521 
† HR 2642 EAS 
practicable, on an independent appraiser 
who shall conduct another appraisal of the 
property of the borrower. 
‘‘(ii) VALUE
OF
FINAL
APPRAISAL.— 
The average of the 2 appraisals under 
clause (i) that are closest in value shall be-
come the final appraisal under this para-
graph. 
‘‘(iii) COST OF APPRAISAL.—The bor-
rower and the Secretary shall each pay 1⁄2 
of the cost of any independent appraisal. 
‘‘(d) PRINCIPAL AND INTEREST WRITE-DOWN.— 
‘‘(1) IN GENERAL.— 
‘‘(A) PRIORITY CONSIDERATION.—In select-
ing the restructuring alternatives to be used in 
the case of a borrower who has requested restruc-
turing under this section, the Secretary shall 
give priority consideration to the use of a prin-
cipal and interest write-down if other creditors 
of the borrower (other than any creditor who is 
fully collateralized) representing a substantial 
portion of the total debt of the borrower held by 
the creditors of the borrower, agree to participate 
in the development of the restructuring plan or
522 
† HR 2642 EAS 
agree to participate in a State mediation pro-
gram. 
‘‘(B) FAILURE OF CREDITORS TO AGREE.— 
Failure of creditors to agree to participate in the 
restructuring plan or mediation program shall 
not preclude the use of a principal and interest 
write-down by the Secretary if the Secretary de-
termines that restructuring results in the least 
cost to the Secretary. 
‘‘(2) PARTICIPATION
OF
CREDITORS.—Before 
eliminating the option to use debt write-down in the 
case of a borrower, the Secretary shall make a reason-
able effort to contact the creditors of the borrower, ei-
ther directly or through the borrower, and encourage 
the creditors to participate with the Secretary in the 
development of a restructuring plan for the borrower. 
‘‘(e) SHARED APPRECIATION ARRANGEMENTS.— 
‘‘(1) IN GENERAL.—As a condition of restruc-
turing a loan in accordance with this section, the bor-
rower of the loan may be required to enter into a 
shared appreciation arrangement that requires the re-
payment of amounts written off or set aside. 
‘‘(2) TERMS.—A shared appreciation agreement 
shall—
523 
† HR 2642 EAS 
‘‘(A) have a term not to exceed 10 years; 
and 
‘‘(B) provide for recapture based on the dif-
ference between the appraised values of the real 
security property at the time of restructuring 
and at the time of recapture. 
‘‘(3) PERCENTAGE OF RECAPTURE.—The amount 
of the appreciation to be recaptured by the Secretary 
shall be— 
‘‘(A) 75 percent of the appreciation in the 
value of the real security property if the recap-
ture occurs not later than 4 years after the date 
of restructuring; and 
‘‘(B) 50 percent if the recapture occurs dur-
ing the remainder of the term of the agreement. 
‘‘(4) TIME OF RECAPTURE.—Recapture shall take 
place on the date that is the earliest of— 
‘‘(A) the end of the term of the agreement; 
‘‘(B) the conveyance of the real security 
property; 
‘‘(C) the repayment of the loans; or 
‘‘(D) the cessation of farming operations by 
the borrower. 
‘‘(5) TRANSFER OF TITLE.—Transfer of title to 
the spouse of a borrower on the death of the borrower
524 
† HR 2642 EAS 
shall not be treated as a conveyance for the purpose 
of paragraph (4). 
‘‘(6) NOTICE OF RECAPTURE.—Not later than 12 
months before the end of the term of a shared appre-
ciation arrangement, the Secretary shall notify the 
borrower involved of the provisions of the arrange-
ment. 
‘‘(7) FINANCING OF RECAPTURE PAYMENT.— 
‘‘(A) IN GENERAL.—The Secretary may am-
ortize a recapture payment owed to the Secretary 
under this subsection. 
‘‘(B) TERM.—The term of an amortization 
under this paragraph may not exceed 25 years. 
‘‘(C) INTEREST
RATE.—The interest rate 
applicable to an amortization under this para-
graph may not exceed the rate applicable to a 
loan to reacquire homestead property less 100 
basis points. 
‘‘(D) REAMORTIZATION.— 
‘‘(i) IN GENERAL.—The Secretary may 
modify the amortization of a recapture pay-
ment referred to in subparagraph (A) of 
this paragraph on which a payment has be-
come delinquent if—
525 
† HR 2642 EAS 
‘‘(I) the default is due to cir-
cumstances beyond the control of the 
borrower; and 
‘‘(II) the borrower acted in good 
faith (as determined by the Secretary) 
in attempting to repay the recapture 
amount. 
‘‘(ii) LIMITATIONS.— 
‘‘(I) 
TERM
OF
REAMORTIZA-
TION.—The term of a reamortization 
under this subparagraph may not ex-
ceed 25 years from the date of the 
original amortization agreement. 
‘‘(II) NO
REDUCTION
OR
PRIN-
CIPAL OR UNPAID INTEREST DUE.—A 
reamortization of a recapture payment 
under this subparagraph may not pro-
vide for reducing the outstanding prin-
cipal or unpaid interest due on the re-
capture payment. 
‘‘(f) INTEREST RATES.—Any loan for farm ownership 
purposes, farm operating purposes, or disaster emergency 
purposes, that is deferred, consolidated, rescheduled, or re-
amortized shall, notwithstanding any other provision of 
this subtitle, bear interest on the balance of the original loan
526 
† HR 2642 EAS 
and for the term of the original loan at a rate that is the 
lowest of— 
‘‘(1) the rate of interest on the 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 rate being charged by the Secretary for 
loans, other than guaranteed loans, of the same type 
at the time of the deferral, consolidation, rescheduling, 
or reamortization. 
‘‘(g) PERIOD AND EFFECT.— 
‘‘(1) PERIOD.—The Secretary may consolidate or 
reschedule outstanding loans for payment over a pe-
riod not to exceed 7 years (or, in the case of loans for 
farm operating purposes, 15 years) from the date of 
the consolidation or rescheduling. 
‘‘(2) EFFECT.—The amount of unpaid principal 
and interest of the prior loans so consolidated or re-
scheduled shall not create a new charge against any 
loan levels authorized by law. 
‘‘(h) PREREQUISITES TO FORECLOSURE OR LIQUIDA-
TION.—No foreclosure or other similar action shall be taken 
to liquidate any loan determined to be ineligible for restruc-
turing by the Secretary under this section—
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† HR 2642 EAS 
‘‘(1) until the borrower has been given the oppor-
tunity to appeal the decision; and 
‘‘(2) if the borrower appeals, the appeals process 
has been completed, and a determination has been 
made that the loan is ineligible for restructuring. 
‘‘(i) NOTICE
OF
INELIGIBILITY
FOR
RESTRUC-
TURING.— 
‘‘(1) IN GENERAL.—A notice of ineligibility for 
restructuring shall be sent to the borrower by reg-
istered or certified mail not later than 15 days after 
a determination of ineligibility. 
‘‘(2) CONTENTS.—The notice required under 
paragraph (1) shall contain— 
‘‘(A) the determination and the reasons for 
the determination; 
‘‘(B) the computations used to make the de-
termination, including the calculation of the re-
covery value of the collateral securing the loan; 
and 
‘‘(C) a statement of the right of the borrower 
to appeal the decision to the appeals division, 
and to appear before a hearing officer. 
‘‘(j) INDEPENDENT APPRAISALS.—
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† HR 2642 EAS 
‘‘(1) IN GENERAL.—An appeal may include a re-
quest by the borrower for an independent appraisal of 
any property securing the loan. 
‘‘(2) PROCESS FOR APPRAISAL.—On a request 
under paragraph (1), the Secretary shall present the 
borrower with a list of 3 appraisers approved by the 
county supervisor, from which the borrower shall se-
lect an appraiser to conduct the appraisal. 
‘‘(3) COST.—The cost of an appraisal under this 
subsection shall be paid by the borrower. 
‘‘(4) RESULT.—The result of an appraisal under 
this subsection shall be considered in any final deter-
mination concerning the loan. 
‘‘(5) COPY.—A copy of any appraisal under this 
subsection shall be provided to the borrower. 
‘‘(k) ONLY 1 WRITE-DOWN OR NET RECOVERY BUY- 
OUT PER BORROWER FOR A LOAN MADE AFTER JANUARY 
6, 1988.— 
‘‘(1) IN GENERAL.—The Secretary may provide 
for each borrower not more than 1 write-down or net 
recovery buy-out under this section with respect to all 
loans made to the borrower after January 6, 1988. 
‘‘(2) SPECIAL RULE.—For purposes of paragraph 
(1), the Secretary shall treat any loan made on or be-
fore January 6, 1988, with respect to which a restruc-
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† HR 2642 EAS 
turing, write-down, or net recovery buy-out is pro-
vided under this section after January 6, 1988, as a 
loan made after January 6, 1988. 
‘‘(l) LIQUIDATION OF ASSETS.—The Secretary may 
not use the authority provided by this section to reduce or 
terminate any portion of the debt of the borrower that the 
borrower could pay through the liquidation of assets (or 
through the payment of the loan value of the assets, if the 
loan value is greater than the liquidation value) described 
in subsection (c)(2)(A)(ii). 
‘‘(m) LIFETIME LIMITATION ON DEBT FORGIVENESS 
PER BORROWER.—The Secretary may provide each bor-
rower not more than $300,000 in debt forgiveness under this 
section. 
‘‘SEC. 3412. RELIEF FOR MOBILIZED MILITARY RESERVISTS 
FROM CERTAIN AGRICULTURAL LOAN OBLI-
GATIONS. 
‘‘(a) DEFINITION OF MOBILIZED MILITARY RESERV-
IST.—In this section, the term ‘mobilized military reservist’ 
means an individual who— 
‘‘(1) is on active duty under section 688, 
12301(a), 12301(g), 12302, 12304, 12306, or 12406, 
or chapter 15 of title 10, United States Code, or any 
other provision of law during a war or during a na-
tional emergency declared by the President or Con-
530 
† HR 2642 EAS 
gress, regardless of the location at which the active 
duty service is performed; or 
‘‘(2) in the case of a member of the National 
Guard, is on full-time National Guard duty (as de-
fined in section 101(d)(5) of title 10, United States 
Code) under a call to active service authorized by the 
President or the Secretary of Defense for a period of 
more than 30 consecutive days under section 502(f) of 
title 32, United States Code, for purposes of respond-
ing to a national emergency declared by the President 
and supported by Federal funds. 
‘‘(b) FORGIVENESS
OF INTEREST PAYMENTS DUE 
WHILE BORROWER IS A MOBILIZED MILITARY RESERV-
IST.—Any requirement that a borrower of a direct loan 
made under this subtitle make any interest payment on the 
loan that would otherwise be required to be made while the 
borrower is a mobilized military reservist is rescinded. 
‘‘(c) DEFERRAL OF PRINCIPAL PAYMENTS DUE WHILE 
OR AFTER BORROWER IS A MOBILIZED MILITARY RESERV-
IST.—The due date of any payment of principal on a direct 
loan made to a borrower under this subtitle that would oth-
erwise be required to be made while or after the borrower 
is a mobilized military reservist is deferred for a period 
equal in length to the period for which the borrower is a 
mobilized military reservist.
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† HR 2642 EAS 
‘‘(d) NONACCRUAL OF INTEREST.—Interest on a direct 
loan made to a borrower described in this section shall not 
accrue during the period the borrower is a mobilized mili-
tary reservist. 
‘‘(e) BORROWER NOT CONSIDERED TO BE DELIN-
QUENT
OR RECEIVING DEBT FORGIVENESS.—Notwith-
standing section 3425 or any other provision of this title, 
a borrower who receives assistance under this section shall 
not, as a result of the assistance, be considered to be delin-
quent or receiving debt forgiveness for purposes of receiving 
a direct or guaranteed loan under this subtitle. 
‘‘SEC. 3413. INTEREST RATE REDUCTION PROGRAM. 
‘‘(a) ESTABLISHMENT OF PROGRAM.—The Secretary 
shall establish and carry out in accordance with this section 
an interest rate reduction program for any loan guaranteed 
under this subtitle. 
‘‘(b) ENTERING INTO CONTRACTS.—The Secretary 
shall enter into a contract with, and make payments to, 
an institution to reduce, during the term of the contract, 
the interest rate paid by the borrower on the guaranteed 
loan if— 
‘‘(1) the borrower— 
‘‘(A) is unable to obtain credit elsewhere; 
‘‘(B) is unable to make payments on the 
loan in a timely manner; and
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† HR 2642 EAS 
‘‘(C) during the 24-month period beginning 
on the date on which the contract is entered into, 
has a total estimated cash income, including all 
farm and nonfarm income, that will equal or ex-
ceed the total estimated cash expenses, including 
all farm and nonfarm expenses, to be incurred 
by the borrower during the period; and 
‘‘(2) during the term of the contract, the lender 
reduces the annual rate of interest payable on the 
loan by a minimum percentage specified in the con-
tract. 
‘‘(c) PAYMENTS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), in 
return for a contract entered into by a lender under 
subsection (b) for the reduction of the interest rate 
paid on a loan, the Secretary 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. 
‘‘(2) LIMITATION.—Payments under paragraph 
(1) may not exceed the cost of reducing the rate by 
more than 400 basis points. 
‘‘(d) TERM.—The term of a contract entered into under 
this section to reduce the interest rate on a guaranteed loan 
may not exceed the outstanding term of the loan.
533 
† HR 2642 EAS 
‘‘(e) CONDITION ON FORECLOSURE.—Notwithstanding 
any other law, any contract of guarantee on a farm loan 
entered into under this subtitle shall contain a condition 
that the lender of the loan may not initiate a foreclosure 
action on the loan until 60 days after a determination is 
made with respect to the eligibility of the borrower to par-
ticipate in the program established under this section. 
‘‘SEC. 3414. HOMESTEAD PROPERTY. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) 
ADMINISTRATOR.—The 
term 
‘Adminis-
trator’ means the Administrator of the Small Busi-
ness Administration. 
‘‘(2) BORROWER-OWNER.—The term ‘borrower- 
owner’ means— 
‘‘(A) a borrower-owner of a loan made or 
guaranteed by the Secretary or the Adminis-
trator who meets the eligibility requirements of 
subsection (c)(1); or 
‘‘(B) in a case in which an owner of home-
stead property pledged the property to secure the 
loan and the owner is different than the bor-
rower, the owner. 
‘‘(3) FARM
PROGRAM
LOAN.—The term ‘farm 
program loan’ means a loan made by the Adminis-
trator under the Small Business Act (15 U.S.C. 631
534 
† HR 2642 EAS 
et seq.) for any of the purposes authorized for loans 
under chapter 1 or 2. 
‘‘(4) HOMESTEAD PROPERTY.—The term ‘home-
stead property’ means— 
‘‘(A) the principal residence and adjoining 
property possessed and occupied by a borrower- 
owner, including a reasonable number of farm 
outbuildings located on the adjoining land that 
are useful to any occupant of the homestead; and 
‘‘(B) not more than 10 acres of adjoining 
land that is used to maintain the family of the 
borrower-owner. 
‘‘(b) RETENTION OF HOMESTEAD PROPERTY.— 
‘‘(1) IN GENERAL.—The Secretary or the Admin-
istrator shall, on application by a borrower-owner 
who meets the eligibility requirements of subsection 
(c)(1), permit the borrower-owner to retain possession 
and occupancy of homestead property under the terms 
set forth, and until the action described in this section 
has been completed, if— 
‘‘(A) the Secretary forecloses or takes into 
inventory property securing a loan made under 
this subtitle; 
‘‘(B) the Administrator forecloses or takes 
into inventory property securing a farm pro-
535 
† HR 2642 EAS 
gram loan made under the Small Business Act 
(15 U.S.C. 631 et seq.); or 
‘‘(C) the borrower-owner of a loan made by 
the Secretary or the Administrator files a peti-
tion in bankruptcy that results in the conveyance 
of the homestead property to the Secretary or the 
Administrator, or agrees to voluntarily liquidate 
or convey the property in whole or in part. 
‘‘(2) PERIOD OF OCCUPANCY.—Subject to sub-
section (c), the Secretary or the Administrator shall 
not grant a period of occupancy of less than 3 nor 
more than 5 years. 
