DEVELOPMENTAL VENTURE CAPITAL.—The
term ‘developmental venture capital’ means capital in
the form of equity capital investments in Rural Busi-
ness Investment Companies with an objective of fos-
tering economic development in rural areas.
‘‘(3) EMPLOYEE WELFARE BENEFIT PLAN; PEN-
SION PLAN.—
‘‘(A) IN
GENERAL.—The terms ‘employee
welfare benefit plan’ and ‘pension plan’ have the
meanings given the terms in section 3 of the Em-
ployee Retirement Income Security Act of 1974
(29 U.S.C. 1002).
‘‘(B) INCLUSIONS.—The terms ‘employee
welfare 
benefit 
plan’ 
and 
‘pension 
plan’
include—
‘‘(i) public and private pension or re-
tirement plans subject to this subtitle; and
‘‘(ii) similar plans not covered by this
subtitle that have been established and that
are maintained by the Federal Government
or any State (including by a political sub-
division, agency, or instrumentality of the
Federal Government or a State) for the ben-
efit of employees.
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‘‘(4) EQUITY CAPITAL.—The term ‘equity cap-
ital’ means common or preferred stock or a similar
instrument, including subordinated debt with equity
features.
‘‘(5) LEVERAGE.—The term ‘leverage’ includes—
‘‘(A) debentures purchased or guaranteed by
the Secretary;
‘‘(B) participating securities purchased or
guaranteed by the Secretary; and
‘‘(C) preferred securities outstanding as of
the date of enactment of this subtitle.
‘‘(6) LICENSE.—The term ‘license’ means a li-
cense issued by the Secretary as provided in section
384D(c).
‘‘(7) LIMITED
LIABILITY
COMPANY.—The term
‘limited liability company’ means a business entity
that is organized and operating in accordance with a
State limited liability company law approved by the
Secretary.
‘‘(8) MEMBER.—The term ‘member’ means, with
respect to a Rural Business Investment Company that
is a limited liability company, a holder of an owner-
ship interest or a person otherwise admitted to mem-
bership in the limited liability company.
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‘‘(9) 
OPERATIONAL
ASSISTANCE.—The 
term
‘operational assistance’ means management, mar-
keting, and other technical assistance that assists a
rural business concern with business development.
‘‘(10) PARTICIPATION
AGREEMENT.—The term
‘participation agreement’ means an agreement, be-
tween the Secretary and a Rural Business Investment
Company granted final approval under section
384D(d), that requires the Rural Business Investment
Company to make investments in smaller enterprises
in rural areas.
‘‘(11) PRIVATE CAPITAL.—
‘‘(A) IN GENERAL.—The term ‘private cap-
ital’ means the total of—
‘‘(i) the paid-in capital and paid-in
surplus of a corporate Rural Business In-
vestment Company, the contributed capital
of the partners of a partnership Rural
Business Investment Company, or the eq-
uity investment of the members of a limited
liability company Rural Business Invest-
ment Company; and
‘‘(ii) unfunded binding commitments,
from investors that meet criteria established
by the Secretary to contribute capital to the
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Rural Business Investment Company, ex-
cept that unfunded commitments may be
counted as private capital for purposes of
approval by the Secretary of any request for
leverage, but leverage shall not be funded
based on the commitments.
‘‘(B) EXCLUSIONS.—The term ‘private cap-
ital’ does not include—
‘‘(i) any funds borrowed by a Rural
Business Investment Company from any
source;
‘‘(ii) any funds obtained through the
issuance of leverage; or
‘‘(iii) any funds obtained directly or
indirectly from the Federal Government or
any State (including by a political subdivi-
sion, agency, or instrumentality of the Fed-
eral Government or a State), except for—
‘‘(I) 50 percent of funds from the
National Rural Cooperative and Busi-
ness Equity Fund;
‘‘(II) funds obtained from the
business revenues (excluding any gov-
ernmental appropriation) of any feder-
ally chartered or government-sponsored
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enterprise established prior to the date
of enactment of this subtitle;
‘‘(III) funds invested by an em-
ployee welfare benefit plan or pension
plan; and
‘‘(IV) any qualified nonprivate
funds (if the investors of the qualified
nonprivate funds do not control, di-
rectly or indirectly, the management,
board of directors, general partners, or
members of the Rural Business Invest-
ment Company).
‘‘(12) QUALIFIED
NONPRIVATE
FUNDS.—The
term ‘qualified nonprivate funds’ means any—
‘‘(A) funds directly or indirectly invested in
any applicant or Rural Business Investment
Company on or before the date of enactment of
this subtitle, by any Federal agency, other than
the Department of Agriculture, under a provi-
sion of law explicitly mandating the inclusion of
those funds in the definition of the term ‘private
capital’; and
‘‘(B) funds invested in any applicant or
Rural Business Investment Company by 1 or
more entities of any State (including by a polit-
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ical subdivision, agency, or instrumentality of
the State and including any guarantee extended
by those entities) in an aggregate amount that
does not exceed 33 percent of the private capital
of the applicant or Rural Business Investment
Company.
‘‘(13) RURAL
BUSINESS
CONCERN.—The term
‘rural business concern’ means—
‘‘(A) a public, private, or cooperative for-
profit or nonprofit organization;
‘‘(B) a for-profit or nonprofit business con-
trolled by an Indian tribe on a Federal or State
reservation or other federally recognized Indian
tribal group; or
‘‘(C) any other person or entity;
that primarily operates in a rural area, as deter-
mined by the Secretary.
‘‘(14) RURAL
BUSINESS
INVESTMENT
COM-
PANY.—The term ‘Rural Business Investment Com-
pany’ means a company that—
‘‘(A) has been granted final approval by the
Secretary under section 384D(d); and
‘‘(B) has entered into a participation agree-
ment with the Secretary.
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‘‘(15) SMALLER ENTERPRISE.—The term ‘small-
er enterprise’ means any rural business concern that,
together with its affiliates—
‘‘(A) has—
‘‘(i) a net financial worth of not more
than $6,000,000, as of the date on which as-
sistance is provided under this subtitle to
the rural business concern; and
‘‘(ii) an average net income for the 2-
year period preceding the date on which as-
sistance is provided under this subtitle to
the rural business concern, of not more than
$2,000,000, after Federal income taxes (ex-
cluding any carryover losses) except that,
for purposes of this clause, if the rural busi-
ness concern is not required by law to pay
Federal income taxes at the enterprise level,
but is required to pass income through to
the shareholders, partners, beneficiaries, or
other equitable owners of the business con-
cern, the net income of the business concern
shall be determined by allowing a deduction
in an amount equal to the total of—
‘‘(I) if the rural business concern
is not required by law to pay State
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(and local, if any) income taxes at the
enterprise level, the net income (deter-
mined without regard to this clause),
multiplied by the marginal State in-
come tax rate (or by the combined
State and local income tax rates, as
applicable) that would have applied if
the business concern were a corpora-
tion; and
‘‘(II) the net income (so deter-
mined) less any deduction for State
(and local) income taxes calculated
under subclause (I), multiplied by the
marginal Federal income tax rate that
would have applied if the rural busi-
ness concern were a corporation; or
‘‘(B) satisfies the standard industrial classi-
fication size standards established by the Admin-
istrator of the Small Business Administration
for the industry in which the rural business con-
cern is primarily engaged.
