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(i) in the clause heading, by inserting 
‘‘; SOCIALLY DISADVANTAGED FARMER OR 
RANCHER’’ after ‘‘OR RANCHER’’; 
(ii) by inserting ‘‘or a socially dis-
advantaged farmer or rancher’’ after ‘‘a 
beginning farmer or rancher’’; and 
(iii) by inserting ‘‘or the socially dis-
advantaged farmer or rancher’’ after ‘‘the 
beginning farmer or rancher’’; 
(B) by redesignating clauses (ii) and (iii) 
as clauses (iii) and (iv), respectively; 
(C) by inserting after clause (i) the fol-
lowing: 
‘‘(ii) PRIORITY TO BE GIVEN TO SO-
CIALLY
DISADVANTAGED
FARMERS
AND 
RANCHERS.—In carrying out clause (i), the 
Secretary shall give priority to socially dis-
advantaged farmers and ranchers.’’; and 
(D) in clause (iii) (as so redesignated)— 
(i) in the matter preceding subclause 
(I), by inserting ‘‘or a socially disadvan-
taged farmer or rancher’’ after ‘‘or ranch-
er’’; and
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(ii) in subclause (II), by inserting ‘‘or 
the socially disadvantaged farmer or ranch-
er’’ after ‘‘or rancher’’; 
(3) in paragraph (6)— 
(A) in subparagraph (A), by inserting ‘‘or 
a socially disadvantaged farmer or rancher’’ 
after ‘‘or rancher’’; and 
(B) in subparagraph (C)— 
(i) in clause (i)(I), by inserting ‘‘and 
socially disadvantaged farmers and ranch-
ers’’ after ‘‘and ranchers’’; and 
(ii) in clause (ii), by inserting ‘‘or so-
cially disadvantaged farmers or ranchers’’ 
after ‘‘or ranchers’’; and 
(4) by adding at the end the following: 
‘‘(7) In this subsection, the term ‘socially dis-
advantaged farmer or rancher’ has the meaning 
given in section 355(e)(2).’’. 
SEC. 5022. LOAN FUND SET-ASIDES. 
Section 346(b)(2) of the Consolidated Farm and 
Rural Development Act (7 U.S.C. 1994(b)(2)) is amend-
ed— 
(1) in subparagraph (A)— 
(A) in clause (i)—
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(i) in subclause (I), by striking ‘‘70 
percent’’ and inserting ‘‘not less than 75 
percent of the total amount made available 
under paragraph (1)’’; and 
(ii) in subclause (II)— 
(I) in the subclause heading, by 
inserting ‘‘; PARTICIPATION
LOANS’’ 
after ‘‘PAYMENT LOANS’’; 
(II) by striking ‘‘60 percent’’ and 
inserting ‘‘not less than 2⁄3 of the 
amount reserved under subclause (I)’’; 
and 
(III) by inserting ‘‘and participa-
tion loans’’ after ‘‘section 310E’’; and 
(B) in clause (ii)(III), by striking ‘‘2003 
through 2007, 35 percent’’ and inserting ‘‘2008 
through 2012, not less than 50 percent of the 
total amount made available under paragraph 
(1)’’; and 
(2) in subparagraph (B)(i), by striking ‘‘25 per-
cent’’ and inserting ‘‘not less than 40 percent of the 
total amount made available under paragraph (1)’’.
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SEC. 5023. TRANSITION TO PRIVATE COMMERCIAL OR 
OTHER SOURCES OF CREDIT. 
Subtitle D of the Consolidated Farm and Rural De-
velopment Act (7 U.S.C. 1981–2008r) is amended by in-
serting after section 344 the following: 
‘‘SEC. 345. TRANSITION TO PRIVATE COMMERCIAL OR 
OTHER SOURCES OF CREDIT. 
‘‘(a) IN GENERAL.—In making or insuring a farm 
loan under subtitle A or B, the Secretary shall establish 
a plan and promulgate regulations (including performance 
criteria) that promote the goal of transitioning borrowers 
to private commercial credit and other sources of credit 
in the shortest practicable period of time. 