‘‘(c) ELIGIBILITY.— 
‘‘(1) IN
GENERAL.—To be eligible to occupy 
homestead property, a borrower-owner of a loan made 
by the Secretary or the Administrator shall— 
‘‘(A) apply for the occupancy not later than 
30 days after the property is acquired by the 
Secretary or Administrator; 
‘‘(B) have received from farming operations 
gross farm income that is reasonably commensu-
rate with— 
‘‘(i) the size and location of the farm-
ing unit of the borrower-owner; and
536 
† HR 2642 EAS 
‘‘(ii) local agricultural conditions (in-
cluding natural and economic conditions), 
during at least 2 calendar years of the 6- 
year period preceding the calendar year in 
which the application is made; 
‘‘(C) have received from farming operations 
at least 60 percent of the gross annual income of 
the borrower-owner and any spouse of the bor-
rower-owner during at least 2 calendar years of 
the 6-year period described in subparagraph (B); 
‘‘(D) have continuously occupied the home-
stead property during the 6-year period de-
scribed in subparagraph (B), except that the re-
quirement of this subparagraph may be waived 
if a borrower-owner, due to circumstances be-
yond the control of the borrower-owner, had to 
leave the homestead property for a period of time 
not to exceed 12 months during the 6-year pe-
riod; 
‘‘(E) during the period of occupancy of the 
homestead property, pay a reasonable sum as 
rent for the property to the Secretary or the Ad-
ministrator in an amount substantially equiva-
lent to rents charged for similar residential
537 
† HR 2642 EAS 
properties in the area in which the homestead 
property is located; 
‘‘(F) during the period of the occupancy of 
the homestead property, maintain the property 
in good condition; and 
‘‘(G) meet such other reasonable and nec-
essary terms and conditions as the Secretary 
may require. 
‘‘(2) DEFINITION OF FARMING OPERATIONS.—In 
subparagraphs (B) and (C) of paragraph (1), the 
term ‘farming operations’ includes rent paid by a les-
see of agricultural land during a period in which the 
borrower-owner, due to circumstances beyond the con-
trol of the borrower-owner, is unable to actively farm 
the land. 
‘‘(3) TERMINATION OF RIGHTS.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(E), the failure of the borrower-owner 
to make a timely rental payment shall constitute 
cause for the termination of all rights of the bor-
rower-owner to possession and occupancy of the 
homestead property under this section. 
‘‘(B) PROCEDURE
FOR
TERMINATION.—In 
effecting a termination under subparagraph (A), 
the Secretary shall—
538 
† HR 2642 EAS 
‘‘(i) afford the borrower-owner or lessee 
the notice and hearing procedural rights de-
scribed in subtitle H of the Department of 
Agriculture Reorganization Act of 1994 (7 
U.S.C. 6991 et seq.); and 
‘‘(ii) comply with any applicable State 
and local law governing eviction of a person 
from residential property. 
‘‘(4) RIGHTS OF BORROWER-OWNER.— 
‘‘(A) PERIOD
OF
OCCUPANCY.—Subject to 
subsection (b)(2), the period of occupancy al-
lowed the borrower-owner of homestead property 
under this section shall be the period requested 
in writing by the borrower-owner. 
‘‘(B) RIGHT TO REACQUIRE.— 
‘‘(i) IN GENERAL.—During the period 
the borrower-owner occupies the homestead 
property, the borrower-owner shall have a 
right to reacquire the homestead property 
on such terms and conditions as the Sec-
retary shall determine. 
‘‘(ii) SOCIALLY DISADVANTAGED BOR-
ROWER-OWNER.—During the period of occu-
pancy of a borrower-owner who is a socially 
disadvantaged farmer, the borrower-owner
539 
† HR 2642 EAS 
or a member of the immediate family of the 
borrower-owner shall have a right of first 
refusal to reacquire the homestead property 
on such terms and conditions as the Sec-
retary shall determine. 
‘‘(iii) INDEPENDENT APPRAISAL.—The 
Secretary may not demand a payment for 
the homestead property that is in excess of 
the current market value of the homestead 
property as established by an independent 
appraisal. 
‘‘(iv) CONDUCT
OF
APPRAISAL.—An 
independent appraisal under clause (iii) 
shall be conducted by an appraiser selected 
by the borrower-owner, or, in the case of a 
borrower-owner who is a socially disadvan-
taged farmer, the immediate family member 
of the borrower-owner, from a list of 3 ap-
praisers approved by the county supervisor. 
‘‘(5) TRANSFER OF RIGHTS.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), no right of a borrower-owner 
under this section, and no agreement entered 
into between the borrower-owner and the Sec-
retary for occupancy of the homestead property,
540 
† HR 2642 EAS 
shall be transferable or assignable by the bor-
rower-owner or by operation of law. 
‘‘(B) DEATH
OR
INCOMPETENCY.—In the 
case of death or incompetency of the borrower- 
owner, the right and agreement shall be transfer-
able to a spouse of the borrower-owner if the 
spouse agrees to comply with any terms and con-
ditions of the right or agreement. 
‘‘(6) NOTIFICATION.—Not later than the date of 
acquisition of the property securing a loan made 
under this subtitle, the Secretary shall notify the bor-
rower-owner of the property of the availability of 
homestead protection rights under this section. 
‘‘(d) END OF PERIOD OF OCCUPANCY.— 
‘‘(1) IN GENERAL.—At the end of the period of 
occupancy allowed a borrower-owner under subsection 
(c), the Secretary or the Administrator shall grant to 
the borrower-owner a right of first refusal to reacquire 
the homestead property on such terms and conditions 
(which may include payment of principal in install-
ments) as the Secretary or the Administrator shall de-
termine. 
‘‘(2) TERMS AND CONDITIONS.—The terms and 
conditions granted under paragraph (1) may not be 
less favorable than those offered by the Secretary or
541 
† HR 2642 EAS 
Administrator or intended by the Secretary or Ad-
ministrator to be offered to any other buyer. 
‘‘(e) MAXIMUM PAYMENT OF PRINCIPAL.— 
‘‘(1) IN GENERAL.—At the time a reacquisition 
agreement is entered into, the Secretary or the Ad-
ministrator may not demand a total payment of 
principal that is in excess of the value of the home-
stead property. 
‘‘(2) DETERMINATION OF VALUE.—To the max-
imum extent practicable, the value of the homestead 
property shall be determined by an independent ap-
praisal made during the 180-day period beginning on 
the date of receipt of the application of the borrower- 
owner to retain possession and occupancy of the 
homestead property. 
‘‘(f) TITLE NOT NEEDED TO ENTER INTO CON-
TRACTS.—The Secretary may enter into a contract author-
ized by this section before the Secretary acquires title to 
the homestead property that is the subject of the contract. 
‘‘(g) STATE LAW PREVAILS.—In the event of a conflict 
between this section and a provision of State law relating 
to the right of a borrower-owner to designate for separate 
sale or redeem part or all of the real property securing a 
loan foreclosed on by a lender to the borrower-owner, the 
provision of State law shall prevail.
542 
† HR 2642 EAS 
‘‘SEC. 3415. TRANSFER OF INVENTORY LAND. 
‘‘(a) IN GENERAL.—Subject to subsection (b), the Sec-
retary may transfer to a Federal or State agency, for con-
servation purposes, any real property, or interest in real 
property, administered by the Secretary under this sub-
title— 
‘‘(1) with respect to which the rights of all prior 
owners and operators have expired; 
‘‘(2) that is eligible to be disposed of in accord-
ance with section 3409; and 
‘‘(3) that— 
‘‘(A) has marginal value for agricultural 
production; 
‘‘(B) is environmentally sensitive; or 
‘‘(C) has special management importance. 
‘‘(b) CONDITIONS.—The Secretary may not transfer 
any property or interest in property under subsection (a) 
unless— 
‘‘(1) at least 2 public notices are given of the 
transfer; 
‘‘(2) if requested, at least 1 public meeting is 
held prior to the transfer; and 
‘‘(3) the Governor and at least 1 elected county 
official of the State and county in which the property 
is located are consulted prior to the transfer.
543 
† HR 2642 EAS 
‘‘SEC. 3416. TARGET PARTICIPATION RATES. 
‘‘(a) ESTABLISHMENT.— 
‘‘(1) IN GENERAL.—The Secretary shall establish 
annual target participation rates, on a county-wide 
basis, that shall ensure that members of socially dis-
advantaged groups shall— 
‘‘(A) receive loans made or guaranteed 
under chapter 1; and 
‘‘(B) have the opportunity to purchase or 
lease farmland acquired by the Secretary under 
this subtitle. 
‘‘(2) GROUP POPULATION.—Except as provided 
in paragraph (3), in establishing the target rates, the 
Secretary shall take into consideration— 
‘‘(A) the portion of the population of the 
county made up of the socially disadvantaged 
groups; and 
‘‘(B) the availability of inventory farmland 
in the county. 
‘‘(3) GENDER.—In the case of gender, target par-
ticipation rates shall take into consideration the num-
ber of current and potential socially disadvantaged 
farmers in a State in proportion to the total number 
of farmers in the State. 
‘‘(b) RESERVATION AND ALLOCATION.—
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† HR 2642 EAS 
‘‘(1) RESERVATION.—To the maximum extent 
practicable, the Secretary shall reserve sufficient loan 
funds made available under chapter 1 for use by 
members of socially disadvantaged groups identified 
under target participation rates established under 
subsection (a). 
‘‘(2) ALLOCATION.—The Secretary shall allocate 
the loans on the basis of the proportion of members 
of socially disadvantaged groups in a county and the 
availability of inventory farmland, with the greatest 
amount of loan funds being distributed in the county 
with the greatest proportion of socially disadvantaged 
group members and the greatest quantity of available 
inventory farmland. 
‘‘(3) INDIAN
RESERVATIONS.—In distributing 
loan funds in counties within the boundaries of an 
Indian reservation, the Secretary shall allocate the 
funds on a reservation-wide basis. 
‘‘(c) OPERATING LOANS.— 
‘‘(1) ESTABLISHMENT.— 
‘‘(A) IN GENERAL.—The Secretary shall es-
tablish annual target participation rates that 
shall ensure that socially disadvantaged farmers 
receive loans made or guaranteed under chapter 
2.
545 
† HR 2642 EAS 
‘‘(B) CONSIDERATIONS.—In establishing the 
target rates, the Secretary shall consider the 
number of socially disadvantaged farmers in a 
State in proportion to the total number of farm-
ers in the State. 
‘‘(2) RESERVATION AND ALLOCATION.— 
‘‘(A) IN GENERAL.—To the maximum ex-
tent practicable, the Secretary shall reserve and 
allocate the proportion of the loan funds of each 
State made available under chapter 2 that is 
equal to the target participation rate of the State 
for use by the socially disadvantaged farmers in 
the State. 
‘‘(B) DISTRIBUTION.—To the maximum ex-
tent practicable, the Secretary shall distribute 
the total loan funds reserved under subparagraph 
(A) on a county-by-county basis according to the 
number of socially disadvantaged farmers in the 
county. 
‘‘(C) REALLOCATION OF UNUSED FUNDS.— 
Any funds reserved and allocated under this 
paragraph but not used within a State shall, to 
the extent necessary to satisfy pending applica-
tions under this subtitle, be available for use by 
socially disadvantaged farmers in other States,
546 
† HR 2642 EAS 
as determined by the Secretary, and any re-
maining funds shall be reallocated within the 
State. 
‘‘(d) REPORT.—The Secretary shall prepare and sub-
mit to the Committee on Agriculture of the House of Rep-
resentatives and the Committee on Agriculture, Nutrition, 
and Forestry of the Senate a report that describes the an-
nual target participation rates and the success in meeting 
the rates. 
‘‘(e) IMPLEMENTATION CONSISTENT WITH SUPREME 
COURT HOLDING.—Not later than 180 days after April 4, 
1996, the Secretary shall ensure that the implementation 
of this section is consistent with the holding of the Supreme 
Court in Adarand Constructors, Inc. v. Federico Pena, Sec-
retary of Transportation, 115 S. Ct. 2097 (1995). 
‘‘SEC. 3417. COMPROMISE OR ADJUSTMENT OF DEBTS OR 
CLAIMS BY GUARANTEED LENDER. 
‘‘(a) LOSS BY LENDER.—If the lender of a guaranteed 
farmer program loan takes any action described in section 
3903(a)(4) with respect to the loan and the Secretary ap-
proves the action, for purposes of the guarantee, the lender 
shall be treated as having sustained a loss equal to the 
amount by which— 
‘‘(1) the outstanding balance of the loan imme-
diately before the action; exceeds
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† HR 2642 EAS 
‘‘(2) the outstanding balance of the loan imme-
diately after the action. 
‘‘(b) NET PRESENT VALUE OF LOAN.—The Secretary 
shall approve the taking of an action described in section 
3903(a)(4) by the lender of a guaranteed farmer program 
loan with respect to the loan if the action reduces the net 
present value of the loan to an amount equal to not less 
than the greater of— 
‘‘(1) the greatest net present value of a loan the 
borrower could reasonably be expected to repay; and 
‘‘(2) the difference between— 
‘‘(A) the greatest amount that the lender of 
the loan could reasonably expect to recover from 
the borrower through bankruptcy, or liquidation 
of the property securing the loan; and 
‘‘(B) all reasonable and necessary costs and 
expenses that the lender of the loan could reason-
ably expect to incur to preserve or dispose of the 
property (including all associated legal and 
property management costs) in the course of such 
a bankruptcy or liquidation. 
‘‘(c) NO LIMITATION ON AUTHORITY.—This section 
shall not limit the authority of the Secretary to enter into 
a shared appreciation arrangement with a borrower under 
section 3411(e).
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† HR 2642 EAS 
‘‘SEC. 3418. WAIVER OF MEDIATION RIGHTS BY BOR-
ROWERS. 
‘‘The Secretary may not make or guarantee any farm-
er program loan to a farm borrower on the condition that 
the borrower waive any right under the mediation program 
of any State. 
‘‘SEC. 3419. BORROWER TRAINING. 
‘‘(a) IN GENERAL.—The Secretary shall contract to 
provide educational training to all borrowers of direct loans 
made under this subtitle in financial and farm manage-
ment concepts associated with commercial farming. 
‘‘(b) CONTRACT.— 
‘‘(1) IN GENERAL.—The Secretary may contract 
with a State or private provider of farm management 
and credit counseling services (including a commu-
nity college, the extension service of a State, a State 
department of agriculture, or a nonprofit organiza-
tion) to carry out this section. 
‘‘(2) CONSULTATION.—The Secretary may con-
sult with the chief executive officer of a State con-
cerning the identity of the contracting organization 
and the process for contracting. 
‘‘(c) ELIGIBILITY FOR LOANS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), to 
be eligible to obtain a direct loan under this subtitle, 
a borrower shall be required to obtain management
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† HR 2642 EAS 
assistance under this section, appropriate to the man-
agement ability of the borrower during the determina-
tion of eligibility for the loan. 
‘‘(2) LOAN CONDITIONS.—The need of a borrower 
who satisfies the criteria set out in section 
3101(b)(1)(B) or 3201(b)(1)(B) for management as-
sistance under this section shall not be cause for de-
nial of eligibility of the borrower for a direct loan 
under this subtitle. 
‘‘(d) GUIDELINES AND CURRICULUM.—The Secretary 
shall issue regulations establishing guidelines and cur-
riculum for the borrower training program established 
under this section. 
‘‘(e) PAYMENT.—A borrower— 
‘‘(1) shall pay for training received under this 
section; and 
‘‘(2) may use funds from operating loans made 
under chapter 2 to pay for the training. 
‘‘(f) WAIVERS.— 
‘‘(1) IN GENERAL.—The Secretary may waive 
the requirements of this section for an individual bor-
rower on a determination that the borrower dem-
onstrates adequate knowledge in areas described in 
this section.
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† HR 2642 EAS 
‘‘(2) CRITERIA.—The Secretary shall establish 
criteria providing for the application of paragraph 
(1) consistently in all counties nationwide. 
‘‘SEC. 3420. LOAN ASSESSMENTS. 