‘‘SEC. 384B. PURPOSES.
‘‘The purposes of the Rural Business Investment Pro-
gram established under this subtitle are—
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‘‘(1) to promote economic development and the
creation of wealth and job opportunities in rural
areas and among individuals living in those areas by
encouraging developmental venture capital invest-
ments in smaller enterprises primarily located in
rural areas; and
‘‘(2) to establish a developmental venture capital
program, with the mission of addressing the unmet
equity investment needs of small enterprises located
in rural areas, by authorizing the Secretary—
‘‘(A) to enter into participation agreements
with Rural Business Investment Companies;
‘‘(B) to guarantee debentures of Rural Busi-
ness Investment Companies to enable each Rural
Business Investment Company to make develop-
mental venture capital investments in smaller
enterprises in rural areas; and
‘‘(C) to make grants to Rural Business In-
vestment Companies, and to other entities, for
the purpose of providing operational assistance
to smaller enterprises financed, or expected to be
financed, by Rural Business Investment Compa-
nies.
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‘‘SEC. 384C. ESTABLISHMENT.
‘‘In accordance with this subtitle, the Secretary shall
establish a Rural Business Investment Program, under
which the Secretary may—
‘‘(1) enter into participation agreements with
companies granted final approval under section
384D(d) for the purposes set forth in section 384B;
‘‘(2) guarantee the debentures issued by Rural
Business Investment Companies as provided in sec-
tion 384E; and
‘‘(3) make grants to Rural Business Investment
Companies, and to other entities, under section 384H.
‘‘SEC. 384D. SELECTION OF RURAL BUSINESS INVESTMENT
COMPANIES.
‘‘(a) ELIGIBILITY.—A company shall be eligible to
apply to participate, as a Rural Business Investment Com-
pany, in the program established under this subtitle if—
‘‘(1) the company is a newly formed for-profit
entity or a newly formed for-profit subsidiary of such
an entity;
‘‘(2) the company has a management team with
experience in community development financing or
relevant venture capital financing; and
‘‘(3) the company will invest in enterprises that
will create wealth and job opportunities in rural
areas, with an emphasis on smaller businesses.
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‘‘(b) APPLICATION.—To participate, as a Rural Busi-
ness Investment Company, in the program established
under this subtitle, a company meeting the eligibility re-
quirements of subsection (a) shall submit an application
to the Secretary that includes—
‘‘(1) a business plan describing how the company
intends to make successful developmental venture cap-
ital investments in identified rural areas;
‘‘(2) information regarding the community devel-
opment finance or relevant venture capital qualifica-
tions and general reputation of the management of
the company;
‘‘(3) a description of how the company intends
to work with community-based organizations and
local entities (including local economic development
companies, local lenders, and local investors) and to
seek to address the unmet equity capital needs of the
communities served;
‘‘(4) a proposal describing how the company in-
tends to use the grant funds provided under this sub-
title to provide operational assistance to smaller en-
terprises financed by the company, including infor-
mation regarding whether the company intends to use
licensed professionals, when necessary, on the staff of
the company or from an outside entity;
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‘‘(5) with respect to binding commitments to be
made to the company under this subtitle, an estimate
of the ratio of cash to in-kind contributions;
‘‘(6) a description of the criteria to be used to
evaluate whether and to what extent the company
meets the purposes of the program established under
this subtitle;
‘‘(7) information regarding the management and
financial strength of any parent firm, affiliated firm,
or any other firm essential to the success of the busi-
ness plan of the company; and
‘‘(8) such other information as the Secretary
may require.
‘‘(c) ISSUANCE OF LICENSE.—
‘‘(1) SUBMISSION OF APPLICATION.—Each appli-
cant for a license to operate as a Rural Business In-
vestment Company under this subtitle shall submit to
the Secretary an application, in a form and includ-
ing such documentation as may be prescribed by the
Secretary.
‘‘(2) PROCEDURES.—
‘‘(A) STATUS.—Not later than 90 days after
the initial receipt by the Secretary of an appli-
cation under this subsection, the Secretary shall
provide the applicant with a written report de-
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scribing the status of the application and any re-
quirements remaining for completion of the ap-
plication.
‘‘(B) APPROVAL OR DISAPPROVAL.—Within
a reasonable time after receiving a completed ap-
plication submitted in accordance with this sub-
section and in accordance with such require-
ments as the Secretary may prescribe by regula-
tion, the Secretary shall—
‘‘(i) approve the application and issue
a license for the operation to the applicant,
if the requirements of this section are satis-
fied; or
‘‘(ii) disapprove the application and
notify the applicant in writing of the dis-
approval.
‘‘(3) MATTERS CONSIDERED.—In reviewing and
processing any application under this subsection, the
Secretary—
‘‘(A) shall determine whether—
‘‘(i) the applicant meets the require-
ments of subsection (d); and
‘‘(ii) the management of the applicant
is qualified and has the knowledge, experi-
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ence, and capability necessary to comply
with this subtitle;
‘‘(B) shall take into consideration—
‘‘(i) the need for and availability of fi-
nancing for rural business concerns in the
geographic area in which the applicant is to
commence business;
‘‘(ii) the general business reputation of
the owners and management of the appli-
cant; and
‘‘(iii) the probability of successful oper-
ations of the applicant, including adequate
profitability and financial soundness; and
‘‘(C) shall not take into consideration any
projected shortage or unavailability of grant
funds or leverage.
‘‘(d) APPROVAL; DESIGNATION.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the Secretary may approve an applicant
to operate as a Rural Business Investment Company
under this subtitle and designate the applicant as a
Rural Business Investment Company, if—
‘‘(A) the Secretary determines that the ap-
plication satisfies the requirements of subsection
(b);
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‘‘(B) the area in which the Rural Business
Investment Company is to conduct its oper-
ations, and establishment of branch offices or
agencies (if authorized by the articles), are ap-
proved by the Secretary; and
‘‘(C) the applicant enters into a participa-
tion agreement with the Secretary.
‘‘(2) CAPITAL REQUIREMENTS.—
‘‘(A) IN
GENERAL.—Notwithstanding any
other provision of this subtitle, the Secretary
may approve an applicant to operate as a Rural
Business Investment Company under this sub-
title and designate the applicant as a Rural
Business Investment Company, if the Secretary
determines that the applicant—
‘‘(i) has private capital of less than
$2,500,000;
‘‘(ii) would otherwise be approved
under this subtitle, except that the applicant
does not satisfy the requirements of section
384I(c); and
‘‘(iii) has a viable business plan that
reasonably projects profitable operations
and that has a reasonable timetable for
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achieving a level of private capital that sat-
isfies the requirements of section 384I(c).
‘‘(B) LEVERAGE.—An applicant approved
under subparagraph (A) shall not be eligible to
receive leverage under this subtitle until the ap-
plicant satisfies the requirements of section
384I(c).
‘‘(C) GRANTS.—An applicant approved
under subparagraph (A) shall be eligible for
grants under section 384H in proportion to the
private capital of the applicant, as determined
by the Secretary.
‘‘SEC. 384E. DEBENTURES.
‘‘(a) IN GENERAL.—The Secretary may guarantee the
timely payment of principal and interest, as scheduled, on
debentures issued by any Rural Business Investment Com-
pany.