‘‘(b) COORDINATION.—In carrying out this section, 
the Secretary shall integrate and coordinate the transition 
policy described in subsection (a) with— 
‘‘(1) the borrower training program established 
by section 359; 
‘‘(2) the loan assessment process established by 
section 360; 
‘‘(3) the supervised credit requirement estab-
lished by section 361; 
‘‘(4) the market placement program established 
by section 362; and 
‘‘(5) other appropriate programs and authori-
ties, as determined by the Secretary.’’.
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SEC. 5024. EXTENSION OF THE RIGHT OF FIRST REFUSAL 
TO REACQUIRE HOMESTEAD PROPERTY TO 
IMMEDIATE 
FAMILY 
MEMBERS 
OF 
BOR-
ROWER-OWNER. 
Section 352(c)(4)(B) of the Consolidated Farm and 
Rural Development Act (7 U.S.C. 2000(c)(4)(B)) is 
amended— 
(1) in the 1st sentence, by striking ‘‘, the bor-
rower-owner’’ inserting ‘‘of a borrower-owner who is 
a socially disadvantaged farmer or rancher (as de-
fined in section 355(e)(2)), the borrower-owner or a 
member of the immediate family of the borrower- 
owner’’; and 
(2) in the 2nd sentence, by inserting ‘‘or imme-
diate family member, as the case may be,’’ before 
‘‘from’’. 
SEC. 5025. RURAL DEVELOPMENT AND FARM LOAN PRO-
GRAM ACTIVITIES. 
Subtitle D of the Consolidated Farm and Rural De-
velopment Act (7 U.S.C. 1981–2008r) is amended by in-
serting after section 364 the following: 
‘‘SEC. 365. RURAL DEVELOPMENT AND FARM LOAN PRO-
GRAM ACTIVITIES. 
‘‘The Secretary may not complete a study of, or enter 
into a contract with a private party to carry out, without 
specific authorization in a subsequent Act of Congress, a
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competitive sourcing activity of the Secretary, including 
support personnel of the Department of Agriculture, relat-
ing to rural development or farm loan programs.’’. 
Subtitle D—Farm Credit 
SEC. 5031. BANK FOR COOPERATIVES VOTING STOCK. 
(a) IN GENERAL.—Section 3.3(c) of the Farm Credit 
Act of 1971 (12 U.S.C. 2124(c)) is amended by striking 
‘‘and (ii)’’ and inserting ‘‘(ii) other categories of persons 
and entities described in sections 3.7 and 3.8 eligible to 
borrow from the bank, as determined by the bank’s board 
of directors; and (iii)’’. 
(b) 
CONFORMING
AMENDMENTS.—Section 
4.3A(c)(1)(D) of such Act (12 U.S.C. 2154a(c)(1)(D)) is 
amended by redesignating clauses (ii) and (iii) as clauses 
(iii) and (iv), respectively, and inserting after clause (i) 
the following: 
‘‘(ii) persons and entities eligible to 
borrow from the banks for cooperatives, as 
described in section 3.3(c)(ii);’’. 
SEC. 5032. RURAL UTILITY LOANS. 
Section 8.0(9) of the Farm Credit Act of 1971 (12 
U.S.C. 2279aa(9)) is amended— 
(1) by striking ‘‘or’’ at the end of subparagraph 
(A)(iii);
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(2) by striking the period at the end of sub-
paragraph (B) and inserting ‘‘; or’’; and 
(3) by adding at the end the following: 
‘‘(C) that is a loan or interest in a loan for 
electric or telephone facilities by a cooperative 
lender to a borrower who has received or is eli-
gible to receive a loan under the Rural Elec-
trification Act (7 U.S.C. 901 et seq.), except 
that— 
‘‘(i) subsections (c) and (d) of section 
8.6, and sections 8.8 and 8.9 shall not 
apply to the loan or interest in the loan or 
to an obligation backed by a pool of obliga-
tions relating to the loan or interest in the 
loan; and 
‘‘(ii) the loan or interest in the loan 
shall be considered to meet all standards 
for qualified loans for all purposes under 
this Act, subject to reasonable under-
writing, security appraisal, and repayment 
standards established by the Corpora-
tion.’’.