‘‘(a) IN GENERAL.—After an applicant is determined 
to be eligible for assistance under this subtitle, the Secretary 
shall evaluate, in accordance with regulations issued by the 
Secretary, the farming plan and financial situation of each 
qualified farmer applicant. 
‘‘(b) DETERMINATIONS.—In evaluating the farming 
plan and financial situation of an applicant under this sec-
tion, the Secretary shall determine— 
‘‘(1) the amount that the applicant needs to bor-
row to carry out the proposed farming plan; 
‘‘(2) the rate of interest that the applicant would 
need to be able to cover expenses and build an ade-
quate equity base; 
‘‘(3) the goals of the proposed farming plan of 
the applicant; 
‘‘(4) the financial viability of the plan and any 
changes that are necessary to make the plan viable; 
and 
‘‘(5) whether assistance is necessary under this 
subtitle and, if so, the amount of the assistance.
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† HR 2642 EAS 
‘‘(c) CONTRACT.—The Secretary may contract with a 
third party (including an entity that is eligible to provide 
borrower training under section 3419(b)) to conduct a loan 
assessment under this section. 
‘‘(d) REVIEW OF LOANS.— 
‘‘(1) IN GENERAL.—Loan assessments conducted 
under this section shall include annual review of di-
rect loans, and periodic review (as determined nec-
essary by the Secretary) of guaranteed loans, made 
under this subtitle to assess the progress of a borrower 
in meeting the goals for the farm operation. 
‘‘(2) CONTRACTS.—The Secretary may contract 
with an entity that is eligible to provide borrower 
training under section 3419(b) to conduct a loan re-
view under paragraph (1). 
‘‘(3) PROBLEM ASSESSMENTS.—If a borrower is 
delinquent in payments on a direct or guaranteed 
loan made under this subtitle, the Secretary or the 
contracting entity shall determine the cause of, and 
action necessary to correct, the delinquency. 
‘‘(e) GUIDELINES.—The Secretary shall issue regula-
tions providing guidelines for loan assessments conducted 
under this section.
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† HR 2642 EAS 
‘‘SEC. 3421. SUPERVISED CREDIT. 
‘‘The Secretary shall provide adequate training to em-
ployees of the Farm Service Agency on credit analysis and 
financial and farm management— 
‘‘(1) to better acquaint the employees with what 
constitutes adequate financial data on which to base 
a direct or guaranteed loan approval decision; and 
‘‘(2) to ensure proper supervision of farmer pro-
gram loans. 
‘‘SEC. 3422. MARKET PLACEMENT. 
‘‘The Secretary shall establish a market placement pro-
gram for a qualified beginning farmer and any other bor-
rower of farmer program loans that the Secretary believes 
has a reasonable chance of qualifying for commercial credit 
with a guarantee provided under this subtitle. 
‘‘SEC. 3423. RECORDKEEPING OF LOANS BY GENDER OF 
BORROWER. 
‘‘The Secretary shall classify, by gender, records of ap-
plicants for loans and loan guarantees under this subtitle. 
‘‘SEC. 3424. CROP INSURANCE REQUIREMENT. 
‘‘(a) IN GENERAL.—As a condition of obtaining any 
benefit (including a direct loan, loan guarantee, or pay-
ment) described in subsection (b), a borrower shall be re-
quired to obtain at least catastrophic risk protection insur-
ance coverage under section 508 of the Federal Crop Insur-
ance Act (7 U.S.C. 1508) for the crop and crop year for
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† HR 2642 EAS 
which the benefit is sought, if the coverage is offered by the 
Federal Crop Insurance Corporation. 
‘‘(b) APPLICABLE BENEFITS.—Subsection (a) shall 
apply to— 
‘‘(1) a farm ownership loan under section 3102; 
‘‘(2) an operating loan under section 3202; and 
‘‘(3) an emergency loan under section 3301. 
‘‘SEC. 3425. LOAN AND LOAN SERVICING LIMITATIONS. 
‘‘(a) DELINQUENT BORROWERS PROHIBITED FROM 
OBTAINING DIRECT OPERATING LOANS.—The Secretary 
may not make a direct operating loan under chapter 2 to 
a borrower who is delinquent on any loan made or guaran-
teed under this subtitle. 
‘‘(b) LOANS PROHIBITED
FOR BORROWERS THAT 
HAVE RECEIVED DEBT FORGIVENESS.— 
‘‘(1) PROHIBITIONS.—Except as provided in 
paragraph (2)— 
‘‘(A) the Secretary may not make a loan 
under this subtitle to a borrower that has re-
ceived debt forgiveness on a loan made or guar-
anteed under this subtitle; and 
‘‘(B) the Secretary may not guarantee a 
loan under this subtitle to a borrower that has 
received—
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† HR 2642 EAS 
‘‘(i) debt forgiveness after April 4, 
1996, on a loan made or guaranteed under 
this subtitle; or 
‘‘(ii) received debt forgiveness on more 
than 3 occasions on or before April 4, 1996. 
‘‘(2) EXCEPTIONS.— 
‘‘(A) IN
GENERAL.—The Secretary may 
make a direct or guaranteed farm operating loan 
for paying annual farm operating expenses of a 
borrower who— 
‘‘(i) was restructured with a write- 
down under section 3411; 
‘‘(ii) is current on payments under a 
confirmed reorganization plan under chap-
ters 11, 12, or 13 of title 11 of the United 
States Code; or 
‘‘(iii) received debt forgiveness on not 
more than 1 occasion resulting directly and 
primarily from a major disaster or emer-
gency designated by the President on or 
after April 4, 1996, under the Robert T. 
Stafford Disaster Relief and Emergency As-
sistance Act (42 U.S.C. 5121 et seq.).
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† HR 2642 EAS 
‘‘(B) EMERGENCY
LOANS.—The Secretary 
may make an emergency loan under section 3301 
to a borrower that— 
‘‘(i) on or before April 4, 1996, re-
ceived not more than 1 debt forgiveness on 
a loan made or guaranteed under this sub-
title; and 
‘‘(ii) after April 4, 1996, has not re-
ceived debt forgiveness on a loan made or 
guaranteed under this subtitle. 
‘‘(c) NO MORE THAN 1 DEBT FORGIVENESS FOR A 
BORROWER ON A DIRECT LOAN.—The Secretary may not 
provide to a borrower debt forgiveness on a direct loan made 
under this subtitle if the borrower has received debt forgive-
ness on another direct loan made under this subtitle. 
‘‘SEC. 3426. SHORT FORM CERTIFICATION OF FARM PRO-
GRAM BORROWER COMPLIANCE. 
‘‘The Secretary shall develop and use a consolidated 
short form for farmer program loan borrowers to use in cer-
tifying compliance with any applicable provision of law 
(including a regulation) that serves as an eligibility pre-
requisite for a loan made under this subtitle. 
‘‘SEC. 3427. UNDERWRITING FORMS AND STANDARDS. 
‘‘In the administration of this subtitle, the Secretary 
shall, to the extent practicable, use underwriting forms,
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† HR 2642 EAS 
standards, practices, and terminology similar to the forms, 
standards, practices, and terminology used by lenders in 
the private sector. 
‘‘SEC. 3428. BEGINNING FARMER INDIVIDUAL DEVELOP-
MENT ACCOUNTS PILOT PROGRAM. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) 
DEMONSTRATION
PROGRAM.—The 
term 
‘demonstration program’ means a demonstration pro-
gram carried out by a qualified entity under the pilot 
program established in subsection (b)(1). 
‘‘(2) ELIGIBLE PARTICIPANT.—The term ‘eligible 
participant’ means a qualified beginning farmer 
that— 
‘‘(A) lacks significant financial resources or 
assets; and 
‘‘(B) has an income that is less than— 
‘‘(i) 80 percent of the median income 
of the State in which the farmer resides; or 
‘‘(ii) 200 percent of the most recent an-
nual Federal Poverty Income Guidelines 
published by the Department of Health and 
Human Services for the State. 
‘‘(3) INDIVIDUAL DEVELOPMENT ACCOUNT.—The 
term ‘individual development account’ means a sav-
ings account described in subsection (b)(4)(A).
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† HR 2642 EAS 
‘‘(4) QUALIFIED ENTITY.— 
‘‘(A) IN GENERAL.—The term ‘qualified en-
tity’ means— 
‘‘(i) 1 or more organizations— 
‘‘(I) described in section 501(c)(3) 
of the Internal Revenue Code of 1986; 
and 
‘‘(II) exempt from taxation under 
section 501(a) of such Code; or 
‘‘(ii) a State, local, or tribal govern-
ment submitting an application jointly 
with an organization described in clause 
(i). 
‘‘(B) NO
PROHIBITION
ON
COLLABORA-
TION.—An organization described in subpara-
graph (A)(i) may collaborate with a financial 
institution or for-profit community development 
corporation to carry out the purposes of this sec-
tion. 
‘‘(b) PILOT PROGRAM.— 
‘‘(1) IN GENERAL.—The Secretary shall establish 
a pilot program to be known as the ‘New Farmer In-
dividual Development Accounts Pilot Program’ under 
which the Secretary shall work through qualified enti-
ties to establish demonstration programs—
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† HR 2642 EAS 
‘‘(A) of at least 5 years in duration; and 
‘‘(B) in at least 15 States. 
‘‘(2) COORDINATION.—The Secretary shall oper-
ate the pilot program through and in coordination 
with the farmer program loans of the Farm Service 
Agency. 
‘‘(3) RESERVE FUNDS.— 
‘‘(A) IN GENERAL.—A qualified entity car-
rying out a demonstration program under this 
section shall establish a reserve fund consisting of 
a non-Federal match of 50 percent of the total 
amount of the grant awarded to the demonstra-
tion program under this section. 
‘‘(B) FEDERAL FUNDS.—After the qualified 
entity has deposited the non-Federal matching 
funds described in subparagraph (A) in the re-
serve fund, the Secretary shall provide the total 
amount of the grant awarded under this section 
to the demonstration program for deposit in the 
reserve fund. 
‘‘(C) USE OF FUNDS.—Of the funds depos-
ited under subparagraph (B) in the reserve fund 
established for a demonstration program, the 
qualified entity carrying out the demonstration 
program—
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† HR 2642 EAS 
‘‘(i) may use up to 10 percent for ad-
ministrative expenses; and 
‘‘(ii) shall use the remainder in mak-
ing matching awards described in para-
graph (4)(B)(ii)(I). 
‘‘(D) INTEREST.—Any interest earned on 
amounts in a reserve fund established under sub-
paragraph (A) may be used by the qualified en-
tity as additional matching funds for, or to ad-
minister, the demonstration program. 
‘‘(E) GUIDANCE.—The Secretary shall issue 
guidance regarding the investment requirements 
of reserve funds established under this para-
graph. 
‘‘(F) REVERSION.—On the date on which 
all funds remaining in any individual develop-
ment account established by a qualified entity 
have reverted under paragraph (5)(B)(ii) to the 
reserve fund established by the qualified entity, 
there shall revert to the Treasury of the United 
States a percentage of the amount (if any) in the 
reserve fund equal to— 
‘‘(i) the amount of Federal funds de-
posited in the reserve fund under subpara-
560 
† HR 2642 EAS 
graph (B) that were not used for adminis-
trative expenses; divided by 
‘‘(ii) the total amount of funds depos-
ited in the reserve fund. 
‘‘(4) INDIVIDUAL DEVELOPMENT ACCOUNTS.— 
‘‘(A) IN GENERAL.—A qualified entity re-
ceiving a grant under this section shall establish 
and administer individual development accounts 
for eligible participants. 
‘‘(B) CONTRACT REQUIREMENTS.—To be el-
igible to receive funds under this section from a 
qualified entity, an eligible participant shall 
enter into a contract with only 1 qualified entity 
under which— 
‘‘(i) the eligible participant agrees— 
‘‘(I) to deposit a certain amount 
of funds of the eligible participant in 
a personal savings account, as pre-
scribed by the contractual agreement 
between the eligible participant and 
the qualified entity; 
‘‘(II) to use the funds described in 
subclause (I) only for 1 or more eligible 
expenditures described in paragraph 
(5)(A); and
561 
† HR 2642 EAS 
‘‘(III) to complete financial train-
ing; and 
‘‘(ii) the qualified entity agrees— 
‘‘(I) to deposit, not later than 1 
month after an amount is deposited 
pursuant to clause (i)(I), at least a 
100-percent, and up to a 200-percent, 
match of that amount into the indi-
vidual development account established 
for the eligible participant; and 
‘‘(II) with uses of funds proposed 
by the eligible participant. 
‘‘(C) LIMITATION.— 
‘‘(i) IN GENERAL.—A qualified entity 
administering a demonstration program 
under this section may provide not more 
than $6,000 for each fiscal year in match-
ing funds to the individual development ac-
count established by the qualified entity for 
an eligible participant. 
‘‘(ii) TREATMENT
OF
AMOUNT.—An 
amount provided under clause (i) shall not 
be considered to be a gift or loan for mort-
gage purposes. 
‘‘(5) ELIGIBLE EXPENDITURES.—
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† HR 2642 EAS 
‘‘(C) the experience and ability of the quali-
fied entity in recruiting, educating, and assist-
ing eligible participants to increase economic 
independence and pursue or advance farming 
opportunities; 
‘‘(D) the aggregate amount of direct funds 
from non-Federal public sector and private 
sources that are formally committed to the dem-
onstration program as matching contributions; 
‘‘(E) the adequacy of the plan of the quali-
fied entity to provide information relevant to an 
evaluation of the demonstration program; and 
‘‘(F) such other factors as the Secretary con-
siders to be appropriate. 
‘‘(3) PREFERENCES.—In considering an applica-
tion to conduct a demonstration program under this 
section, the Secretary shall give preference to an ap-
plication from a qualified entity that demonstrates— 
‘‘(A) a track record of serving clients tar-
geted by the program, including, as appropriate, 
socially disadvantaged farmers; and 
‘‘(B) expertise in dealing with financial 
management aspects of farming. 
‘‘(4) APPROVAL.—Not later than 1 year after the 
date of enactment of this section, in accordance with
565 
† HR 2642 EAS 
this section, the Secretary shall, on a competitive 
basis, approve such applications to conduct dem-
onstration programs as the Secretary considers ap-
propriate. 
‘‘(5) TERM OF AUTHORITY.—If the Secretary ap-
proves an application to carry out a demonstration 
program, the Secretary shall authorize the applicant 
to carry out the project for a period of 5 years, plus 
an additional 2 years to make eligible expenditures in 
accordance with subsection (b)(5)(B). 
‘‘(d) GRANT AUTHORITY.— 
‘‘(1) IN GENERAL.—The Secretary shall make a 
grant to a qualified entity authorized to carry out a 
demonstration program under this section. 
‘‘(2) MAXIMUM AMOUNT OF GRANTS.—The aggre-
gate amount of grant funds provided to a demonstra-
tion program carried out under this section shall not 
exceed $250,000. 
‘‘(3) TIMING
OF
GRANT
PAYMENTS.—The Sec-
retary shall pay the amounts awarded under a grant 
made under this section— 
‘‘(A) on the awarding of the grant; or 
‘‘(B) pursuant to such payment plan as the 
qualified entity may specify. 
‘‘(e) REPORTS.—
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† HR 2642 EAS 
‘‘(1) ANNUAL PROGRESS REPORTS.— 
‘‘(A) IN GENERAL.—Not later than 60 days 
after the end of the calendar year in which the 
Secretary authorizes a qualified entity to carry 
out a demonstration program under this section, 
and annually thereafter until the conclusion of 
the demonstration program, the qualified entity 
shall prepare an annual report that includes, for 
the period covered by the report— 
‘‘(i) an evaluation of the progress of 
the demonstration program; 
‘‘(ii) information about the demonstra-
tion program, including the eligible partici-
pants and the individual development ac-
counts that have been established; and 
‘‘(iii) such other information as the 
Secretary may require. 
‘‘(B) SUBMISSION OF REPORTS.—A quali-
fied entity shall submit each report required 
under subparagraph (A) to the Secretary. 
‘‘(2) REPORTS BY THE SECRETARY.—Not later 
than 1 year after the date on which all demonstration 
programs under this section are concluded, the Sec-
retary shall submit to Congress a final report that de-
567 
† HR 2642 EAS 
scribes the results and findings of all reports and 
evaluations carried out under this section. 