‘‘(b) TERMS AND CONDITIONS.—The Secretary may
make guarantees under this section on such terms and con-
ditions as the Secretary considers appropriate, except that
the term of any debenture guaranteed under this section
shall not exceed 15 years.
‘‘(c) FULL FAITH
AND CREDIT
OF
THE UNITED
STATES.—Section 381H(i) shall apply to any guarantee
under this section.
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‘‘(d) MAXIMUM GUARANTEE.—Under this section, the
Secretary may—
‘‘(1) guarantee the debentures issued by a Rural
Business Investment Company only to the extent that
the total face amount of outstanding guaranteed de-
bentures of the Rural Business Investment Company
does not exceed the lesser of—
‘‘(A) 300 percent of the private capital of
the Rural Business Investment Company; or
‘‘(B) $105,000,000; and
‘‘(2) provide for the use of discounted debentures.
‘‘SEC. 384F. ISSUANCE AND GUARANTEE OF TRUST CERTIFI-
CATES.
‘‘(a) ISSUANCE.—The Secretary may issue trust cer-
tificates representing ownership of all or a fractional part
of debentures issued by a Rural Business Investment Com-
pany and guaranteed by the Secretary under this subtitle,
if the certificates are based on and backed by a trust or
pool approved by the Secretary and composed solely of
guaranteed debentures.
‘‘(b) GUARANTEE.—
‘‘(1) IN GENERAL.—The Secretary may, under
such terms and conditions as the Secretary considers
appropriate, guarantee the timely payment of the
principal of and interest on trust certificates issued
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by the Secretary or agents of the Secretary for pur-
poses of this section.
‘‘(2) LIMITATION.—Each guarantee under this
subsection shall be limited to the extent of principal
and interest on the guaranteed debentures that com-
pose the trust or pool.
‘‘(3) PREPAYMENT OR DEFAULT.—
‘‘(A) IN GENERAL.—In the event a deben-
ture in a trust or pool is prepaid, or in the event
of default of such a debenture, the guarantee of
timely payment of principal and interest on the
trust certificates shall be reduced in proportion
to the amount of principal and interest the pre-
paid debenture represents in the trust or pool.
‘‘(B) INTEREST.—Interest on prepaid or de-
faulted debentures shall accrue and be guaran-
teed by the Secretary only through the date of
payment of the guarantee.
‘‘(C) REDEMPTION.—At any time during its
term, a trust certificate may be called for re-
demption due to prepayment or default of all de-
bentures.
‘‘(c) FULL FAITH
AND CREDIT
OF
THE UNITED
STATES.—Section 381H(i) shall apply to any guarantee of
a trust certificate issued by the Secretary under this section.
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‘‘(d) SUBROGATION AND OWNERSHIP RIGHTS.—
‘‘(1) SUBROGATION.—If the Secretary pays a
claim under a guarantee issued under this section, the
claim shall be subrogated fully to the rights satisfied
by the payment.
‘‘(2) OWNERSHIP RIGHTS.—No Federal, State, or
local law shall preclude or limit the exercise by the
Secretary of the ownership rights of the Secretary in
a debenture residing in a trust or pool against which
1 or more trust certificates are issued under this sec-
tion.
‘‘(e) MANAGEMENT AND ADMINISTRATION.—
‘‘(1) REGISTRATION.—The Secretary shall pro-
vide for a central registration of all trust certificates
issued under this section.
‘‘(2) 
CREATION
OF
POOLS.—The 
Secretary
may—
‘‘(A) maintain such commercial bank ac-
counts or investments in obligations of the
United States as may be necessary to facilitate
the creation of trusts or pools backed by deben-
tures guaranteed under this subtitle; and
‘‘(B) issue trust certificates to facilitate the
creation of those trusts or pools.
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‘‘(3) FIDELITY BOND OR INSURANCE REQUIRE-
MENT.—Any agent performing functions on behalf of
the Secretary under this paragraph shall provide a fi-
delity bond or insurance in such amount as the Sec-
retary considers to be necessary to fully protect the
interests of the United States.
‘‘(4) REGULATION OF BROKERS AND DEALERS.—
The Secretary may regulate brokers and dealers in
trust certificates issued under this section.
‘‘(5) ELECTRONIC
REGISTRATION.—Nothing in
this subsection prohibits the use of a book-entry or
other electronic form of registration for trust certifi-
cates issued under this section.
‘‘SEC. 384G. FEES.
‘‘(a) IN GENERAL.—The Secretary may charge such
fees as the Secretary considers appropriate with respect to
any guarantee or grant issued under this subtitle.
‘‘(b) TRUST
CERTIFICATE.—Notwithstanding sub-
section (a), the Secretary shall not collect a fee for any guar-
antee of a trust certificate under section 384F, except that
any agent of the Secretary may collect a fee approved by
the Secretary for the functions described in section
384F(e)(2).
‘‘(c) LICENSE.—
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‘‘(1) IN GENERAL.—The Secretary may prescribe
fees to be paid by each applicant for a license to oper-
ate as a Rural Business Investment Company under
this subtitle.
‘‘(2) USE
OF
AMOUNTS.—Fees collected under
this subsection—
‘‘(A) shall be deposited in the account for
salaries and expenses of the Secretary; and
‘‘(B) are authorized to be appropriated sole-
ly to cover the costs of licensing examinations.
‘‘SEC. 384H. OPERATIONAL ASSISTANCE GRANTS.
‘‘(a) IN GENERAL.—In accordance with this section,
the Secretary may make grants to Rural Business Invest-
ment Companies and to other entities, as authorized by this
subtitle, to provide operational assistance to smaller enter-
prises financed, or expected to be financed, by the entities.
‘‘(b) TERMS.—Grants made under this section shall be
made over a multiyear period (not to exceed 10 years)
under such other terms as the Secretary may require.
‘‘(c) USE OF FUNDS.—The proceeds of a grant made
under this section may be used by the Rural Business In-
vestment Company receiving the grant only to provide oper-
ational assistance in connection with an equity or prospec-
tive equity investment in a business located in a rural area.
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‘‘(d) SUBMISSION OF PLANS.—A Rural Business In-
vestment Company shall be eligible for a grant under this
section only if the Rural Business Investment Company
submits to the Secretary, in such form and manner as the
Secretary may require, a plan for use of the grant.
‘‘(e) GRANT AMOUNT.—
‘‘(1) RURAL
BUSINESS
INVESTMENT
COMPA-
NIES.—The amount of a grant made under this sec-
tion to a Rural Business Investment Company shall
be equal to the lesser of—
‘‘(A) 10 percent of the private capital raised
by the Rural Business Investment Company; or
‘‘(B) $1,000,000.
‘‘(2) OTHER ENTITIES.—The amount of a grant
made under this section to any entity other than a
Rural Business Investment Company shall be equal to
the resources (in cash or in kind) raised by the entity
in accordance with the requirements applicable to
Rural Business Investment Companies under this
subtitle.
‘‘SEC. 384I. RURAL BUSINESS INVESTMENT COMPANIES.