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SEC. 5033. FARM CREDIT SYSTEM INSURANCE CORPORA-
TION. 
(a) AUTHORITY TO PASS ALONG COST OF INSUR-
ANCE PREMIUMS.—Section 1.12(b) of the Farm Credit 
Act of 1971 (12 U.S.C. 2020(b)) is amended by striking 
the last sentence and inserting ‘‘The assessment on any 
such association or other financing institution for any pe-
riod shall be computed in an equitable manner.’’. 
(b) PREMIUMS; AMOUNT IN FUND NOT EXCEEDING 
SECURE BASE AMOUNT.—Section 5.55(a) of such Act (12 
U.S.C. 2277a–4(a)) is amended— 
(1) in paragraph (1)— 
(A) in the matter preceding subparagraph 
(A), by striking ‘‘(2), the annual’’ and inserting 
‘‘(3), the’’; 
(B) by striking subparagraphs (A) through 
(D) and inserting the following: 
‘‘(A) the average outstanding insured obli-
gations issued by the bank for the calendar 
year, after deducting therefrom the percentages 
of the guaranteed portions of loans and invest-
ments described in paragraph (2), multiplied by 
0.0020; 
‘‘(B) the average principal outstanding for 
the calendar year on loans made by the bank
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that are in nonaccrual status, multiplied by 
0.0010; and 
‘‘(C) the average amount outstanding for 
the calendar year of other-than-temporarily im-
paired investments made by the bank, multi-
plied by 0.0010.’’; 
(2) in paragraph (2), by striking ‘‘annual’’; 
(3) in paragraph (3), in the matter preceding 
subparagraph (A), by striking ‘‘As used’’ and all 
that follows through ‘‘that’’ and inserting ‘‘As used 
in this section, the term ‘government-guaranteed’ 
when applied to loans or investments, means loans, 
credits, or investments, or portions of loans, credits, 
or investments, that’’; and 
(4) by redesignating paragraphs (2) and (3) as 
paragraphs (3) and (4), respectively, and inserting 
after paragraph (1) the following: 
‘‘(2) 
DEDUCTIONS
FROM
AVERAGE
OUT-
STANDING
INSURED
OBLIGATIONS.—The average 
outstanding insured obligations issued by the bank 
for the calendar year referred to in subsection 
(a)(1)(A) of this section shall be reduced by deduct-
ing therefrom the sum of— 
‘‘(A) 90 percent of the sum of—
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‘‘(i) the average principal outstanding 
for such calendar year on the guaranteed 
portions of Federal government-guaranteed 
loans made by the bank that are in accrual 
status; and 
‘‘(ii) the average amount outstanding 
for the calendar year of the guaranteed 
portions of Federal government-guaranteed 
investments made by the bank that are not 
permanently impaired, as determined by 
the Corporation; and 
‘‘(B) 80 percent of the sum of— 
‘‘(i) the average principal outstanding 
for the calendar year on the guaranteed 
portions of State government-guaranteed 
loans made by the bank that are in accrual 
status; and 
‘‘(ii) the average amount outstanding 
for the calendar year of the guaranteed 
portions of State government-guaranteed 
investments made by the bank that are not 
permanently impaired, as determined by 
the Corporation.’’.
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(c) PREMIUMS; AMOUNT IN FUND EXCEEDING SE-
CURE BASE AMOUNT.—Section 5.55(b) of such Act (12 
U.S.C. 2277a–4(b)) is amended by striking ‘‘annual’’. 