‘‘(f) ANNUAL REVIEW.—The Secretary may conduct an 
annual review of the financial records of a qualified enti-
ty— 
‘‘(1) to assess the financial soundness of the 
qualified entity; and 
‘‘(2) to determine the use of grant funds made 
available to the qualified entity under this section. 
‘‘(g) REGULATIONS.—In carrying out this section, the 
Secretary may promulgate regulations to ensure that the 
program includes provisions for— 
‘‘(1) the termination of demonstration programs; 
‘‘(2) control of the reserve funds in the case of 
such a termination; 
‘‘(3) transfer of demonstration programs to other 
qualified entities; and 
‘‘(4) remissions from a reserve fund to the Sec-
retary in a case in which a demonstration program 
is terminated without transfer to a new qualified en-
tity. 
‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to carry out this section 
$5,000,000 for each of fiscal years 2013 through 2018.
568 
† HR 2642 EAS 
‘‘SEC. 3429. FARMER LOAN PILOT PROJECTS. 
‘‘(a) IN GENERAL.—The Secretary may conduct pilot 
projects of limited scope and duration that are consistent 
with this subtitle to evaluate processes and techniques that 
may improve the efficiency and effectiveness of the pro-
grams carried out under this subtitle 
‘‘(b) NOTIFICATION.—The Secretary shall— 
‘‘(1) not less than 60 days before the date on 
which the Secretary initiates a pilot project under 
subsection (a), submit notice of the proposed pilot 
project to the Committee on Agriculture of the House 
of Representatives and the Committee on Agriculture, 
Nutrition, and Forestry of the Senate; and 
‘‘(2) consider any recommendations or feedback 
provided to the Secretary in response to the notice 
provided under paragraph (1). 
‘‘SEC. 3430. PROHIBITION ON USE OF LOANS FOR CERTAIN 
PURPOSES. 
‘‘(a) IN GENERAL.—Except as provided in subsections 
(b) and (c), the Secretary may not approve a loan under 
this subtitle to drain, dredge, fill, level, or otherwise manip-
ulate a wetland (as defined in section 1201(a) of the Food 
Security Act of 1985 (16 U.S.C. 3801(a))), or to engage 
in any activity that results in impairing or reducing the 
flow, circulation, or reach of water.
569 
† HR 2642 EAS 
‘‘(b) PRIOR ACTIVITY.—Subsection (a) does not apply 
in the case of— 
‘‘(1) an activity related to the maintenance of a 
previously converted wetland; or 
‘‘(2) an activity that had already commenced be-
fore November 28, 1990. 
‘‘(c) EXCEPTION.—This section shall not apply to a 
loan made or guaranteed under this subtitle for a utility 
line. 
‘‘SEC. 3431. AUTHORIZATION OF APPROPRIATIONS AND AL-
LOCATION OF FUNDS. 
‘‘(a) AUTHORIZATION FOR LOANS.— 
‘‘(1) IN GENERAL.—The Secretary may make or 
guarantee loans under chapters 1 and 2 from the Ag-
ricultural Credit Insurance Fund for not more than 
$4,226,000,000 for each of fiscal years 2013 through 
2018, of which, for each fiscal year— 
‘‘(A) $1,200,000,000 shall be for direct 
loans, of which— 
‘‘(i) $350,000,000 shall be for farm 
ownership loans; and 
‘‘(ii) $850,000,000 shall be for oper-
ating loans; and 
‘‘(B) $3,026,000,000 shall be for guaranteed 
loans, of which—
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† HR 2642 EAS 
‘‘(i) $1,000,000,000 shall be for guar-
antees of farm ownership loans; and 
‘‘(ii) $2,026,000,000 shall be for guar-
antees of operating loans. 
‘‘(2) BEGINNING FARMERS.— 
‘‘(A) DIRECT LOANS.— 
‘‘(i) FARM OWNERSHIP LOANS.— 
‘‘(I) 
IN
GENERAL.—Of 
the 
amounts made available under para-
graph (1) for direct farm ownership 
loans, the Secretary shall reserve an 
amount that is not less than 75 percent 
of the total amount for qualified begin-
ning farmers. 
‘‘(II) 
DOWN
PAYMENT
LOANS; 
JOINT FINANCING ARRANGEMENTS.—Of 
the amounts reserved for a fiscal year 
under subclause (I), the Secretary shall 
reserve an amount not less than 2⁄3 of 
the amount for the down payment loan 
program under section 3107 and joint 
financing arrangements under section 
3105 until April 1 of the fiscal year. 
‘‘(ii) 
OPERATING
LOANS.—Of 
the 
amounts made available under paragraph
571 
† HR 2642 EAS 
(1) for direct operating loans, the Secretary 
shall reserve for qualified beginning farmers 
for each of fiscal years 2013 through 2018, 
an amount that is not less than 50 percent 
of the total amount. 
‘‘(iii) FUNDS
RESERVED
UNTIL
SEP-
TEMBER 1.—Except as provided in clause 
(i)(II), funds reserved for qualified begin-
ning farmers under this subparagraph for a 
fiscal year shall be reserved only until Sep-
tember 1 of the fiscal year. 
‘‘(B) GUARANTEED LOANS.— 
‘‘(i) FARM OWNERSHIP LOANS.—Of the 
amounts made available under paragraph 
(1) for guarantees of farm ownership loans, 
the Secretary shall reserve an amount that 
is not less than 40 percent of the total 
amount for qualified beginning farmers. 
‘‘(ii) 
OPERATING
LOANS.—Of 
the 
amounts made available under paragraph 
(1) for guarantees of operating loans, the 
Secretary shall reserve 40 percent for quali-
fied beginning farmers. 
‘‘(iii) FUNDS RESERVED UNTIL APRIL 
1.—Funds reserved for qualified beginning
572 
† HR 2642 EAS 
farmers under this subparagraph for a fis-
cal year shall be reserved only until April 
1 of the fiscal year. 
‘‘(C) RESERVED FUNDS FOR ALL QUALIFIED 
BEGINNING FARMERS.—If a qualified beginning 
farmer meets the eligibility criteria for receiving 
a direct or guaranteed loan under section 3101, 
3107, or 3201, the Secretary shall make or guar-
antee the loan if sufficient funds reserved under 
this paragraph are available to make or guar-
antee the loan. 
‘‘(3) TRANSFER FOR DOWN PAYMENT LOANS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B)— 
‘‘(i) beginning on August 1 of each fis-
cal year, the Secretary shall use available 
unsubsidized guaranteed farm operating 
loan funds to provide direct farm ownership 
loans approved by the Secretary to qualified 
beginning farmers under the down payment 
loan program established under section 
3107, if sufficient direct farm ownership 
loan funds are not otherwise available; and 
‘‘(ii) beginning on September 1 of each 
fiscal year, the Secretary shall use available
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† HR 2642 EAS 
unsubsidized guaranteed farm operating 
loan funds to provide direct farm ownership 
loans approved by the Secretary to qualified 
beginning farmers, if sufficient direct farm 
ownership loan funds are not otherwise 
available. 
‘‘(B) LIMITATION.—The Secretary shall 
limit the transfer of funds under subparagraph 
(A) so that all guaranteed farm operating loans 
that have been approved, or will be approved, by 
the Secretary during the fiscal year will be made 
to the extent of available amounts. 
‘‘(4) TRANSFER FOR CREDIT SALES OF FARM IN-
VENTORY PROPERTY.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C), beginning on September 1 
of each fiscal year, the Secretary may use avail-
able funds made available under chapter 3 for 
the fiscal year to fund the credit sale of farm real 
estate in the inventory of the Secretary. 
‘‘(B) SUPPLEMENTAL
APPROPRIATIONS.— 
The transfer authority provided under subpara-
graph (A) shall not apply to any funds made 
available to the Secretary for any fiscal year
574 
† HR 2642 EAS 
under an Act making supplemental appropria-
tions. 
‘‘(C) LIMITATION.—The Secretary shall 
limit the transfer of funds under subparagraph 
(A) so that all emergency disaster loans that 
have been approved, or will be approved, by the 
Secretary during the fiscal year will be made to 
the extent of available amounts. 
‘‘(5) AVAILABILITY
OF
FUNDS.—Funds made 
available to carry out this subtitle shall remain avail-
able until expended. 
‘‘(b) COST PROJECTIONS.— 
‘‘(1) IN GENERAL.—The Secretary shall develop 
long-term cost projections for loan program author-
izations required under subsection (a). 
‘‘(2) ANALYSIS.—Each projection under para-
graph (1) shall include analyses of— 
‘‘(A) the long-term costs of the lending levels 
that the Secretary requests to be authorized 
under subsection (a); and 
‘‘(B) the long-term costs for increases in 
lending levels beyond those requested to be au-
thorized, based on increments of $10,000,000 or 
such other levels as the Secretary considers ap-
propriate.
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‘‘(3) SUBMISSION TO CONGRESS.—The Secretary 
shall submit to the Committees on Agriculture and 
Appropriations of the House of Representatives and 
the Committees on Agriculture, Nutrition, and For-
estry and Appropriations of the Senate reports con-
taining the long-term cost projections for the 3-year 
period beginning with fiscal year 1983 and each 3- 
year period thereafter at the time the requests for au-
thorizations for those periods are submitted to Con-
gress. 
‘‘(c) 
LOW-INCOME, 
LIMITED-RESOURCE
BOR-
ROWERS.— 
‘‘(1) RESERVE.—Notwithstanding any other pro-
vision of law, not less than 25 percent of the loans for 
farm ownership purposes for each fiscal year under 
this subtitle shall be for low-income, limited-resource 
borrowers. 
‘‘(2) NOTIFICATION.—The Secretary shall pro-
vide notification to farm borrowers under this subtitle 
in the normal course of loan making and loan serv-
icing operations, of the provisions of this subtitle re-
lating to low-income, limited-resource borrowers and 
the procedures by which persons may apply for loans 
under the low-income, limited-resource borrower pro-
gram.’’.
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Subtitle B—Miscellaneous 
SEC. 5101. STATE AGRICULTURAL MEDIATION PROGRAMS. 
Section 506 of the Agricultural Credit Act of 1987 (7 
U.S.C. 5106) is amended by striking ‘‘2015’’ and inserting 
‘‘2018’’. 
SEC. 
5102. 
LOANS 
TO 
PURCHASERS 
OF 
HIGHLY 
FRACTIONATED LAND. 
(a) IN GENERAL.—The first sentence of Public Law 
91–229 (25 U.S.C. 488) is amended— 
(1) in subsection (a), in the first sentence, by 
striking ‘‘loans from’’ and all that follows through 
‘‘1929)’’ and inserting ‘‘direct loans in a manner con-
sistent with direct loans pursuant to chapter 4 of sub-
title A of the Consolidated Farm and Rural Develop-
ment Act’’; 
(2) in subsection (b)(1)— 
(A) by striking ‘‘pursuant to section 205(c) 
of the Indian Land Consolidation Act (25 U.S.C. 
2204(c))’’; and 
(B) by inserting ‘‘or to intermediaries in 
order to establish revolving loan funds for the 
purchase of highly fractionated land under that 
section’’ before the period at the end; and 
(3) by adding at the end the following:
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‘‘(c) CONSULTATION REQUIRED.—In determining reg-
ulations and procedures to define eligible purchasers of 
highly fractionated land under this section, the Secretary 
of Agriculture shall consult with the Secretary of the Inte-
rior.’’. 
SEC. 5103. REMOVAL OF DUPLICATIVE APPRAISALS. 
Notwithstanding any other law (including regula-
tions), in making loans under the first section of Public 
Law 91–229 (25 U.S.C. 488), borrowers who are Indian 
tribes, members of Indian tribes, or tribal corporations shall 
only be required to obtain 1 appraisal under an appraisal 
standard recognized as of the date of enactment of this Act 
by the Secretary or the Secretary of the Interior. 
SEC. 5104. COMPENSATION DISCLOSURE BY FARM CREDIT 
SYSTEM INSTITUTIONS. 
(a) FINDINGS.—Congress finds that — 
(1) the reasonable disclosure to stockholders by 
Farm Credit System institutions regarding the com-
pensation of Farm Credit System institution senior 
officers is beneficial to stockholders’ understanding of 
the operation of their institutions; 
(2) transparency regarding compensation prac-
tices reinforces the cooperative nature of Farm Credit 
System institutions;
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† HR 2642 EAS 
(3) the unique cooperative structure of the Farm 
Credit System should be considered when promul-
gating rules; 
(4) the participation of stockholders in the elec-
tion of the boards of directors of Farm Credit System 
institutions provides stockholders the opportunity to 
participate in the management of their institutions; 
(5) as representatives of stockholders, the boards 
of directors of Farm Credit System institutions im-
portantly establish and oversee the compensation 
practices of Farm Credit System institutions to en-
sure the safe and sound operation of those institu-
tions; and 
(6) any regulation should strengthen and not 
hinder the ability of Farm Credit System boards of 
directors to oversee compensation practices. 
(b) IMPLEMENTATION.—Not later than 60 days after 
the date of enactment of this Act, the Farm Credit Adminis-
tration shall review its rules to reflect Congressional intent 
that a primary responsibility of the boards of directors of 
Farm Credit System institutions, as elected representatives 
of their stockholders, is to oversee compensation practices.
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TITLE VI—RURAL DEVELOPMENT 
Subtitle A—Reorganization of the 
Consolidated Farm and Rural 
Development Act 
SEC. 6001. REORGANIZATION OF THE CONSOLIDATED FARM 
AND RURAL DEVELOPMENT ACT. 
Title III of the Agricultural Act of 1961 (7 U.S.C. 
1921 et seq.) is amended to read as follows: 
‘‘TITLE III—AGRICULTURAL 
CREDIT 
‘‘SEC. 3001. SHORT TITLE; TABLE OF CONTENTS. 
‘‘(a) SHORT TITLE.—This title may be cited as the 
‘Consolidated Farm and Rural Development Act’. 
‘‘(b) TABLE OF CONTENTS.—The table of contents of 
this title is as follows: 
‘‘TITLE III—AGRICULTURAL CREDIT 
‘‘Sec. 3001. Short title; table of contents. 
‘‘Sec. 3002. Definitions. 
‘‘Subtitle A—Farmer Loans, Servicing, and Other Assistance 
‘‘CHAPTER 1—FARM OWNERSHIP LOANS 
‘‘Sec. 3101. Farm ownership loans. 
‘‘Sec. 3102. Purposes of loans. 
‘‘Sec. 3103. Conservation loan and loan guarantee program. 
‘‘Sec. 3104. Loan maximums. 
‘‘Sec. 3105. Repayment requirements for farm ownership loans. 
‘‘Sec. 3106. Limited-resource loans. 
‘‘Sec. 3107. Downpayment loan program. 
‘‘Sec. 3108. Beginning farmer and socially disadvantaged farmer contract land 
sales program. 
‘‘CHAPTER 2—OPERATING LOANS 
‘‘Sec. 3201. Operating loans. 
‘‘Sec. 3202. Purposes of loans. 
‘‘Sec. 3203. Restrictions on loans.
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‘‘Sec. 3204. Terms of loans. 
‘‘CHAPTER 3—EMERGENCY LOANS 
‘‘Sec. 3301. Emergency loans. 
‘‘Sec. 3302. Purposes of loans. 
‘‘Sec. 3303. Terms of loans. 
‘‘Sec. 3304. Production losses. 
‘‘CHAPTER 4—GENERAL FARMER LOAN PROVISIONS 
‘‘Sec. 3401. Agricultural Credit Insurance Fund. 
‘‘Sec. 3402. Guaranteed farmer loans. 
‘‘Sec. 3403. Provision of information to borrowers. 
‘‘Sec. 3404. Notice of loan service programs. 
‘‘Sec. 3405. Planting and production history guidelines. 
‘‘Sec. 3406. Special conditions and limitations on loans. 
‘‘Sec. 3407. Graduation of borrowers. 
‘‘Sec. 3408. Debt adjustment and credit counseling. 
‘‘Sec. 3409. Security servicing. 
‘‘Sec. 3410. Contracts on loan security properties. 