‘‘(a) ORGANIZATION.—For the purpose of this subtitle,
a Rural Business Investment Company shall—
‘‘(1) be an incorporated body, a limited liability
company, or a limited partnership organized and
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chartered or otherwise existing under State law solely
for the purpose of performing the functions and con-
ducting the activities authorized by this subtitle;
‘‘(2)(A) if incorporated, have succession for a pe-
riod of not less than 30 years unless earlier dissolved
by the shareholders of the Rural Business Investment
Company; and
‘‘(B) if a limited partnership or a limited liabil-
ity company, have succession for a period of not less
than 10 years; and
‘‘(3) possess the powers reasonably necessary to
perform the functions and conduct the activities.
‘‘(b) ARTICLES.—The articles of any Rural Business
Investment Company—
‘‘(1) shall specify in general terms—
‘‘(A) the purposes for which the Rural Busi-
ness Investment Company is formed;
‘‘(B) the name of the Rural Business Invest-
ment Company;
‘‘(C) the area or areas in which the oper-
ations of the Rural Business Investment Com-
pany are to be carried out;
‘‘(D) the place where the principal office of
the Rural Business Investment Company is to be
located; and
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‘‘(E) the amount and classes of the shares of
capital stock of the Rural Business Investment
Company;
‘‘(2) may contain any other provisions consistent
with this subtitle that the Rural Business Investment
Company may determine appropriate to adopt for the
regulation of the business of the Rural Business In-
vestment Company and the conduct of the affairs of
the Rural Business Investment Company; and
‘‘(3) shall be subject to the approval of the Sec-
retary.
‘‘(c) CAPITAL REQUIREMENTS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the private capital of each Rural Business
Investment Company shall be not less than—
‘‘(A) $5,000,000; or
‘‘(B) $10,000,000, with respect to each
Rural Business Investment Company authorized
or seeking authority to issue participating secu-
rities to be purchased or guaranteed by the Sec-
retary under this subtitle.
‘‘(2) EXCEPTION.—The Secretary may, in the
discretion of the Secretary and based on a showing of
special circumstances and good cause, permit the pri-
vate capital of a Rural Business Investment Com-
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pany described in paragraph (1)(B) to be less than
$10,000,000, but not less than $5,000,000, if the Sec-
retary determines that the action would not create or
otherwise contribute to an unreasonable risk of default
or loss to the Federal Government.
‘‘(3) ADEQUACY.—In addition to the require-
ments of paragraph (1), the Secretary shall—
‘‘(A) determine whether the private capital
of each Rural Business Investment Company is
adequate to ensure a reasonable prospect that the
Rural Business Investment Company will be op-
erated soundly and profitably, and managed ac-
tively and prudently in accordance with the ar-
ticles of the Rural Business Investment Com-
pany;
‘‘(B) determine that the Rural Business In-
vestment Company will be able to comply with
the requirements of this subtitle;
‘‘(C) require that at least 75 percent of the
capital of each Rural Business Investment Com-
pany is invested in rural business concerns and
not more than 10 percent of the investments shall
be made in an area containing a city of over
100,000 in the last decennial census and the
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Census Bureau defined urbanized area con-
taining or adjacent to that city;
‘‘(D) ensure that the Rural Business Invest-
ment Company is designed primarily to meet eq-
uity capital needs of the businesses in which the
Rural Business Investment Company invests and
not to compete with traditional small business fi-
nancing by commercial lenders; and
‘‘(E) require that the Rural Business In-
vestment Company makes short-term non-equity
investments of less than 5 years only to the ex-
tent necessary to preserve an existing investment.
‘‘(d) DIVERSIFICATION OF OWNERSHIP.—The Sec-
retary shall ensure that the management of each Rural
Business Investment Company licensed after the date of
enactment of this subtitle is sufficiently diversified from
and unaffiliated with the ownership of the Rural Business
Investment Company so as to ensure independence and ob-
jectivity in the financial management and oversight of the
investments and operations of the Rural Business Invest-
ment Company.
‘‘SEC. 384J. FINANCIAL INSTITUTION INVESTMENTS.
‘‘(a) IN GENERAL.—Except as otherwise provided in
this section and notwithstanding any other provision of
law, the following banks, associations, and institutions are
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eligible both to establish and invest in any Rural Business
Investment Company or in any entity established to invest
solely in Rural Business Investment Companies:
‘‘(1) Any bank or savings association the depos-
its of which are insured under the Federal Deposit
Insurance Act (12 U.S.C. 1811 et seq.)
‘‘(2) Any Farm Credit System institution de-
scribed in section 1.2(a) of the Farm Credit Act of
1971 (12 U.S.C. 2002(a)).
‘‘(b) LIMITATION.—No bank, association, or institu-
tion described in subsection (a) may make investments de-
scribed in subsection (a) that are greater than 5 percent
of the capital and surplus of the bank, association, or insti-
tution.
‘‘(c) LIMITATION ON RURAL BUSINESS INVESTMENT
COMPANIES CONTROLLED BY FARM CREDIT SYSTEM INSTI-
TUTIONS.—If a Farm Credit System institution described
in section 1.2(a) of the Farm Credit Act of 1971 (12 U.S.C.
2002(a)) holds more than 15 percent of the shares of a
Rural Business Investment Company, either alone or in
conjunction with other System institutions (or affiliates),
the Rural Business Investment Company shall not provide
equity investments in, or provide other financial assistance
to, entities that are not otherwise eligible to receive financ-
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ing from the Farm Credit System under that Act (12 U.S.C.
2001 et seq.).
‘‘SEC. 384K. REPORTING REQUIREMENTS.
‘‘(a) RURAL BUSINESS INVESTMENT COMPANIES.—
Each Rural Business Investment Company that partici-
pates in the program established under this subtitle shall
provide to the Secretary such information as the Secretary
may require, including—
‘‘(1) information relating to the measurement
criteria that the Rural Business Investment Company
proposed in the program application of the Rural
Business Investment Company; and
‘‘(2) in each case in which the Rural Business
Investment Company under this subtitle makes an in-
vestment in, or a loan or grant to, a business that is
not located in a rural area, a report on the number
and percentage of employees of the business who reside
in those areas.
‘‘(b) PUBLIC REPORTS.—
‘‘(1) IN GENERAL.—The Secretary shall prepare
and make available to the public an annual report on
the program established under this subtitle, including
detailed information on—
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‘‘(A) the number of Rural Business Invest-
ment Companies licensed by the Secretary dur-
ing the previous fiscal year;
‘‘(B) the aggregate amount of leverage that
Rural Business Investment Companies have re-
ceived from the Federal Government during the
previous fiscal year;
‘‘(C) the aggregate number of each type of
leveraged instruments used by Rural Business
Investment Companies during the previous fiscal
year and how each number compares to previous
fiscal years;
‘‘(D) the number of Rural Business Invest-
ment Company licenses surrendered and the
number of Rural Business Investment Compa-
nies placed in liquidation during the previous
fiscal year, identifying the amount of leverage
each Rural Business Investment Company has
received from the Federal Government and the
type of leverage instruments each Rural Business
Investment Company has used;
‘‘(E) the amount of losses sustained by the
Federal Government as a result of operations
under this subtitle during the previous fiscal
year and an estimate of the total losses that the
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Federal Government can reasonably expect to
incur as a result of the operations during the
current fiscal year;
‘‘(F) actions taken by the Secretary to
maximize recoupment of funds of the Federal
Government incurred to implement and admin-
ister the Rural Business Investment Program
under this subtitle during the previous fiscal
year and to ensure compliance with the require-
ments of this subtitle (including regulations);
‘‘(G) the amount of Federal Government le-
verage that each licensee received in the previous
fiscal year and the types of leverage instruments
each licensee used;
‘‘(H) for each type of financing instrument,
the sizes, types of geographic locations, and other
characteristics of the small business investment
companies using the instrument during the pre-
vious fiscal year, including the extent to which
the investment companies have used the leverage
from each instrument to make loans or equity
investments in rural areas; and
‘‘(I) the actions of the Secretary to carry
out this subtitle.