(d) SECURE BASE AMOUNT.—Section 5.55(c) of such 
Act (12 U.S.C. 2277a–4(c)) is amended by striking the 
parenthetical phrase and inserting ‘‘(adjusted downward 
to exclude an amount equal to the sum of: (1) 90 percent 
of: (A) the guaranteed portions of principal outstanding 
on Federal government-guaranteed loans in accrual status 
made by the banks; and (B) the guaranteed portions of 
the amount of Federal government-guaranteed invest-
ments made by the banks that are not permanently im-
paired; and (2) 80 percent of: (A) the guaranteed portions 
of principal outstanding on State government-guaranteed 
loans in accrual status made by the banks; and (B) the 
guaranteed portions of the amount of State government- 
guaranteed investments made by the banks that are not 
permanently impaired, as determined by the Corpora-
tion)’’. 
(e) DETERMINATION
OF LOAN
AND INVESTMENT 
AMOUNTS.—Section 5.55(d) of such Act (12 U.S.C. 
2277a–4(d)) is amended— 
(1) in the subsection heading, by striking 
‘‘PRINCIPAL OUTSTANDING’’ and inserting ‘‘LOAN 
AND INVESTMENT AMOUNTS’’;
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(2) in the matter preceding paragraph (1), by 
striking ‘‘For’’ and all that follows through ‘‘—’’ 
and inserting ‘‘For the purpose of subsections (a) 
and (c) of this section, the principal outstanding on 
all loans made by an insured System bank or the 
amount outstanding on all investments made by an 
insured System bank shall be determined based on 
all loans or investments made—’’; and 
(3) in each of paragraphs (1) and (2), by in-
serting ‘‘or investments’’ before ‘‘because’’. 
(f) ALLOCATION TO SYSTEM INSTITUTIONS OF EX-
CESS RESERVES.—Section 5.55(e) of such Act (12 U.S.C. 
2277a–4(e)) is amended— 
(1) in paragraph (3), by striking ‘‘the average 
secure base amount for the calendar year (as cal-
culated on an average daily balance basis)’’ and in-
serting ‘‘the secure base amount’’; 
(2) in paragraph (4), by striking subparagraph 
(B) and inserting the following: 
‘‘(B) there shall be credited to the Allo-
cated Insurance Reserves Account of each in-
sured System bank an amount that bears the 
same ratio to the total amount (less any 
amount credited under subparagraph (A) of 
this paragraph) as the average principal out-
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standing for the calendar year on insured obli-
gations issued by the bank (after deducting 
therefrom the percentages of the guaranteed 
portions of loans and investments described in 
subsection (a)(2) of this section), bears to the 
average principal outstanding for the calendar 
year on insured obligations issued by all insured 
System banks (after deducting therefrom the 
percentages of the guaranteed portions of loans 
and investments so described).’’; and 
(3) in paragraph (6)— 
(A) in subparagraph (A)— 
(i) in the matter preceding clause (i), 
by striking ‘‘beginning’’ and all that fol-
lows through ‘‘2005’’; 
(ii) by striking clause (i) and inserting 
the following: 
‘‘(i) subject to subparagraph (D), pay 
to each insured System bank, in a manner 
determined by the Corporation, an amount 
equal to the balance in its Allocated Insur-
ance Reserves Account; and’’; and 
(iii) in clause (ii)—
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(I) by striking ‘‘(C), (E), and 
(F)’’ and inserting ‘‘(C) and (E)’’; 
and 
(II) by striking ‘‘outstanding,’’ 
and all that follows and inserting ‘‘at 
the time of the termination of the Fi-
nancial Assistance Corporation, of the 
balance in the Allocated Insurance 
Reserves Account established under 
subparagraph (1)(B).’’; 
(B) in subparagraph (C)— 
(i) in clause (i), by striking ‘‘(in addi-
tion to the amounts described in subpara-
graph (F)(ii))’’; and 
(ii) by striking clause (ii) and insert-
ing the following: 
‘‘(ii) TERMINATION
OF
ACCOUNT.— 
On disbursement of $56,000,000, the Cor-
poration shall close the Account established 
under paragraph (1)(B) and transfer any 
remaining funds in the Account to the re-
maining Allocated Insurance Reserves Ac-
counts in accordance with paragraph 
(4)(B) for the calendar year in which the 
transfer occurs.’’; and
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(C) by striking subparagraph (F). 