‘‘Sec. 3411. Debt restructuring and loan servicing. 
‘‘Sec. 3412. Relief for mobilized military reservists from certain agricultural loan 
obligations. 
‘‘Sec. 3413. Interest rate reduction program. 
‘‘Sec. 3414. Homestead property. 
‘‘Sec. 3415. Transfer of inventory land. 
‘‘Sec. 3416. Target participation rates. 
‘‘Sec. 3417. Compromise or adjustment of debts or claims by guaranteed lender. 
‘‘Sec. 3418. Waiver of mediation rights by borrowers. 
‘‘Sec. 3419. Borrower training. 
‘‘Sec. 3420. Loan assessments. 
‘‘Sec. 3421. Supervised credit. 
‘‘Sec. 3422. Market placement. 
‘‘Sec. 3423. Recordkeeping of loans by gender of borrower. 
‘‘Sec. 3424. Crop insurance requirement. 
‘‘Sec. 3425. Loan and loan servicing limitations. 
‘‘Sec. 3426. Short form certification of farm program borrower compliance. 
‘‘Sec. 3427. Underwriting forms and standards. 
‘‘Sec. 3428. Beginning farmer individual development accounts pilot program. 
‘‘Sec. 3429. Farmer loan pilot projects. 
‘‘Sec. 3430. Prohibition on use of loans for certain purposes. 
‘‘Sec. 3431. Authorization of appropriations and allocation of funds. 
‘‘Subtitle B—Rural Development 
‘‘CHAPTER 1—RURAL COMMUNITY PROGRAMS 
‘‘Sec. 3501. Water and waste disposal loans, loan guarantees, and grants. 
‘‘Sec. 3502. Community facilities loans, loan guarantees, and grants. 
‘‘Sec. 3503. Health care services. 
‘‘CHAPTER 2—RURAL BUSINESS AND COOPERATIVE DEVELOPMENT 
‘‘Sec. 3601. Business programs. 
‘‘Sec. 3602. Rural Business Investment Program.
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‘‘CHAPTER 3—GENERAL RURAL DEVELOPMENT PROVISIONS 
‘‘Sec. 3701. General provisions for loans and grants. 
‘‘Sec. 3702. Strategic economic and community development. 
‘‘Sec. 3703. Guaranteed rural development loans. 
‘‘Sec. 3704. Rural Development Insurance Fund. 
‘‘Sec. 3705. Rural economic area partnership zones. 
‘‘Sec. 3706. Streamlining applications and improving accessibility of rural devel-
opment programs. 
‘‘Sec. 3707. State Rural Development Partnership. 
‘‘CHAPTER 4—DELTA REGIONAL AUTHORITY 
‘‘Sec. 3801. Definitions. 
‘‘Sec. 3802. Delta Regional Authority. 
‘‘Sec. 3803. Economic and community development grants. 
‘‘Sec. 3804. Supplements to Federal grant programs. 
‘‘Sec. 3805. Local development districts; certification and administrative ex-
penses. 
‘‘Sec. 3806. Distressed counties and areas and nondistressed counties. 
‘‘Sec. 3807. Development planning process. 
‘‘Sec. 3808. Program development criteria. 
‘‘Sec. 3809. Approval of development plans and projects. 
‘‘Sec. 3810. Consent of States. 
‘‘Sec. 3811. Records. 
‘‘Sec. 3812. Annual report. 
‘‘Sec. 3813. Authorization of appropriations. 
‘‘Sec. 3814. Termination of authority. 
‘‘CHAPTER 5—NORTHERN GREAT PLAINS REGIONAL AUTHORITY 
‘‘Sec. 3821. Definitions. 
‘‘Sec. 3822. Northern Great Plains Regional Authority. 
‘‘Sec. 3823. Interstate cooperation for economic opportunity and efficiency. 
‘‘Sec. 3824. Economic and community development grants. 
‘‘Sec. 3825. Supplements to Federal grant programs. 
‘‘Sec. 3826. Multistate and local development districts and organizations and 
Northern Great Plains Inc. 
‘‘Sec. 3827. Distressed counties and areas and nondistressed counties. 
‘‘Sec. 3828. Development planning process. 
‘‘Sec. 3829. Program development criteria. 
‘‘Sec. 3830. Approval of development plans and projects. 
‘‘Sec. 3831. Consent of States. 
‘‘Sec. 3832. Records. 
‘‘Sec. 3833. Annual report. 
‘‘Sec. 3834. Authorization of appropriations. 
‘‘Sec. 3835. Termination of authority. 
‘‘Subtitle C—General Provisions 
‘‘Sec. 3901. Full faith and credit. 
‘‘Sec. 3902. Purchase and sale of guaranteed portions of loans. 
‘‘Sec. 3903. Administration. 
‘‘Sec. 3904. Loan moratorium and policy on foreclosures. 
‘‘Sec. 3905. Oil and gas royalty payments on loans. 
‘‘Sec. 3906. Taxation. 
‘‘Sec. 3907. Conflicts of interest.
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‘‘Sec. 3908. Loan summary statements. 
‘‘Sec. 3909. Certified lenders program. 
‘‘Sec. 3910. Loans to resident aliens. 
‘‘Sec. 3911. Expedited clearing of title to inventory property. 
‘‘Sec. 3912. Transfer of land to Secretary. 
‘‘Sec. 3913. Competitive sourcing limitations. 
‘‘Sec. 3914. Regulations. 
‘‘SEC. 3002. DEFINITIONS. 
‘‘In this title (unless the context otherwise requires): 
‘‘(1) ABLE TO OBTAIN CREDIT ELSEWHERE.— 
The term ‘able to obtain credit elsewhere’ means able 
to obtain a loan from a production credit association, 
a Federal land bank, or other responsible cooperative 
or private credit source (or, in the case of a borrower 
under section 3106, the borrower may be able to ob-
tain a loan under section 3101) at reasonable rates 
and terms, taking into consideration prevailing pri-
vate and cooperative rates and terms in the commu-
nity in or near which the applicant resides for loans 
for similar purposes and periods of time. 
‘‘(2) 
AGRICULTURAL
CREDIT
INSURANCE 
FUND.—The term ‘Agricultural Credit Insurance 
Fund’ means the fund established under section 3401. 
‘‘(3) APPROVED LENDER.—The term ‘approved 
lender’ means— 
‘‘(A) a lender approved prior to October 28, 
1992, by the Secretary under the approved lender 
program established by exhibit A to subpart B of
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part 1980 of title 7, Code of Federal Regulations 
(as in effect on January 1, 1991); or 
‘‘(B) a lender certified under section 3909. 
‘‘(4) AQUACULTURE.—The term ‘aquaculture’ 
means the culture or husbandry of aquatic animals or 
plants by private industry for commercial purposes, 
including the culture and growing of fish by private 
industry for the purpose of creating or augmenting 
publicly owned and regulated stocks of fish. 
‘‘(5) BEGINNING FARMER.—The term ‘beginning 
farmer’ has the meaning given the term by the Sec-
retary. 
‘‘(6) BORROWER.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘borrower’ means an 
individual or entity who has an outstanding ob-
ligation to the Secretary under any loan made 
or guaranteed under this title, without regard to 
whether the loan has been accelerated. 
‘‘(B) EXCLUSIONS.—The term ‘borrower’ 
does not include an individual or entity all of 
whose loans and accounts have been foreclosed on 
or liquidated, voluntarily or otherwise. 
‘‘(7) COUNTY
COMMITTEE.—The term ‘county 
committee’ means the appropriate county committee
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established under section 8(b)(5) of the Soil Conserva-
tion and Domestic Allotment Act (16 U.S.C. 
590h(b)(5)). 
‘‘(8) DEBT FORGIVENESS.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘debt forgiveness’ 
means reducing or terminating a loan made or 
guaranteed under this title, in a manner that re-
sults in a loss to the Secretary, through— 
‘‘(i) writing down or writing off a loan 
under section 3411; 
‘‘(ii) compromising, adjusting, reduc-
ing, or charging-off a debt or claim under 
section 3903; 
‘‘(iii) paying a loss on a guaranteed 
loan under this title; or 
‘‘(iv) discharging a debt as a result of 
bankruptcy. 
‘‘(B) LOAN
RESTRUCTURING.—The term 
‘debt forgiveness’ does not include consolidation, 
rescheduling, reamortization, or deferral. 
‘‘(9) DEPARTMENT.—The term ‘Department’ 
means the Department of Agriculture.
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‘‘(10) DIRECT
LOAN.—The term ‘direct loan’ 
means a loan made by the Secretary from appro-
priated funds. 
‘‘(11) ENTITY.—The term ‘entity’ means a cor-
poration, farm cooperative, partnership, joint oper-
ation, governmental entity, or other legal organiza-
tion, as determined by the Secretary. 
‘‘(12) FARM.—The term ‘farm’ means an oper-
ation involved in— 
‘‘(A) the production of an agricultural com-
modity; 
‘‘(B) ranching; or 
‘‘(C) aquaculture, in a controlled environ-
ment. 
‘‘(13) FARMER.—The term ‘farmer’ means an in-
dividual or entity engaged primarily and directly 
in— 
‘‘(A) the production of an agricultural com-
modity; 
‘‘(B) ranching; or 
‘‘(C) aquaculture, in a controlled environ-
ment. 
‘‘(14) FARMER
PROGRAM
LOAN.—The term 
‘farmer program loan’ means—
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† HR 2642 EAS 
‘‘(A) a farm ownership loan under section 
3101; 
‘‘(B) a conservation loan under section 
3103; 
‘‘(C) an operating loan under section 3201; 
‘‘(D) an emergency loan under section 3301; 
‘‘(E) an economic emergency loan under 
section 202 of the Emergency Agricultural Credit 
Adjustment Act of 1978 (7 U.S.C. prec. 1961 
note; Public Law 95–334); 
‘‘(F) a loan for a farm service building 
under section 502 of the Housing Act of 1949 (42 
U.S.C. 1472); 
‘‘(G) an economic opportunity loan under 
section 602 of the Economic Opportunity Act of 
1964 (Public Law 88–452; 42 U.S.C. 2942 note) 
(as it existed before the amendment made by sec-
tion 683(a) of the Omnibus Budget Reconcili-
ation Act of 1981 (Public Law 97–35; 95 Stat. 
519)); 
‘‘(H) a softwood timber loan under section 
608 of the Agricultural Programs Adjustment 
Act of 1984 (7 U.S.C. 1981 note; Public Law 
98–258); or
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‘‘(I) any other loan described in section 
343(a)(10) of this title (as it existed before the 
amendment made by section 2 of the Agriculture 
Reform, Food, and Jobs Act of 2013) that is out-
standing on the date of enactment of that Act. 
‘‘(15) FARM SERVICE AGENCY.—The term ‘Farm 
Service Agency’ means the offices of the Farm Service 
Agency to which the Secretary delegates responsibility 
to carry out this title. 
‘‘(16) GOVERNMENTAL ENTITY.—The term ‘gov-
ernmental entity’ means any agency of a State or a 
unit of local government of a State, or subdivision 
thereof. 
‘‘(17) GUARANTEE.—The term ‘guarantee’ means 
guaranteeing the payment of a loan originated, held, 
and serviced by a private financial agency, or lender, 
approved by the Secretary. 
‘‘(18) HIGHLY
ERODIBLE
LAND.—The term 
‘highly erodible land’ has the meaning given the term 
in section 1201(a) of the Food Security Act of 1985 
(16 U.S.C. 3801(a)). 
‘‘(19) 
HOMESTEAD
RETENTION.—The 
term 
‘homestead retention’ means homestead retention as 
authorized under section 3414.
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‘‘(20) INDIAN TRIBE.—The term ‘Indian tribe’ 
means a Federal or State-recognized Indian tribe or 
other federally recognized Indian tribal group (in-
cluding a Tribal College or University, as defined in 
section 316(b) of the Higher Education Act of 1965 
(20 U.S.C. 1059c(b)). 
‘‘(21) LOAN SERVICE PROGRAM.—The term ‘loan 
service program’ means, with respect to a farmer pro-
gram loan borrower, a primary loan service program 
or a homestead retention program. 
‘‘(22) NATURAL OR MAJOR DISASTER OR EMER-
GENCY.—The term ‘natural or major disaster or 
emergency’ means— 
‘‘(A) a disaster due to nonmanmade causes 
declared by the Secretary; or 
‘‘(B) a major disaster or emergency des-
ignated by the President under the Robert T. 
Stafford Disaster Relief and Emergency Assist-
ance Act (42 U.S.C. 5121 et seq.). 
‘‘(23) PRIMARY LOAN SERVICE PROGRAM.—The 
term ‘primary loan service program’ means, with re-
spect to a farmer program loan— 
‘‘(A) loan consolidation, rescheduling, or re-
amortization;
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† HR 2642 EAS 
‘‘(B) interest rate reduction, including the 
use of the limited resource program; 
‘‘(C) loan restructuring, including deferral, 
set aside, or writing down of the principal or ac-
cumulated interest charges, or both, of the loan; 
or 
‘‘(D) any combination of actions described 
in subparagraphs (A), (B), and (C). 
‘‘(24) PRIME
FARMLAND.—The term ‘prime 
farmland’ means prime farmland and unique farm-
land (as defined in subsections (a) and (b) of section 
657.5 of title 7, Code of Federal Regulations (1980)). 
‘‘(25) PROJECT.—For purposes of section 3501, 
the term ‘project’ includes a facility providing central 
service or a facility serving an individual property, 
or both. 
‘‘(26) QUALIFIED
BEGINNING
FARMER.—The 
term ‘qualified beginning farmer’ means an appli-
cant, regardless of whether the applicant is partici-
pating in a program under section 3107, who— 
‘‘(A) is eligible for assistance under subtitle 
A; 
‘‘(B) has not operated a farm, or has oper-
ated a farm for not more than 10 years;
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† HR 2642 EAS 
‘‘(C) in the case of a cooperative, corpora-
tion, partnership, or joint operation, has mem-
bers, stockholders, partners, or joint operators 
who are all related to each other by blood or 
marriage; 
‘‘(D) in the case of a farmer who is the 
owner and operator of a farm— 
‘‘(i) in the case of a loan made to an 
individual, individually or with the imme-
diate family of the applicant— 
‘‘(I) materially and substantially 
participates in the operation of the 
farm; and 
‘‘(II) provides substantial day-to- 
day labor and management of the 
farm, consistent with the practices in 
the State or county in which the farm 
is located; or 
‘‘(ii)(I) in the case of a loan made to 
a cooperative, corporation, partnership, or 
joint operation, has members, stockholders, 
partners, or joint operators who materially 
and substantially participate in the oper-
ation of the farm; and
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‘‘(II) in the case of a loan made to a 
corporation, has stockholders who all qual-
ify individually as beginning farmers; 
‘‘(E) in the case of an applicant seeking to 
become an owner and operator of a farm— 
‘‘(i) in the case of a loan made to an 
individual, individually or with the imme-
diate family of the applicant, will— 
‘‘(I) materially and substantially 
participate in the operation of the 
farm; and 
‘‘(II) provide substantial day-to- 
day labor and management of the 
farm, consistent with the practices in 
the State or county in which the farm 
is located; or 
‘‘(ii)(I) in the case of a loan made to 
a cooperative, corporation, partnership, or 
joint operation, will have members, stock-
holders, partners, or joint operators who 
will materially and substantially partici-
pate in the operation of the farm; and 
‘‘(II) in the case of a loan made to a 
corporation, has stockholders who will all 
qualify individually as beginning farmers;
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† HR 2642 EAS 
‘‘(F) agrees to participate in such loan as-
sessment, borrower training, and financial man-
agement programs as the Secretary may require; 
‘‘(G)(i) does not own farm land; or 
‘‘(ii) directly or through interests in family 
farm corporations, owns farm land, the aggre-
gate acreage of which does not exceed 30 percent 
of the average acreage of the farms, as the case 
may be, in the county in which the farm oper-
ations of the applicant are located, as reported 
in the most recent census of agriculture taken in 
accordance with the Census of Agriculture Act of 
1997 (7 U.S.C. 2204g et seq.), except that this 
subparagraph shall not apply to a loan made or 
guaranteed under chapter 2 of subtitle A; and 
‘‘(H) demonstrates that the available re-
sources of the applicant and any spouse of the 
applicant are not sufficient to enable the appli-
cant to farm on a viable scale. 