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‘‘(2) PROHIBITION.—In compiling the report re-
quired under paragraph (1), the Secretary may not—
‘‘(A) compile the report in a manner that
permits identification of any particular type of
investment by an individual Rural Business In-
vestment Company or small business concern in
which a Rural Business Investment Company
invests; and
‘‘(B) may not release any information that
is prohibited under section 1905 of title 18,
United States Code.
‘‘SEC. 384L. EXAMINATIONS.
‘‘(a) IN GENERAL.—Each Rural Business Investment
Company that participates in the program established
under this subtitle shall be subject to examinations made
at the direction of the Secretary in accordance with this
section.
‘‘(b) ASSISTANCE OF PRIVATE SECTOR ENTITIES.—An
examination under this section may be conducted with the
assistance of a private sector entity that has the qualifica-
tions and the expertise necessary to conduct such an exam-
ination.
‘‘(c) COSTS.—
‘‘(1) IN GENERAL.—The Secretary may assess the
cost of an examination under this section, including
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compensation of the examiners, against the Rural
Business Investment Company examined.
‘‘(2) PAYMENT.—Any Rural Business Investment
Company against which the Secretary assesses costs
under this paragraph shall pay the costs.
‘‘(d) DEPOSIT OF FUNDS.—Funds collected under this
section shall—
‘‘(1) be deposited in the account that incurred
the costs for carrying out this section;
‘‘(2) be made available to the Secretary to carry
out this section, without further appropriation; and
‘‘(3) remain available until expended.
‘‘SEC. 384M. INJUNCTIONS AND OTHER ORDERS.
‘‘(a) IN GENERAL.—
‘‘(1) APPLICATION
BY
SECRETARY.—Whenever,
in the judgment of the Secretary, a Rural Business
Investment Company or any other person has engaged
or is about to engage in any act or practice that con-
stitutes or will constitute a violation of a provision
of this subtitle (including any rule, regulation, order,
or participation agreement under this subtitle), the
Secretary may apply to the appropriate district court
of the United States for an order enjoining the act or
practice, or for an order enforcing compliance with
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the provision, rule, regulation, order, or participation
agreement.
‘‘(2) JURISDICTION; RELIEF.—The court shall
have jurisdiction over the action and, on a showing
by the Secretary that the Rural Business Investment
Company or other person has engaged or is about to
engage in an act or practice described in paragraph
(1), a permanent or temporary injunction, restrain-
ing order, or other order, shall be granted without
bond.
‘‘(b) JURISDICTION.—
‘‘(1) IN
GENERAL.—In any proceeding under
subsection (a), the court as a court of equity may, to
such extent as the court considers necessary, take ex-
clusive jurisdiction over the Rural Business Invest-
ment Company and the assets of the Rural Business
Investment Company, wherever located.
‘‘(2) TRUSTEE OR RECEIVER.—The court shall
have jurisdiction in any proceeding described in
paragraph (1) to appoint a trustee or receiver to hold
or administer the assets.
‘‘(c) SECRETARY AS TRUSTEE OR RECEIVER.—
‘‘(1) AUTHORITY.—The Secretary may act as
trustee or receiver of a Rural Business Investment
Company.
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‘‘(2) APPOINTMENT.—On the request of the Sec-
retary, the court shall appoint the Secretary to act as
a trustee or receiver of a Rural Business Investment
Company unless the court considers the appointment
inequitable or otherwise inappropriate by reason of
any special circumstances involved.
‘‘SEC. 384N. ADDITIONAL PENALTIES FOR NONCOMPLI-
ANCE.
‘‘(a) IN GENERAL.—With respect to any Rural Busi-
ness Investment Company that violates or fails to comply
with this subtitle (including any rule, regulation, order, or
participation agreement under this subtitle), the Secretary
may, in accordance with this section—
‘‘(1) void the participation agreement between
the Secretary and the Rural Business Investment
Company; and
‘‘(2) cause the Rural Business Investment Com-
pany to forfeit all of the rights and privileges derived
by the Rural Business Investment Company under
this subtitle.
‘‘(b) ADJUDICATION OF NONCOMPLIANCE.—
‘‘(1) IN
GENERAL.—Before the Secretary may
cause a Rural Business Investment Company to for-
feit rights or privileges under subsection (a), a court
of the United States of competent jurisdiction must
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find that the Rural Business Investment Company
committed a violation, or failed to comply, in a cause
of action brought for that purpose in the district, ter-
ritory, or other place subject to the jurisdiction of the
United States, in which the principal office of the
Rural Business Investment Company is located.
‘‘(2) PARTIES AUTHORIZED TO FILE CAUSES OF
ACTION.—Each cause of action brought by the United
States under this subsection shall be brought by the
Secretary or by the Attorney General.
‘‘SEC. 384O. UNLAWFUL ACTS AND OMISSIONS; BREACH OF
FIDUCIARY DUTY.
‘‘(a) PARTIES DEEMED TO COMMIT A VIOLATION.—
Whenever any Rural Business Investment Company vio-
lates this subtitle (including any rule, regulation, order, or
participation agreement under this subtitle), by reason of
the failure of the Rural Business Investment Company to
comply with this subtitle or by reason of its engaging in
any act or practice that constitutes or will constitute a vio-
lation of this subtitle, the violation shall also be deemed to
be a violation and an unlawful act committed by any per-
son that, directly or indirectly, authorizes, orders, partici-
pates in, causes, brings about, counsels, aids, or abets in
the commission of any acts, practices, or transactions that
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constitute or will constitute, in whole or in part, the viola-
tion.
‘‘(b) FIDUCIARY DUTIES.—It shall be unlawful for any
officer, director, employee, agent, or other participant in
the management or conduct of the affairs of a Rural Busi-
ness Investment Company to engage in any act or practice,
or to omit any act or practice, in breach of the fiduciary
duty of the officer, director, employee, agent, or participant
if, as a result of the act or practice, the Rural Business
Investment Company suffers or is in imminent danger of
suffering financial loss or other damage.
‘‘(c) UNLAWFUL ACTS.—Except with the written con-
sent of the Secretary, it shall be unlawful—
‘‘(1) for any person to take office as an officer,
director, or employee of any Rural Business Invest-
ment Company, or to become an agent or participant
in the conduct of the affairs or management of a
Rural Business Investment Company, if the person—
‘‘(A) has been convicted of a felony, or any
other criminal offense involving dishonesty or
breach of trust; or
‘‘(B) has been found civilly liable in dam-
ages, or has been permanently or temporarily en-
joined by an order, judgment, or decree of a
court of competent jurisdiction, by reason of any
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act or practice involving fraud, or breach of
trust; and
‘‘(2) for any person to continue to serve in any
of the capacities described in paragraph (1), if—
‘‘(A) the person is convicted of a felony, or
any other criminal offense involving dishonesty
or breach of trust; or
‘‘(B) the person is found civilly liable in
damages, or is permanently or temporarily en-
joined by an order, judgment, or decree of a
court of competent jurisdiction, by reason of any
act or practice involving fraud or breach of
trust.