(g) CERTIFICATION OF PREMIUMS.— 
(1) FILING
CERTIFIED
STATEMENT.—Section 
5.56(a) of such Act (12 U.S.C. 2277a–5(a)) is 
amended to read as follows: 
‘‘(a) FILING CERTIFIED STATEMENT.—On a date to 
be determined in the sole discretion of the Corporation’s 
Board of Directors, each insured System bank that be-
came insured before the beginning of the period for which 
premiums are being assessed (in this section referred to 
as the ‘period’) shall file with the Corporation a certified 
statement showing— 
‘‘(1) the average outstanding insured obliga-
tions for the period issued by the bank; 
‘‘(2) the average principal outstanding for the 
period on the guaranteed portion of Federal govern-
ment-guaranteed loans that are in accrual status 
and the average amount outstanding for the period 
of Federal government-guaranteed investments that 
are not permanently impaired (as defined in section 
5.55(a)(4)); 
‘‘(3) the average principal outstanding for the 
period on State government-guaranteed loans that 
are in accrual status and the average amount out-
standing for the period of State government-guaran-
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teed investments that are not permanently impaired 
(as defined in section 5.55(a)(4)); 
‘‘(4) the average principal outstanding for the 
period on loans that are in nonaccrual status and 
the average amount outstanding for the period of 
other-than-temporarily impaired investments; and 
‘‘(5) the amount of the premium due the Cor-
poration from the bank for the period.’’. 
(2) PREMIUM PAYMENTS.—Section 5.56(c) of 
such Act (12 U.S.C. 2277a–5(c)) is amended to read 
as follows: 
‘‘(c) PREMIUM PAYMENTS.—Each insured System 
bank shall pay to the Corporation the premium payments 
required under subsection (a), not more frequently than 
once in each calendar quarter, in such manner and at such 
time or times as the Board of Directors shall prescribe, 
except that the amount of the premium shall be estab-
lished not later than 60 days after filing the certified 
statement setting forth the amount of the premium.’’. 
(3) CONFORMING AMENDMENTS.—Section 5.56 
of such Act (12 U.S.C. 2277a–5) is amended by 
striking subsection (d) and redesignating subsection 
(e) as subsection (d).
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(h) RULES AND REGULATIONS.—Section 5.58(10) of 
such Act (12 U.S.C. 2277a–7(10)) is amended by insert-
ing ‘‘and section 1.12(b)’’ after ‘‘part’’. 
SEC. 5034. RISK-BASED CAPITAL LEVELS. 
Section 8.32(a)(1) of the Farm Credit Act of 1971 
(12 U.S.C. 2279bb–1(a)(1)) is amended by striking all 
through ‘‘a pool of’’ and inserting the following: 
‘‘(1) CREDIT RISK.— 
‘‘(A) With respect to securities rep-
resenting an interest in, or obligations backed 
by, a pool of qualified loans (as defined in sec-
tion 8.0(9)(C)), owned or guaranteed by the 
Corporation, losses occur at a rate of default 
and severity reasonably related to risks in elec-
tric and telephone facility loans, respectively, as 
determined by the Director. 
‘‘(B) With respect to securities rep-
resenting an interest in, or obligations backed 
by, a pool of other’’. 
TITLE VI—RURAL 
DEVELOPMENT 
Sec. 6001. Definition of rural. 
Sec. 6002. Water, waste disposal, and wastewater facility grants. 
Sec. 6003. Rural business opportunity grants. 
Sec. 6004. Rural water and wastewater circuit rider program. 
Sec. 6005. Tribal college and university essential community facilities. 
Sec. 6006.
Emergency and imminent community water assistance grant pro-
gram. 
Sec. 6007. Water systems for rural and native villages in Alaska.