‘‘(27) RECREATIONAL PURPOSE.—For purposes 
of section 3410, the term ‘recreational purpose’ has 
the meaning provided by the Secretary, but shall in-
clude hunting. 
‘‘(28) RURAL AND RURAL AREA.—
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† HR 2642 EAS 
‘‘(A) IN GENERAL.—Subject to any deter-
mination made under subparagraph (B), the 
terms ‘rural’ and ‘rural area’ mean any area 
other than— 
‘‘(i) a city or town that has a popu-
lation of greater than 50,000 inhabitants; 
and 
‘‘(ii) any urbanized area contiguous 
and adjacent to a city or town described in 
clause (i). 
‘‘(B) DETERMINATION OF AREAS RURAL IN 
CHARACTER.— 
‘‘(i) IN GENERAL.—If part of an area 
described in subparagraph (A)(ii) was eligi-
ble under the definitions of the terms ‘rural’ 
and ‘rural area’ in section 343 (as in effect 
on the day before the date of enactment of 
the Agriculture Reform, Food, and Jobs Act 
of 2013) for community facility, water and 
waste disposal, and broadband programs, 
that area shall remain eligible unless the 
Secretary, acting through the Under Sec-
retary for Rural Development (referred to 
in this subparagraph as the ‘Under Sec-
retary’), determines the area is no longer
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† HR 2642 EAS 
rural, based on the criteria described in 
clause (iii). 
‘‘(ii) OTHER AREAS.—On petition of a 
unit of local government in an urbanized 
area described in subparagraph (A)(ii), or 
on the initiative of the Under Secretary, the 
Under Secretary may determine that part 
of an area is rural, based on the criteria de-
scribed in clause (iii). 
‘‘(iii) CRITERIA.—In making a deter-
mination under clause (i), the Under Sec-
retary shall consider— 
‘‘(I) population density; 
‘‘(II) economic conditions, favor-
ing a rural determination for areas 
facing— 
‘‘(aa) chronic unemployment 
in excess of statewide averages; 
‘‘(bb) sudden loss of employ-
ment from natural disaster or the 
loss of a significant employer in 
the area; or 
‘‘(cc) chronic poverty dem-
onstrated at the census block or 
county level compared to state-
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† HR 2642 EAS 
wide median household income; 
and 
‘‘(III) commuting patterns, favor-
ing a rural determination for areas 
that can demonstrate higher propor-
tions of the population living and 
working in the area. 
‘‘(iv) ADMINISTRATION.—In carrying 
out this subparagraph, the Under Secretary 
shall— 
‘‘(I) not delegate the authority to 
carry out this subparagraph; 
‘‘(II) not make a determination 
under clause (i) until the date that is 
3 years after the date of enactment of 
the Agriculture Reform, Food, and 
Jobs Act of 2013; 
‘‘(III) consult with the applicable 
rural development State or regional di-
rector of the Department and the Gov-
ernor of the respective State; 
‘‘(IV) provide an opportunity to 
appeal to the Under Secretary a deter-
mination made under this subpara-
graph;
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† HR 2642 EAS 
‘‘(V) release to the public notice of 
a petition filed or initiative of the 
Under Secretary under this subpara-
graph not later than 30 days after re-
ceipt of the petition or the commence-
ment of the initiative, as appropriate; 
‘‘(VI) 
make 
a 
determination 
under this subparagraph not less than 
15 days, and not more than 60 days, 
after the release of the notice under 
subclause (V); and 
‘‘(VII) submit to the Committee 
on Agriculture of the House of Rep-
resentatives and the Committee on Ag-
riculture, Nutrition, and Forestry of 
the Senate an annual report on actions 
taken to carry out this subparagraph. 
‘‘(v) HAWAII AND PUERTO RICO.—Not-
withstanding any other provision of this 
subsection, within the areas of the County of 
Honolulu, Hawaii, and the Commonwealth 
of Puerto Rico, the Under Secretary may 
designate any part of the areas as a rural 
area if the Under Secretary determines that 
the part is not urban in character, other
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† HR 2642 EAS 
than any area included in the Honolulu 
Census Designated Place or the San Juan 
Census Designated Place. 
‘‘(C) EXCLUSIONS.—Notwithstanding any 
other provision of this paragraph, in deter-
mining which census blocks in an urbanized area 
are not in a rural area (as defined in this para-
graph), the Secretary shall exclude any cluster of 
census blocks that would otherwise be considered 
not in a rural area only because the cluster is 
adjacent to not more than 2 census blocks that 
are otherwise considered not in a rural area 
under this paragraph. 
‘‘(29) SEASONED DIRECT LOAN BORROWER.—The 
term ‘seasoned direct loan borrower’ means a bor-
rower who could reasonably be expected to qualify for 
commercial credit using criteria determined by the 
Secretary. 
‘‘(30) SECRETARY.—The term ‘Secretary’ means 
the Secretary of Agriculture. 
‘‘(31) SOCIALLY DISADVANTAGED FARMER.—The 
term ‘socially disadvantaged farmer’ means a farmer 
who is a member of a socially disadvantaged group. 
‘‘(32) SOCIALLY
DISADVANTAGED
GROUP.—The 
term ‘socially disadvantaged group’ means a group
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whose members have been subjected to racial, ethnic, 
or gender prejudice because of the identity of the 
members as members of a group without regard to the 
individual qualities of the members. 
‘‘(33) SOLAR ENERGY.—The term ‘solar energy’ 
means energy derived from sources (other than fossil 
fuels) and technologies included in the Federal Non-
nuclear Energy Research and Development Act of 
1974 (42 U.S.C. 5901 et seq.). 
‘‘(34) STATE.—The term ‘State’ means— 
‘‘(A) in this title (other than subtitle A), 
each of the 50 States, the Commonwealth of 
Puerto Rico, the Virgin Islands, Guam, Amer-
ican Samoa, the Commonwealth of the Northern 
Mariana Islands, the Republic of the Marshall 
Islands, the Federated States of Micronesia, and 
the Republic of Palau; and 
‘‘(B) in subtitle A, each of the 50 States, the 
Commonwealth of Puerto Rico, the Virgin Is-
lands, Guam, American Samoa, the Common-
wealth of the Northern Mariana Islands, and, to 
the extent the Secretary determines it to be fea-
sible and appropriate, the Republic of the Mar-
shall Islands, the Federated States of Micronesia, 
and the Republic of Palau.
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‘‘(35) STATE
BEGINNING
FARMER
PROGRAM.— 
The term ‘State beginning farmer program’ means 
any program that is— 
‘‘(A) carried out by, or under contract with, 
a State; and 
‘‘(B) designed to assist qualified beginning 
farmers in obtaining the financial assistance 
necessary to enter agriculture and establish via-
ble farming operations. 
‘‘(36) VETERAN.—The term ‘veteran’ has the 
meaning given the term in section 101 of title 38, 
United States Code. 
‘‘(37) WETLAND.—The term ‘wetland’ has the 
meaning given the term in section 1201(a) of the 
Food Security Act of 1985 (16 U.S.C. 3801(a)). 
‘‘(38) WILDLIFE.—The term ‘wildlife’ means fish 
or wildlife (as defined in section 2(a) of the Lacey Act 
Amendments of 1981 (16 U.S.C. 3371(a))). 
‘‘Subtitle B—Rural Development 
‘‘CHAPTER 1—RURAL COMMUNITY 
PROGRAMS 
‘‘SEC. 3501. WATER AND WASTE DISPOSAL LOANS, LOAN 
GUARANTEES, AND GRANTS. 
‘‘(a) IN GENERAL.—The Secretary may make grants 
and loans and issue loan guarantees (including a guarantee
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† HR 2642 EAS 
of a loan financed by the net proceeds of a bond described 
in section 142(a) of the Internal Revenue Code of 1986) to 
eligible entities described in subsection (b) for projects in 
rural areas that primarily serve rural residents to provide 
for— 
‘‘(1) the development, storage, treatment, purifi-
cation, or distribution of water or the collection, 
treatment, or disposal of waste; and 
‘‘(2) financial assistance and other aid in the 
planning of projects for purposes described in para-
graph (1). 
‘‘(b) ELIGIBLE ENTITIES.—Entities eligible for assist-
ance described in subsection (a) are— 
‘‘(1) associations (including corporations not op-
erated for profit); 
‘‘(2) Indian tribes; 
‘‘(3) public and quasi-public agencies; and 
‘‘(4) in the case of a project to attach an indi-
vidual property in a rural area to a water system to 
alleviate a health risk, an individual. 
‘‘(c) LOAN AND LOAN GUARANTEE REQUIREMENTS.— 
In connection with loans made or guaranteed under this 
section, the Secretary shall require the applicant— 
‘‘(1) to certify in writing, and the Secretary 
shall determine, that the applicant is unable to obtain
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† HR 2642 EAS 
credit elsewhere to finance the actual needs of the ap-
plicant at reasonable rates and terms, taking into 
consideration prevailing private and cooperative rates 
and terms in the community in or near which the ap-
plicant resides for loans for similar purposes and pe-
riods of time; and 
‘‘(2) to furnish an appropriate written financial 
statement. 
‘‘(d) GRANT AMOUNTS.— 
‘‘(1) MAXIMUM.—Except as otherwise provided 
in this subsection, the amount of any grant made 
under this section shall not exceed 75 percent of the 
development cost of the project for which the grant is 
provided. 
‘‘(2) GRANT RATE.—The Secretary shall establish 
the grant rate for each project in conformity with reg-
ulations issued by the Secretary that shall provide for 
a graduated scale of grant rates that establish higher 
rates for projects in communities that have— 
‘‘(A) lower community population; 
‘‘(B) higher rates of outmigration; and 
‘‘(C) lower income levels. 
‘‘(3) LOCAL
SHARE
REQUIREMENTS.—Grants 
made under this section may be used to pay the local 
share requirements of another Federal grant-in-aid
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† HR 2642 EAS 
program to the extent permitted under the law pro-
viding for the grant-in-aid program. 
‘‘(e) SPECIAL GRANTS.— 
‘‘(1) REVOLVING FUNDS FOR FINANCING WATER 
AND WASTEWATER PROJECTS.— 
‘‘(A) IN
GENERAL.—The Secretary may 
make grants to qualified, nonprofit entities in 
rural areas to capitalize revolving funds for the 
purpose of providing financing to eligible enti-
ties for— 
‘‘(i) predevelopment costs associated 
with 
proposed 
water 
and 
wastewater 
projects or with existing water and waste-
water systems; and 
‘‘(ii) short-term costs incurred for re-
placement equipment, small-scale extension 
services, or other small capital projects that 
are not part of the regular operations and 
maintenance activities of existing water 
and wastewater systems. 
‘‘(B) MAXIMUM AMOUNT OF FINANCING.— 
The amount of financing made to an eligible en-
tity under this paragraph shall not exceed— 
‘‘(i) $100,000 for costs described in 
subparagraph (A)(i); and
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‘‘(ii) $100,000 for costs described in 
subparagraph (A)(ii). 
‘‘(C) TERM.—The term of financing pro-
vided to an eligible entity under this paragraph 
shall not exceed 10 years. 
‘‘(D) 
ADMINISTRATION.—The 
Secretary 
shall limit the amount of grant funds that may 
be used by a grant recipient for administrative 
costs incurred under this paragraph. 
‘‘(E) ANNUAL REPORT.—A nonprofit entity 
receiving a grant under this paragraph shall 
submit to the Secretary an annual report that 
describes the number and size of communities 
served and the type of financing provided. 
‘‘(F) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—There is authorized to be appropriated 
to carry out this paragraph $30,000,000 for each 
of fiscal years 2014 through 2018. 
‘‘(2) EMERGENCY
AND
IMMINENT
COMMUNITY 
WATER ASSISTANCE PROGRAM.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
provide grants in accordance with this para-
graph to assist the residents of rural areas and 
small communities to secure adequate quantities 
of safe water—
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† HR 2642 EAS 
‘‘(i) after a significant decline in the 
quantity or quality of water available from 
the water supplies of the rural areas and 
small communities, or when such a decline 
is imminent; or 
‘‘(ii) when repairs, partial replace-
ment, or significant maintenance efforts on 
established water systems would remedy— 
‘‘(I) an acute or imminent short-
age of quality water; or 
‘‘(II) a significant or imminent 
decline in the quantity or quality of 
water that is available. 
‘‘(B) PRIORITY.—In carrying out subpara-
graph (A), the Secretary shall— 
‘‘(i) give priority to projects described 
in subparagraph (A)(i); and 
‘‘(ii) provide at least 70 percent of all 
grants under this paragraph to those 
projects. 
‘‘(C) ELIGIBILITY.—To be eligible to obtain 
a grant under this paragraph, an applicant 
shall— 
‘‘(i) be a public or private nonprofit 
entity; and
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† HR 2642 EAS 
‘‘(ii) in the case of a grant made under 
subparagraph (A)(i), demonstrate to the 
Secretary that the decline referred to in that 
subparagraph occurred, or will occur, not 
later than 2 years after the date on which 
the application was filed for the grant. 
‘‘(D) USES.— 
‘‘(i) IN GENERAL.—Grants made under 
this paragraph may be used— 
‘‘(I) for waterline extensions from 
existing 
systems, 
laying 
of 
new 
waterlines, repairs, significant mainte-
nance, digging of new wells, equipment 
replacement, and hook and tap fees; 
‘‘(II) for any other appropriate 
purpose associated with developing 
sources of, treating, storing, or distrib-
uting water; 
‘‘(III) to assist communities in 
complying with the requirements of the 
Federal Water Pollution Control Act 
(33 U.S.C. 1251 et seq.) or the Safe 
Drinking Water Act (42 U.S.C. 300f et 
seq.); and
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‘‘(IV) to provide potable water to 
communities through other means. 
‘‘(ii) JOINT PROPOSALS.— 
‘‘(I) IN GENERAL.—Subject to the 
restrictions in subparagraph (E), noth-
ing in this paragraph precludes rural 
communities from submitting joint 
proposals for emergency water assist-
ance. 
‘‘(II) CONSIDERATION
OF
RE-
STRICTIONS.—The restrictions in sub-
paragraph (E) shall be considered in 
the aggregate, depending on the num-
ber of communities involved. 
‘‘(E) RESTRICTIONS.— 
‘‘(i) MAXIMUM
INCOME.—No grant 
provided under this paragraph shall be used 
to assist any rural area or community that 
has a median household income in excess of 
the State nonmetropolitan median house-
hold income according to the most recent de-
cennial census of the United States. 
‘‘(ii) SET-ASIDE FOR SMALLER COMMU-
NITIES.—Not less than 50 percent of the 
funds allocated under this paragraph shall
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† HR 2642 EAS 
be allocated to rural communities with pop-
ulations that do not exceed 3,000 inhab-
itants. 
‘‘(F) MAXIMUM
GRANTS.—Grants made 
under this paragraph may not exceed— 
‘‘(i) in the case of each grant made 
under subparagraph (A)(i), $500,000; and 
‘‘(ii) in the case of each grant made 
under subparagraph (A)(ii), $150,000. 
‘‘(G) FULL FUNDING.—Subject to subpara-
graph (F), grants under this paragraph shall be 
made in an amount equal to 100 percent of the 
costs of the projects conducted under this para-
graph. 
‘‘(H) APPLICATION.— 
‘‘(i) NATIONALLY COMPETITIVE APPLI-
CATION PROCESS.— 
‘‘(I) IN GENERAL.—The Secretary 
shall develop a nationally competitive 
application process to award grants 
under this paragraph. 
‘‘(II) REQUIREMENTS.—The proc-
ess shall include criteria for evaluating 
applications, 
including 
population, 
median household income, and the se-
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† HR 2642 EAS 
verity of the decline, or imminent de-
cline, in the quantity or quality of 
water. 
‘‘(ii) TIMING OF REVIEW OF APPLICA-
TIONS.— 
‘‘(I) SIMPLIFIED APPLICATION.— 
The application process developed by 
the Secretary under clause (i) shall in-
clude a simplified application form 
that will permit expedited consider-
ation of an application for a grant 
filed under this paragraph. 