‘‘SEC. 384P. REMOVAL OR SUSPENSION OF DIRECTORS OR
OFFICERS.
‘‘Using the procedures established by the Secretary for
removing or suspending a director or an officer of a Rural
Business Investment Company, the Secretary may remove
or suspend any director or officer of any Rural Business
Investment Company.
‘‘SEC. 384Q. CONTRACTING OF FUNCTIONS.
‘‘Notwithstanding any other provision of law, the Sec-
retary shall enter into an interagency agreement with the
Administrator of the Small Business Administration to
carry out, on behalf of the Secretary, the day-to-day man-
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agement and operation of the program authorized by this
subtitle.
‘‘SEC. 384R. REGULATIONS.
‘‘The Secretary may promulgate such regulations as
the Secretary considers necessary to carry out this subtitle.
‘‘SEC. 384S. FUNDING.
‘‘(a) IN GENERAL.—Not later than 30 days after the
date of enactment of this Act, out of any funds in the Treas-
ury not otherwise appropriated, the Secretary of the Treas-
ury shall transfer to the Secretary of Agriculture—
‘‘(1) such sums as may be necessary for the cost
of guaranteeing $350,000,000 of debentures under this
subtitle; and
‘‘(2) $50,000,000 to make grants under this sub-
title.
‘‘(b) RECEIPT AND ACCEPTANCE.—The Secretary shall
be entitled to receive, shall accept, and shall use to carry
out this section the funds transferred under subsection (a),
without further appropriation.
‘‘(c) AVAILABILITY
OF FUNDS.—Funds transferred
under subsection (a) shall remain available until ex-
pended.’’.
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SEC. 603. FULL FUNDING OF PENDING RURAL DEVELOP-
MENT LOAN AND GRANT APPLICATIONS.
(a) DEFINITION OF APPLICATION.—In this section, the
term ‘‘application’’ does not include an application for a
loan, loan guarantee, or grant that, as of the date of enact-
ment of this Act, is in the preapplication phase of consider-
ation under regulations of the Secretary of Agriculture in
effect on the date of enactment of this Act.
(b) ACCOUNT.—There is established in the Treasury of
the United States an account to be known as the ‘‘Rural
America Infrastructure Development Account’’ (referred to
in this section as the ‘‘Account’’) to fund rural development
loans, loan guarantees, and grants described in subsection
(d) that are pending on the date of enactment of this Act.
(c) FUNDING.—
(1) IN GENERAL.—Not later than 30 days after
the date of enactment of this Act, out of any funds in
the Treasury not otherwise appropriated, the Sec-
retary of the Treasury shall transfer to the Secretary
of Agriculture such sums as are necessary to carry
out this section, to remain available until expended.
(2) RECEIPT AND ACCEPTANCE.—The Secretary
shall be entitled to receive, shall accept, and shall use
to carry out this section the funds transferred under
paragraph (1), without further appropriation.
(d) USE OF FUNDS.—
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(1) ELIGIBLE PROGRAMS.—Subject to paragraph
(2), the Secretary shall use the funds in the Account
to provide funds for applications that are pending on
the date of enactment of this Act for—
(A) community facility direct loans under
section 306(a)(1) of the Consolidated Farm and
Rural Development Act (7 U.S.C. 1926(a)(1));
(B) community facility grants under para-
graph (19), (20), or (21) of section 306(a) of that
Act (7 U.S.C. 1926(a));
(C) water or waste disposal grants or direct
loans under paragraph (1) or (2) of section
306(a) of that Act (7 U.S.C. 1926(a));
(D) rural water or wastewater technical as-
sistance and training grants under section
306(a)(14) of that Act (7 U.S.C. 1926(a)(14));
(E) emergency community water assistance
grants under section 306A of that Act (7 U.S.C.
1926a);
(F) business and industry guaranteed loans
authorized under section 310B(a)(1)(A) of that
Act (7 U.S.C. 1932(a)(1)(A)); and
(G) solid waste management grants under
section 310B(b) of that Act (7 U.S.C. 1932(b)).
(2) LIMITATIONS.—
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(A) APPROPRIATED
AMOUNTS.—Funds in
the Account shall be available to the Secretary to
provide funds for pending applications for loans,
loan guarantees, and grants described in para-
graph (1) only to the extent that funds for the
loans, loan guarantees, and grants appropriated
in the annual appropriations Act for fiscal year
2002 have been exhausted.
(B) PROGRAM
REQUIREMENTS.—The Sec-
retary may use the Account to provide funds for
a pending application for a loan, loan guar-
antee, or grant described in paragraph (1) only
if the Secretary processes, reviews, and approves
the application in accordance with regulations
in effect on the date of enactment of this Act.
SEC. 604. RURAL ENDOWMENT PROGRAM.
(a) IN GENERAL.—The Consolidated Farm and Rural
Development Act (7 U.S.C. 1921 et seq.) (as amended by
section 602) is amended by adding at the end the following:
‘‘Subtitle I—Rural Endowment
Program
‘‘SEC. 385A. PURPOSE.
‘‘The purpose of this subtitle is to provide rural com-
munities with technical and financial assistance to imple-
ment comprehensive community development strategies to
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reduce the economic and social distress resulting from pov-
erty, high unemployment, outmigration, plant closings, ag-
ricultural downturn, declines in the natural resource-based
economy, or environmental degradation.
‘‘SEC. 385B. DEFINITIONS.
‘‘In this subtitle:
‘‘(1) COMPREHENSIVE
COMMUNITY
DEVELOP-
MENT STRATEGY.—The term ‘comprehensive commu-
nity development strategy’ means a community devel-
opment strategy described in section 385C(e).
‘‘(2) ELIGIBLE RURAL AREA.—
‘‘(A) IN GENERAL.—The term ‘eligible rural
area’ means an area with a population of 25,000
inhabitants or less, as determined by the Sec-
retary using the most recent decennial census.
‘‘(B) EXCLUSIONS.—The term ‘eligible rural
area’ does not include—
‘‘(i) any area designated by the Sec-
retary as a rural empowerment zone or
rural enterprise community; or
‘‘(ii) an urbanized area immediately
adjacent to an incorporated city or town
with a population of more than 25,000 in-
habitants.
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‘‘(3) ENDOWMENT FUND.—The term ‘endowment
fund’ means a long-term fund that an approved pro-
gram entity is required to establish under section
385C(f)(3).
‘‘(4) PERFORMANCE-BASED BENCHMARKS.—The
term ‘performance-based benchmarks’ means a set of
annualized goals and tasks established by a recipient
of a grant under the Program, in collaboration with
the Secretary, for the purpose of measuring perform-
ance in meeting the comprehensive community devel-
opment strategy of the recipient.
‘‘(5) PROGRAM.—The term ‘Program’ means the
Rural Endowment Program established under section
385C(a).