‘‘(II) 
PRIORITY
REVIEW.—In 
processing applications for any water 
or waste grant or loan authorized 
under this section, the Secretary shall 
afford priority processing to an appli-
cation for a grant under this para-
graph to the extent funds will be avail-
able for an award on the application 
at the conclusion of priority proc-
essing. 
‘‘(III) 
TIMING.—The 
Secretary 
shall, to the maximum extent prac-
ticable, review and act on an applica-
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† HR 2642 EAS 
tion under this paragraph not later 
than 60 days after the date on which 
the application is submitted to the Sec-
retary. 
‘‘(I) FUNDING.— 
‘‘(i) RESERVATION.— 
‘‘(I) IN GENERAL.—For each fis-
cal year, not less than 3 nor more than 
5 percent of the total amount made 
available to carry out this section for 
the fiscal year shall be reserved for 
grants under this paragraph. 
‘‘(II) RELEASE.—Funds reserved 
under subclause (I) for a fiscal year 
shall be reserved only until July 1 of 
the fiscal year. 
‘‘(ii) AUTHORIZATION OF APPROPRIA-
TIONS.—In addition to funds made avail-
able under clause (i), there is authorized to 
be appropriated to carry out this paragraph 
$35,000,000 for each of fiscal years 2014 
through 2018. 
‘‘(3) WATER AND WASTE FACILITY LOANS AND 
GRANTS TO ALLEVIATE HEALTH RISKS.—
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† HR 2642 EAS 
‘‘(A) DEFINITION
OF
COOPERATIVE.—In 
this paragraph, the term ‘cooperative’ means a 
cooperative formed specifically for the purpose of 
the installation, expansion, improvement, or op-
eration of water supply or waste disposal facili-
ties or systems. 
‘‘(B) LOANS
AND
GRANTS
TO
PERSONS 
OTHER THAN INDIVIDUALS.— 
‘‘(i) IN GENERAL.—The Secretary shall 
make or guarantee loans and make grants 
to provide for the conservation, develop-
ment, use, and control of water (including 
the extension or improvement of existing 
water supply systems) and the installation 
or improvement of drainage or waste dis-
posal facilities and essential community fa-
cilities, including necessary related equip-
ment, training, and technical assistance 
to— 
‘‘(I) rural water supply corpora-
tions, cooperatives, or similar entities; 
‘‘(II) Indian tribes on Federal or 
State reservations and other federally 
recognized Indian tribes;
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† HR 2642 EAS 
‘‘(III) rural or native villages in 
the State of Alaska; 
‘‘(IV) native tribal health consor-
tiums; 
‘‘(V) public agencies; and 
‘‘(VI) Native Hawaiian Home 
Lands. 
‘‘(ii) ELIGIBLE PROJECTS.—Loans and 
grants described in clause (i) shall be avail-
able only to provide the described water and 
waste facilities and services to communities 
whose residents face significant health risks, 
as determined by the Secretary, due to the 
fact that a significant proportion of the 
residents of the community do not have ac-
cess to, or are not served by, adequate af-
fordable— 
‘‘(I) water supply systems; or 
‘‘(II) waste disposal facilities. 
‘‘(iii) MATCHING
REQUIREMENTS.— 
For entities described under subclauses 
(III), (IV), or (V) of clause (i) to be eligible 
to receive a grant for water supply systems 
or waste disposal facilities, the State in 
which the project will occur shall provide 25
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† HR 2642 EAS 
percent in matching funds from non-Fed-
eral sources. 
‘‘(iv) CERTAIN AREAS TARGETED.— 
‘‘(I) IN
GENERAL.—Loans and 
grants under clause (i) shall be made 
only if the loan or grant funds will be 
used primarily to provide water or 
waste services, or both, to residents of 
a county or census area— 
‘‘(aa) the per capita income 
of the residents of which is not 
more than 70 percent of the na-
tional average per capita income, 
as determined by the Department 
of Commerce; and 
‘‘(bb) the unemployment rate 
of the residents of which is not 
less than 125 percent of the na-
tional 
average 
unemployment 
rate, as determined by the Bureau 
of Labor Statistics. 
‘‘(II) 
EXCEPTIONS.—Notwith-
standing subclause (I), loans and 
grants under clause (i) may also be 
made if the loan or grant funds will be
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† HR 2642 EAS 
used primarily to provide water or 
waste services, or both, to residents 
of— 
‘‘(aa) a rural area that was 
recognized as a colonia as of Octo-
ber 1, 1989; or 
‘‘(bb) 
an 
area 
described 
under subclause (II), (III), or 
(VI) of clause (i). 
‘‘(C) LOANS
AND
GRANTS
TO
INDIVID-
UALS.— 
‘‘(i) IN GENERAL.—The Secretary shall 
make or guarantee loans and make grants 
to individuals who reside in a community 
described in subparagraph (B)(i) for the 
purpose of extending water supply and 
waste disposal systems, connecting the sys-
tems to the residences of the individuals, or 
installing plumbing and fixtures within the 
residences of the individuals to facilitate the 
use of the water supply and waste disposal 
systems. 
‘‘(ii) INTEREST.—Loans described in 
clause (i) shall be at a rate of interest no 
greater than the Federal Financing Bank
614 
† HR 2642 EAS 
rate on loans of a similar term at the time 
the loans are made. 
‘‘(iii) AMORTIZATION.—The repayment 
of loans described in clause (i) shall be am-
ortized over the expected life of the water 
supply or waste disposal system to which 
the residence of the borrower will be con-
nected. 
‘‘(iv) MANNER IN WHICH LOANS AND 
GRANTS
ARE
TO
BE
MADE.—Loans and 
grants to individuals under clause (i) shall 
be made— 
‘‘(I) directly to the individuals by 
the Secretary; or 
‘‘(II) to the individuals through 
the rural water supply corporation, co-
operative, or similar entity, or public 
agency, providing the water supply or 
waste disposal services, pursuant to 
regulations issued by the Secretary. 
‘‘(D) PREFERENCE.—The Secretary shall 
give preference in the awarding of loans and 
grants under subparagraphs (B) and (C) to enti-
ties described in clause (i) of subparagraph (B) 
that propose to provide water supply or waste
615 
† HR 2642 EAS 
disposal services to the residents of Indian res-
ervations, rural or native villages in the State of 
Alaska, Native Hawaiian Home Lands, and 
those rural subdivisions commonly referred to as 
colonias, that are characterized by substandard 
housing, inadequate roads and drainage, and a 
lack of adequate water or waste facilities. 
‘‘(E) RELATIONSHIP
TO
OTHER
AUTHOR-
ITY.—Notwithstanding any other provision of 
law, the head of any Federal agency may enter 
into interagency agreements with Federal, State, 
tribal, and other entities to share resources, in-
cluding transferring and accepting funds, equip-
ment, or other supplies, to carry out the activi-
ties described in this paragraph. 
‘‘(F) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—There are authorized to be appro-
priated— 
‘‘(i) for grants under this paragraph, 
$60,000,000 for each fiscal year; 
‘‘(ii) for loans under this paragraph, 
$60,000,000 for each fiscal year; and 
‘‘(iii) in addition to grants provided 
under clause (i), for grants under this sec-
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† HR 2642 EAS 
tion to benefit Indian tribes, $20,000,000 
for each fiscal year. 
‘‘(4) SOLID WASTE MANAGEMENT GRANTS.— 
‘‘(A) IN
GENERAL.—The Secretary may 
make grants to nonprofit organizations for the 
provision of regional technical assistance to local 
and regional governments and related agencies 
for the purpose of reducing or eliminating pollu-
tion of water resources and improving the plan-
ning and management of solid waste disposal fa-
cilities in rural areas. 
‘‘(B) 
TECHNICAL
ASSISTANCE
GRANT 
AMOUNTS.—Grants made under this paragraph 
for the provision of technical assistance shall be 
made for 100 percent of the cost of the technical 
assistance. 
‘‘(C) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—There is authorized to be appropriated 
to carry out this paragraph $10,000,000 for each 
of fiscal years 2014 through 2018. 
‘‘(5) RURAL
WATER
AND
WASTEWATER
TECH-
NICAL ASSISTANCE AND TRAINING PROGRAMS.— 
‘‘(A) GRANTS TO NONPROFITS.— 
‘‘(i) IN GENERAL.—The Secretary may 
make grants to nonprofit organizations to
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† HR 2642 EAS 
enable the organizations to provide to asso-
ciations that provide water and wastewater 
services in rural areas technical assistance 
and training— 
‘‘(I) to identify, and evaluate al-
ternative solutions to, problems relat-
ing to the obtaining, storage, treat-
ment, purification, or distribution of 
water or the collection, treatment, or 
disposal of waste in rural areas; 
‘‘(II) to prepare applications to 
receive financial assistance for any 
purpose specified in subsection (a)(1) 
from any public or private source; and 
‘‘(III) to improve the operation 
and maintenance practices at any ex-
isting works for the storage, treatment, 
purification, or distribution of water 
or the collection, treatment, or disposal 
of waste in rural areas. 
‘‘(ii) SELECTION PRIORITY.—In select-
ing recipients of grants to be made under 
clause (i), the Secretary shall give priority 
to nonprofit organizations that have experi-
ence in providing the technical assistance
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† HR 2642 EAS 
and training described in clause (i) to asso-
ciations serving rural areas in which— 
‘‘(I) residents have low income; 
and 
‘‘(II) water supply systems or 
waste facilities are unhealthful. 
‘‘(iii) FUNDING.— 
‘‘(I) IN GENERAL.—Except as pro-
vided in subclause (II), not less than 1 
nor more than 3 percent of any funds 
made available to carry out water and 
waste disposal projects described in 
subsection (a) for any fiscal year shall 
be reserved for grants under this para-
graph. 
‘‘(II) EXCEPTION.—The minimum 
amount specified in subclause (I) shall 
not apply if the aggregate amount of 
grant funds requested by applications 
that qualify for grants received by the 
Secretary from eligible nonprofit orga-
nizations for the fiscal year totals less 
than 1 percent of those funds. 
‘‘(B) RURAL WATER AND WASTEWATER CIR-
CUIT RIDER PROGRAM.—
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† HR 2642 EAS 
‘‘(i) IN GENERAL.—The Secretary shall 
continue a national rural water and waste-
water circuit rider program that— 
‘‘(I) is consistent with the activi-
ties and results of the program con-
ducted before January 1, 2012, as de-
termined by the Secretary; and 
‘‘(II) received funding from the 
Secretary, acting through the Adminis-
trator of the Rural Utilities Service. 
‘‘(ii) AUTHORIZATION OF APPROPRIA-
TIONS.—There is authorized to be appro-
priated to carry out this subparagraph 
$25,000,000 for fiscal year 2014 and each 
fiscal year thereafter. 
‘‘(6) SEARCH PROGRAM.— 
‘‘(A) IN GENERAL.—The Secretary may es-
tablish a Special Evaluation Assistance for 
Rural Communities and Households (SEARCH) 
program to make predevelopment planning 
grants for feasibility studies, design assistance, 
and technical assistance, to financially distressed 
communities in rural areas with populations of 
2,500 or fewer inhabitants for water and waste 
disposal projects described in this section.
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† HR 2642 EAS 
‘‘(B) TERMS.— 
‘‘(i) DOCUMENTATION.—With respect 
to grants made under this paragraph, the 
Secretary shall require the lowest quantity 
of documentation practicable. 
‘‘(ii) 
MATCHING.—Notwithstanding 
any other provision of this section, the Sec-
retary may fund up to 100 percent of the 
eligible costs of grants provided under this 
paragraph, as determined by the Secretary. 
‘‘(iii) FUNDING.—The Secretary may 
use not more than 4 percent of the total 
amount of funds made available for a fiscal 
year for water, waste disposal, and essential 
community facility activities under this 
chapter to carry out this paragraph. 
‘‘(C) RELATIONSHIP
TO
OTHER
AUTHOR-
ITY.— 
‘‘(i) IN GENERAL.—The funds and au-
thorities provided under this paragraph are 
in addition to any other funds or authori-
ties the Secretary may have to carry out ac-
tivities described in this section. 
‘‘(ii) AUTHORIZED
ACTIVITIES.—The 
Secretary may furnish financial assistance
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† HR 2642 EAS 
or other aid in planning projects for the 
purposes described in subparagraph (A). 
‘‘(f) PRIORITY.—In making grants and loans, and 
guaranteeing loans, for water, wastewater, and waste dis-
posal projects under this section, the Secretary shall give 
priority consideration to projects that serve rural commu-
nities that, as determined by the Secretary— 
‘‘(1) have a population of less than 5,500 perma-
nent residents; 
‘‘(2) have a community water, wastewater, or 
waste disposal system that— 
‘‘(A) is experiencing— 
‘‘(i) an unanticipated reduction in the 
quality of water, the quantity of water, or 
the ability to deliver water; or 
‘‘(ii) some other deterioration in the 
supply of water to the community; 
‘‘(B) is not adequate to meet the needs of the 
community; and 
‘‘(C) requires immediate corrective action; 
‘‘(3) are experiencing outmigration; 
‘‘(4) have a high percentage of low-income resi-
dents; or 
‘‘(5) are isolated from other significant popu-
lation centers.
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† HR 2642 EAS 
‘‘(g) CURTAILMENT OR LIMITATION OF SERVICE PRO-
HIBITED.—The service provided or made available through 
any such association shall not be curtailed or limited by 
inclusion of the area served by such association within the 
boundaries of any municipal corporation or other public 
body, or by the granting of any private franchise for similar 
service within such area during the term of such loan; nor 
shall the happening of any such event be the basis of requir-
ing such association to secure any franchise, license, or per-
mit as a condition to continuing to serve the area served 
by the association at the time of the occurrence of such 
event. 
‘‘(h) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
such sums as are necessary. 
‘‘SEC. 3502. COMMUNITY FACILITIES LOANS, LOAN GUARAN-
TEES, AND GRANTS. 
‘‘(a) IN GENERAL.—The Secretary may make grants 
and loans and issue loan guarantees (including a guarantee 
of a loan financed by the net proceeds of a bond described 
in section 142(a) of the Internal Revenue Code of 1986) to 
eligible entities described in subsection (b) for projects in 
rural areas that primarily serve rural residents to provide 
for— 
‘‘(1) essential community facilities, including—
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† HR 2642 EAS 
‘‘(A) necessary equipment; 
‘‘(B) recreational developments; and 
‘‘(2) financial assistance and other assistance in 
the planning of projects for purposes described in this 
section. 
‘‘(b) ELIGIBLE ENTITIES.—Entities eligible for assist-
ance described in subsection (a) are— 
‘‘(1) associations (including corporations not op-
erated for profit); 
‘‘(2) Indian tribes (including groups of individ-
uals described in paragraph (4) of section 815 of the 
Native American Programs Act of 1974 (42 U.S.C. 
2992c)); and 
‘‘(3) public and quasi-public agencies. 
‘‘(c) LOAN AND LOAN GUARANTEE REQUIREMENTS.— 
‘‘(1) IN
GENERAL.—In connection with loans 
made or guaranteed under this section, the Secretary 
shall require the applicant— 
‘‘(A) to certify in writing, and the Sec-
retary shall determine, that the applicant is un-
able to obtain credit elsewhere to finance the ac-
tual needs of the applicant; and 
‘‘(B) to furnish an appropriate written fi-
nancial statement.
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† HR 2642 EAS 
‘‘(2) DEBT
RESTRUCTURING
AND
LOAN
SERV-
ICING FOR COMMUNITY FACILITY LOANS.—The Sec-
retary shall establish and implement a program that 
is similar to the program established under section 
3411, except that the debt restructuring and loan 
servicing procedures shall apply to delinquent com-
munity facility program loans to a hospital or health 
care facility under subsection (a). 
‘‘(d) GRANT AMOUNTS.— 
‘‘(1) MAXIMUM.—Except as otherwise provided 
in this subsection, the amount of any grant made 
under this section shall not exceed 75 percent of the 
development cost of the project for which the grant is 
provided. 