‘‘(6) PROGRAM ENTITY.—The term ‘program en-
tity’ means—
‘‘(A) a private nonprofit community-based
development organization;
‘‘(B) a unit of local government (including
a multijurisdictional unit of local government);
‘‘(C) an Indian tribe (as defined in section
4 of the Indian Self-Determination and Edu-
cation Assistance Act (25 U.S.C. 450b));
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‘‘(D) a consortium comprised of an organi-
zation described in subparagraph (A) and a unit
of local government; or
‘‘(E) a consortium of entities specified in
subparagraphs (A) through (D);
that serves an eligible rural area.
‘‘(7) 
PROGRAM-RELATED
INVESTMENT.—The
term ‘program-related investment’ means—
‘‘(A) a loan, loan guarantee, grant, pay-
ment of a technical fee, or other expenditure pro-
vided for an affordable housing, community fa-
cility, small business, environmental improve-
ment, or other community development project
that is part of a comprehensive community de-
velopment strategy; and
‘‘(B) support services relating to a project
described in subparagraph (A).
‘‘SEC. 385C. RURAL ENDOWMENT PROGRAM.
‘‘(a) ESTABLISHMENT.—
‘‘(1) IN GENERAL.—The Secretary may establish
a program, to be known as the ‘Rural Endowment
Program’, to provide approved program entities with
assistance in developing and implementing com-
prehensive community development strategies for eli-
gible rural areas.
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‘‘(2) PURPOSES.—The purposes of the Program
are—
‘‘(A) to enhance the ability of an eligible
rural area to engage in comprehensive commu-
nity development;
‘‘(B) to leverage private and public re-
sources for the benefit of community development
efforts in eligible rural areas;
‘‘(C) to make available staff of Federal
agencies to directly assist the community devel-
opment efforts of an approved program entity or
eligible rural area; and
‘‘(D) to strengthen the asset base of an eligi-
ble rural area to further long-term, ongoing com-
munity development.
‘‘(b) APPLICATIONS.—
‘‘(1) IN
GENERAL.—To receive an endowment
grant under the Program, the eligible entity shall sub-
mit an application at such time, in such form, and
containing such information as the Secretary may re-
quire.
‘‘(2) REGIONAL APPLICATIONS.—
‘‘(A) IN GENERAL.—Where appropriate, the
Secretary shall encourage regional applications
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from program entities serving more than 1 eligi-
ble rural area.
‘‘(B) CRITERIA FOR APPLICATIONS.—To be
eligible for an endowment grant for a regional
application, the program entities that submit the
application shall demonstrate that—
‘‘(i) a comprehensive community devel-
opment strategy for the eligible rural areas
is best accomplished through a regional ap-
proach; and
‘‘(ii) the combined population of the el-
igible rural areas covered by the comprehen-
sive community development strategy is
75,000 inhabitants or less.
‘‘(C) WAIVER
FOR
INDIAN
TRIBES.—The
Secretary may, at the request of an Indian tribe,
waive the requirement under subparagraph
(B)(ii) with respect to an application submitted
by the Indian tribe for multiple eligible rural
areas under the jurisdiction of the Indian tribe.
‘‘(D) AMOUNT OF ENDOWMENT GRANTS.—
For the purpose of subsection (f)(2), 2 or more
program entities that submit a regional applica-
tion shall be considered to be a single program
entity.
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‘‘(3) PREFERENCE.—The Secretary shall give
preference to a joint application submitted by a pri-
vate, nonprofit community development corporation
and a unit of local government or Indian tribe.
‘‘(c) ENTITY APPROVAL.—The Secretary shall approve
a program entity to receive grants under the Program, if
the program entity meets criteria established by the Sec-
retary, including the following:
‘‘(1) DISTRESSED RURAL AREA.—The program
entity shall serve a rural area that suffers from eco-
nomic or social distress resulting from poverty, high
unemployment, outmigration, plant closings, agricul-
tural downturn, declines in the natural resource-based
economy, or environmental degradation.
‘‘(2) CAPACITY TO IMPLEMENT STRATEGY.—The
program entity shall demonstrate the capacity to im-
plement a comprehensive community development
strategy.
‘‘(3) GOALS.—The goals described in the applica-
tion submitted under subsection (b) shall be consistent
with this section.
‘‘(4) PARTICIPATION
PROCESS.—The program
entity shall demonstrate the ability to convene and
maintain a multi-stakeholder, community-based par-
ticipation process.
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‘‘(d) PLANNING
GRANTS
TO
CONDITIONALLY
AP-
PROVED PROGRAM ENTITIES.—
‘‘(1) IN GENERAL.—The Secretary may award
supplemental grants to approved program entities to
assist the approved program entities in the develop-
ment of a comprehensive community development
strategy under subsection (e).
‘‘(2) 
ELIGIBILITY
FOR
SUPPLEMENTAL
GRANTS.—In determining whether to award a supple-
mental grant to an approved program entity, the Sec-
retary shall consider the economic need of the ap-
proved program entity.
‘‘(3) LIMITATIONS
ON
AMOUNT
OF
GRANTS.—
Under this subsection, an approved program entity
may receive a supplemental grant in an amount of—
‘‘(A) not more than $100,000; or
‘‘(B) in the case of a regional application
approved under a waiver by the Secretary under
subsection (b)(2)(C), not more than $200,000.
‘‘(e) ENDOWMENT GRANT AWARD.—
‘‘(1) IN GENERAL.—To be eligible for an endow-
ment grant under the Program, an approved program
entity shall develop, and obtain the approval of the
Secretary for, a comprehensive community develop-
ment strategy that—
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‘‘(A) is designed to reduce economic or so-
cial distress resulting from poverty, high unem-
ployment, outmigration, plant closings, agricul-
tural downturn, declines in the natural resource-
based economy, or environmental degradation;
‘‘(B) addresses a broad range of the develop-
ment needs of a community, including economic,
social, and environmental needs, for a period of
not less than 10 years;
‘‘(C) is developed with input from a broad
array of local governments and business, civic,
and community organizations;
‘‘(D) 
specifies 
measurable 
performance-
based outcomes for all activities; and
‘‘(E) includes a financial plan for achieving
the outcomes and activities of the comprehensive
community development strategy that identifies
sources for, or a plan to meet, the requirement
for a non-Federal share under subsection
(f)(4)(B).
‘‘(2) FINAL APPROVAL.—
‘‘(A) IN GENERAL.—An approved program
entity shall receive final approval if the Sec-
retary determines that—
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‘‘(i) the comprehensive community de-
velopment strategy of the approved program
entity meets the requirements of this section;
‘‘(ii) the management and organiza-
tional structure of the approved program
entity is sufficient to oversee fund and de-
velopment activities;
‘‘(iii) the approved program entity has
established an endowment fund; and
‘‘(iv) the approved program entity will
be able to provide the non-Federal share re-
quired under subsection (f)(4)(B).
‘‘(B) CONDITIONS.—As part of the final ap-
proval, the approved program entity shall agree
to—
‘‘(i) achieve, to the maximum extent
practicable, performance-based benchmarks;
and
‘‘(ii) comply with the terms of the com-
prehensive community development strategy
for a period of not less than 10 years.
‘‘(f) ENDOWMENT GRANTS.—
‘‘(1) IN GENERAL.—Under the Program, the Sec-
retary may make endowment grants to approved pro-
gram entities with final approval to implement an
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approved 
comprehensive 
community 
development
strategy.
‘‘(2) AMOUNT OF GRANTS.—An endowment grant
to an approved program entity shall be in an amount
of not more than $6,000,000, as determined by the
Secretary based on—
‘‘(A) the size of the population of the eligible
rural area for which the endowment grant is to
be used;
‘‘(B) the size of the eligible rural area for
which the endowment grant is to be used;
‘‘(C) the extent of the comprehensive com-
munity development strategy to be implemented
using the endowment grant award; and
‘‘(D) the extent to which the community suf-
fers from economic or social distress resulting
from—
‘‘(i) poverty;
‘‘(ii) high unemployment;
‘‘(iii) outmigration;
‘‘(iv) plant closings;
‘‘(v) agricultural downturn;
‘‘(vi) declines in the natural resource-
based economy; or
‘‘(vii) environmental degradation.
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‘‘(3) ENDOWMENT FUNDS.—
‘‘(A) 
ESTABLISHMENT.—On 
notification
from the Secretary that the program entity has
been approved under subsection (c), the approved
program entity shall establish an endowment
fund.
‘‘(B) FUNDING
OF
ENDOWMENT.—Federal
funds provided in the form of an endowment
grant under the Program shall—
‘‘(i) be deposited in the endowment
fund;
‘‘(ii) be the sole property of the ap-
proved program entity;
‘‘(iii) be used in a manner consistent
with this subtitle; and
‘‘(iv) be subject to oversight by the Sec-
retary for a period of not more than 10
years.
‘‘(C) INTEREST.—Interest earned on Fed-
eral funds in the endowment fund shall be—
‘‘(i) retained by the grantee; and
‘‘(ii) treated as Federal funds are
treated under subparagraph (B).
‘‘(D) LIMITATION.—The Secretary shall
promulgate regulations on matching funds and
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returns on program-related investments only to
the extent that such funds or proceeds are used
in a manner consistent with this subtitle.
‘‘(4) CONDITIONS.—
‘‘(A) DISBURSEMENT.—
‘‘(i) IN
GENERAL.—Each endowment
grant award shall be disbursed during a pe-
riod not to exceed 5 years beginning during
the fiscal year containing the date of final
approval of the approved program entity
under subsection (e)(3).
‘‘(ii) MANNER
OF
DISBURSEMENT.—
Subject to subparagraph (B), the Secretary
may disburse a grant award in 1 lump sum
or in incremental disbursements made each
fiscal year.
‘‘(iii) 
INCREMENTAL
DISBURSE-
MENTS.—If the Secretary elects to make in-
cremental disbursements, for each fiscal
year after the initial disbursement, the Sec-
retary shall make a disbursement under
clause (i) only if the approved program
entity—
‘‘(I) has met the performance-
based benchmarks of the approved pro-
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gram entity for the preceding fiscal
year; and
‘‘(II) has provided the non-Fed-
eral share required for the preceding
fiscal year under subparagraph (B).
‘‘(iv) ADVANCE DISBURSEMENTS.—The
Secretary may make disbursements under
this paragraph notwithstanding any provi-
sion of law limiting grant disbursements to
amounts necessary to cover expected ex-
penses on a term basis.
‘‘(B) NON-FEDERAL SHARE.—
‘‘(i) IN GENERAL.—Except as provided
in clause (ii), for each disbursement under
subparagraph (A), the Secretary shall re-
quire the approved program entity to pro-
vide a non-Federal share in an amount
equal to 50 percent of the amount of funds
received by the approved program entity
under the disbursement.
‘‘(ii) LOWER NON-FEDERAL SHARE.—
In the case of an approved program entity
that serves a small, poor rural area or poor
Indian tribe (as determined by the Sec-
retary), the Secretary may—
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‘‘(I) reduce the non-Federal share
to not less than 20 percent; and
‘‘(II) allow the non-Federal share
to be provided in the form of in-kind
contributions.
‘‘(iii) BINDING COMMITMENTS; PLAN.—
For the purpose of meeting the non-Federal
share requirement with respect to the first
disbursement of an endowment grant award
to the approved program entity under the
Program, an approved program entity
shall—
‘‘(I) have, at a minimum, binding
commitments to provide the non-Fed-
eral share required with respect to the
first disbursement of the endowment
grant award; and
‘‘(II) if the Secretary is making
incremental disbursements of a grant,
develop a viable plan for providing the
remaining amount of the required non-
Federal share.
‘‘(C) LIMITATIONS.—
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‘‘(i) IN
GENERAL.—Subject to clause
(ii), of each disbursement, an approved pro-
gram entity shall use—
‘‘(I) not more than 10 percent for
administrative costs of carrying out
program-related investments;
‘‘(II) not more than 20 percent for
the purpose of maintaining a loss re-
serve account; and
‘‘(III) the remainder for program-
related investments contained in the
comprehensive community development
strategy.
‘‘(ii) LOSS RESERVE ACCOUNT.—If all
disbursed funds available under a grant are
expended in accordance with clause (i) and
the grant recipient has no expected losses to
cover for a fiscal year, the recipient may
use funds in the loss reserve account de-
scribed in clause (i)(II) for program-related
investments described in clause (i)(III) for
which no reserve for losses is required.
‘‘(g) FEDERAL AGENCY ASSISTANCE.—Under the Pro-
gram, the Secretary shall provide and coordinate technical
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assistance for grant recipients by designated field staff of
Federal agencies.
‘‘(h) PRIVATE TECHNICAL ASSISTANCE.—
‘‘(1) IN GENERAL.—Under the Program, the Sec-
retary may make grants to qualified intermediaries
to provide technical assistance and capacity building
to approved program entities under the Program.
‘‘(2) DUTIES.—A qualified intermediary that re-
ceives a grant under this subsection shall—
‘‘(A) provide assistance to approved pro-
gram entities in developing, coordinating, and
overseeing investment strategy;
‘‘(B) provide technical assistance in all as-
pects of planning, developing, and managing the
Program; and
‘‘(C) facilitate Federal and private sector
involvement in rural community development.
‘‘(3) ELIGIBILITY.—To be considered a qualified
intermediary under this subsection, an intermediary
shall—
‘‘(A) be a private, nonprofit community de-
velopment organization;
‘‘(B) have expertise in Federal or private
rural community development policy or pro-
grams; and
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‘‘(C) have experience in providing technical
assistance, planning, and capacity building as-
sistance to rural communities and nonprofit en-
tities in eligible rural areas.
‘‘(4) MAXIMUM AMOUNT OF GRANTS.—A quali-
fied intermediary may receive a grant under this sub-
section of not more than $100,000.
‘‘(5) FUNDING.—Of the amounts made available
under section 385D, the Secretary may use to carry
out this subsection not more than $2,000,000 for each
of not more than 2 fiscal years.
‘‘SEC. 385D. FUNDING.
‘‘(a) FISCAL YEARS 2002 AND 2003.—
‘‘(1) IN GENERAL.—Not later than 30 days after
the date of enactment of this subtitle, out of any funds
in the Treasury not otherwise appropriated, the Sec-
retary of the Treasury shall transfer to the Secretary
of Agriculture to carry out this subtitle $82,000,000
for the period of fiscal years 2002 and 2003, to re-
main available until expended.
‘‘(2) SCHEDULE
FOR
OBLIGATIONS.—Of the
amounts made available under paragraph (1)—
‘‘(A) not more than $5,000,000 shall be obli-
gated to carry out section 385C(d);