‘‘(2) GRANT RATE.—The Secretary shall establish 
the grant rate for each project in conformity with reg-
ulations issued by the Secretary that shall provide for 
a graduated scale of grant rates that establish higher 
rates for projects in communities that have— 
‘‘(A) low community population; 
‘‘(B) high rates of outmigration; and 
‘‘(C) low income levels. 
‘‘(3) LOCAL
SHARE
REQUIREMENTS.—Grants 
made under this section may be used to pay the local 
share requirements of another Federal grant-in-aid
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† HR 2642 EAS 
program to the extent permitted under the law pro-
viding for the grant-in-aid program. 
‘‘(e) PRIORITY.—In making grants and loans, and 
guaranteeing loans under this section, the Secretary shall 
give priority consideration to projects that serve rural com-
munities that— 
‘‘(1) have a population of less than 20,000 per-
manent residents; 
‘‘(2) are experiencing outmigration; 
‘‘(3) have a high percentage of low-income resi-
dents; or 
‘‘(4) are isolated from other significant popu-
lation centers. 
‘‘(f) TRIBAL COLLEGES AND UNIVERSITIES.— 
‘‘(1) IN
GENERAL.—The Secretary may make 
grants to an entity that is a Tribal College or Univer-
sity (as defined in section 316(b) of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1059c(b))) to provide 
the Federal share of the cost of developing specific 
Tribal College or University essential community fa-
cilities in rural areas. 
‘‘(2) FEDERAL SHARE.—The Secretary shall es-
tablish the maximum percentage of the cost of the 
project that may be covered by a grant under this 
subsection, except that the Secretary may not require
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† HR 2642 EAS 
non-Federal financial support in an amount that is 
greater than 5 percent of the total cost of the project. 
‘‘(3) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated to carry out 
this subsection $10,000,000 for each of fiscal years 
2014 through 2018. 
‘‘(g) TECHNICAL ASSISTANCE FOR COMMUNITY FACILI-
TIES PROJECTS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), the 
Secretary may use funds made available for commu-
nity facilities programs authorized under this section 
to provide technical assistance to applicants and par-
ticipants for community facilities programs. 
‘‘(2) FUNDING.—The Secretary may use not 
more than 3 percent of the amount of funds made 
available to participants for a fiscal year for a com-
munity facilities program to provide technical assist-
ance described in paragraph (1). 
‘‘(h) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
such sums as are necessary. 
‘‘SEC. 3503. HEALTH CARE SERVICES. 
‘‘(a) PURPOSE.—The purpose of this section is to ad-
dress the continued unmet health needs in the Delta region 
through cooperation among health care professionals, insti-
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† HR 2642 EAS 
tutions of higher education, research institutions, and other 
individuals and entities in the region. 
‘‘(b) DEFINITION OF ELIGIBLE ENTITY.—In this sec-
tion, the term ‘eligible entity’ means a consortium of re-
gional institutions of higher education, academic health 
and research institutes, and economic development entities 
located in the Delta region that have experience in address-
ing the health care issues in the region. 
‘‘(c) GRANTS.—To carry out the purpose described in 
subsection (a), the Secretary may award a grant to an eligi-
ble entity for— 
‘‘(1) the development of— 
‘‘(A) health care services; 
‘‘(B) health education programs; and 
‘‘(C) health care job training programs; and 
‘‘(2) the development and expansion of public 
health-related facilities in the Delta region to address 
longstanding and unmet health needs of the region. 
‘‘(d) USE.—As a condition of the receipt of the grant, 
the eligible entity shall use the grant to fund projects and 
activities described in subsection (c), based on input solic-
ited from local governments, public health care providers, 
and other entities in the Delta region. 
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to the Secretary to carry out
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† HR 2642 EAS 
this section $3,000,000 for each of fiscal years 2014 through 
2018. 
‘‘CHAPTER 2—RURAL BUSINESS AND 
COOPERATIVE DEVELOPMENT 
‘‘SEC. 3601. BUSINESS PROGRAMS. 
‘‘(a) RURAL BUSINESS DEVELOPMENT GRANTS.— 
‘‘(1) IN
GENERAL.—The Secretary may make 
grants under this subsection to eligible entities de-
scribed in paragraph (2) in rural areas that pri-
marily serve rural areas for purposes described in 
paragraph (3). 
‘‘(2) ELIGIBLE ENTITIES.—The Secretary may 
make grants under this subsection to— 
‘‘(A) governmental entities; 
‘‘(B) Indian tribes; and 
‘‘(C) nonprofit entities. 
‘‘(3) ELIGIBLE PURPOSES FOR GRANTS.—Eligi-
ble entities that receive grants under this subsection 
may use the grant funds for— 
‘‘(A) business opportunity projects that— 
‘‘(i) identify and analyze business op-
portunities; 
‘‘(ii) identify, train, and provide tech-
nical assistance to existing or prospective 
rural entrepreneurs and managers;
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† HR 2642 EAS 
‘‘(iii) assist in the establishment of 
new rural businesses and the maintenance 
of existing businesses, including through 
business support centers; 
‘‘(iv) conduct regional, community, 
and local economic development planning 
and coordination, and leadership develop-
ment; and 
‘‘(v) establish centers for training, tech-
nology, and trade that will provide training 
to rural businesses in the use of interactive 
communications technologies to develop 
international trade opportunities and mar-
kets; and 
‘‘(B) projects that support the development 
of business enterprises that finance or facili-
tate— 
‘‘(i) the development of small and 
emerging private business enterprise; 
‘‘(ii) the establishment, expansion, and 
operation of rural distance learning net-
works; 
‘‘(iii) the development of rural learn-
ing programs that provide educational in-
struction or job training instruction related
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† HR 2642 EAS 
to potential employment or job advancement 
to adult students; and 
‘‘(iv) the provision of technical assist-
ance and training to rural communities for 
the purpose of improving passenger trans-
portation services or facilities. 
‘‘(4) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated to the Sec-
retary to carry out this subsection $65,000,000 for 
each of fiscal years 2014 through 2018, to remain 
available until expended. 
‘‘(b) 
VALUE-ADDED
AGRICULTURAL
PRODUCER 
GRANTS.— 
‘‘(1) DEFINITIONS.—In this subsection: 
‘‘(A) MID-TIER
VALUE
CHAIN.—The term 
‘mid-tier value chain’ means a local and re-
gional supply network that links independent 
producers with businesses and cooperatives that 
market value-added agricultural products in a 
manner that— 
‘‘(i) targets and strengthens the profit-
ability and competitiveness of small- and 
medium-sized farms that are structured as 
family farms; and
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† HR 2642 EAS 
‘‘(ii) obtains agreement from an eligi-
ble agricultural producer group, farmer co-
operative, or majority-controlled producer- 
based business venture that is engaged in 
the value chain on a marketing strategy. 
‘‘(B) 
PRODUCER.—The 
term 
‘producer’ 
means a farmer. 
‘‘(C) VALUE-ADDED
AGRICULTURAL
PROD-
UCT.—The term ‘value-added agricultural prod-
uct’ means any agricultural commodity or prod-
uct— 
‘‘(i) that— 
‘‘(I) has undergone a change in 
physical state; 
‘‘(II) was produced in a manner 
that enhances the value of the agricul-
tural commodity or product, as dem-
onstrated through a business plan that 
shows the enhanced value, as deter-
mined by the Secretary; 
‘‘(III) is physically segregated in 
a manner that results in the enhance-
ment of the value of the agricultural 
commodity or product;
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† HR 2642 EAS 
‘‘(IV) is a source of farm-based re-
newable energy, including E–85 fuel; 
or 
‘‘(V) is aggregated and marketed 
as a locally produced agricultural food 
product; and 
‘‘(ii) for which, as a result of the 
change in physical state or the manner in 
which the agricultural commodity or prod-
uct was produced, marketed, or segregated— 
‘‘(I) the customer base for the ag-
ricultural commodity or product is ex-
panded; and 
‘‘(II) a greater portion of the rev-
enue derived from the marketing, proc-
essing, or physical segregation of the 
agricultural commodity or product is 
available to the producer of the com-
modity or product. 
‘‘(2) GRANTS.— 
‘‘(A) IN
GENERAL.—The Secretary may 
make grants under this subsection to— 
‘‘(i) independent producers of value- 
added agricultural products; and
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† HR 2642 EAS 
‘‘(ii) an agricultural producer group, 
farmer cooperative, or majority-controlled 
producer-based business venture, as deter-
mined by the Secretary. 
‘‘(B) GRANTS TO A PRODUCER.—A grantee 
under subparagraph (A)(i) shall use the grant— 
‘‘(i) to develop a business plan or per-
form a feasibility study to establish a viable 
marketing opportunity (including through 
mid-tier value chains) for value-added agri-
cultural products; or 
‘‘(ii) to provide capital to establish al-
liances or business ventures that allow the 
producer to better compete in domestic or 
international markets. 
‘‘(C) GRANTS TO AN AGRICULTURAL PRO-
DUCER
GROUP, COOPERATIVE
OR
PRODUCER- 
BASED
BUSINESS
VENTURE.—A grantee under 
subparagraph (A)(ii) shall use the grant— 
‘‘(i) to develop a business plan for via-
ble marketing opportunities in emerging 
markets for a value-added agricultural 
product; or 
‘‘(ii) to develop strategies that are in-
tended to create marketing opportunities in
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† HR 2642 EAS 
emerging markets for the value-added agri-
cultural product. 
‘‘(D) AWARD SELECTION.— 
‘‘(i) PRIORITY.—In awarding grants 
under this subsection, the Secretary shall 
give priority to projects— 
‘‘(I) that contribute to increasing 
opportunities for operators of small- 
and medium-sized farms that are 
structured as family farms; or 
‘‘(II) at least 1⁄4 of the recipients 
of which are beginning farmers or so-
cially disadvantaged farmers. 
‘‘(ii) RANKING.—In evaluating and 
ranking proposals under this subsection, the 
Secretary shall provide substantial weight 
to the priorities described in clause (i). 
‘‘(E) AMOUNT OF GRANT.— 
‘‘(i) IN GENERAL.—The total amount 
provided to a grant recipient under this 
subsection shall not exceed $500,000. 
‘‘(ii) 
MAJORITY-CONTROLLED, 
PRO-
DUCER-BASED
BUSINESS
VENTURES.—The 
total amount of all grants provided to ma-
jority-controlled, 
producer-based 
business
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† HR 2642 EAS 
ventures under this subsection for a fiscal 
year shall not exceed 10 percent of the 
amount of funds used to make all grants for 
the fiscal year under this subsection. 
‘‘(F) TERM.—The term of a grant under 
this paragraph shall not exceed 3 years. 
‘‘(G) SIMPLIFIED APPLICATION.—The Sec-
retary shall offer a simplified application form 
and process for project proposals requesting less 
than $50,000 under this subsection. 
‘‘(3) FUNDING.— 
‘‘(A) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—There is authorized to be appropriated 
to carry out this subsection $40,000,000 for each 
of fiscal years 2014 through 2018. 
‘‘(B) 
RESERVATION
OF
FUNDS
FOR 
PROJECTS TO BENEFIT BEGINNING FARMERS, SO-
CIALLY DISADVANTAGED FARMERS, AND MID-TIER 
VALUE CHAINS.— 
‘‘(i) IN GENERAL.—The Secretary shall 
reserve 10 percent of the amounts made 
available for each fiscal year under this 
subsection to fund projects that benefit be-
ginning farmers or socially disadvantaged 
farmers.
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† HR 2642 EAS 
‘‘(ii) MID-TIER
VALUE
CHAINS.—The 
Secretary shall reserve 10 percent of the 
amounts made available for each fiscal year 
under this subsection to fund applications 
of eligible entities described in paragraph 
(2) that propose to develop mid-tier value 
chains. 
‘‘(iii) UNOBLIGATED
AMOUNTS.—Any 
amounts in the reserves for a fiscal year es-
tablished under clauses (i) and (ii) that are 
not obligated by June 30 of the fiscal year 
shall be available to the Secretary to make 
grants under this subsection to eligible enti-
ties in any State, as determined by the Sec-
retary. 
‘‘(C) MANDATORY FUNDING.—Of the funds 
of the Commodity Credit Corporation, the Sec-
retary shall use to carry out this subsection 
$12,500,000 for each of fiscal years 2014 through 
2018, to remain available until expended. 
‘‘(c) RURAL COOPERATIVE DEVELOPMENT GRANTS.— 
‘‘(1) DEFINITIONS.—In this subsection: 
‘‘(A) NONPROFIT
INSTITUTION.—The term 
‘nonprofit institution’ means any organization 
or institution, including an accredited institu-
637 
† HR 2642 EAS 
tion of higher education, no part of the net earn-
ings of which inures, or may lawfully inure, to 
the benefit of any private shareholder or indi-
vidual. 
‘‘(B) UNITED STATES.—The term ‘United 
States’ means— 
‘‘(i) the several States; and 
‘‘(ii) the District of Columbia. 
‘‘(2) GRANTS.—The Secretary shall make grants 
under this subsection to nonprofit institutions for the 
purpose of enabling the nonprofit institutions to es-
tablish and operate centers for rural cooperative de-
velopment. 
‘‘(3) GOALS.—The goals of a center funded under 
this subsection shall be to facilitate the creation of 
jobs in rural areas through the development of new 
rural cooperatives, value -added processing, and rural 
businesses. 
‘‘(4) APPLICATION.— 
‘‘(A) IN GENERAL.—Any nonprofit institu-
tion seeking a grant under paragraph (2) shall 
submit to the Secretary an application con-
taining a plan for the establishment and oper-
ation by the institution of 1 or more centers for 
cooperative development.
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† HR 2642 EAS 
‘‘(B) REQUIREMENTS.—The Secretary may 
approve an application if the plan contains the 
following: 
‘‘(i) A provision that substantiates that 
the center will effectively serve rural areas 
in the United States. 
‘‘(ii) A provision that the primary ob-
jective of the center will be to improve the 
economic condition of rural areas through 
cooperative development. 
‘‘(iii) A description of the activities 
that the center will carry out to accomplish 
the objective, which may include pro-
grams— 
‘‘(I) for applied research and fea-
sibility studies that may be useful to 
individuals, cooperatives, small busi-
nesses, and other similar entities in 
rural areas served by the center; 
‘‘(II) for the collection, interpreta-
tion, and dissemination of information 
that may be useful to individuals, co-
operatives, small businesses, and other 
similar entities in rural areas served 
by the center;
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† HR 2642 EAS 
‘‘(III) providing training and in-
struction for individuals, cooperatives, 
small businesses, and other similar en-
tities in rural areas served by the cen-
ter; 
‘‘(IV) providing loans and grants 
to 
individuals, 
cooperatives, 
small 
businesses, and other similar entities 
in rural areas served by the center; 
‘‘(V) providing technical assist-
ance, research services, and advisory 
services to individuals, cooperatives, 
small businesses, and other similar en-
tities in rural areas served by the cen-
ter; and 
‘‘(VI) providing for the coordina-
tion of services and sharing of infor-
mation by the center. 
‘‘(iv) A description of the contributions 
that the activities are likely to make to the 
improvement of the economic conditions of 
the rural areas for which the center will 
provide services. 
‘‘(v) Provisions that the center, in car-
rying out the activities, will seek, if appro-
640 
† HR 2642 EAS 
priate, the advice, participation, expertise, 
and assistance of representatives of business, 
industry, educational institutions, the Fed-
eral Government, and State and local gov-
ernments. 
‘‘(vi) Provisions that the center will 
take all practicable steps to develop con-
tinuing sources of financial support for the 
center, particularly from sources in the pri-
vate sector. 
‘‘(vii) Provisions for— 
‘‘(I) monitoring and evaluating 
the activities by the nonprofit institu-
tion operating the center; and 
‘‘(II) accounting for funds re-
ceived by the institution under this sec-
tion. 
‘‘(5) AWARDING GRANTS.— 
‘‘(A) IN
GENERAL.—Grants made under 
paragraph (2) shall be made on a competitive 
basis. 
‘‘(B) PREFERENCE.—In making grants 
under paragraph (2), the Secretary shall give 
preference to grant applications providing for
641 
† HR 2642 EAS 
the establishment of centers for rural cooperative 
development that— 
‘‘(i) demonstrate a proven track record 
in carrying out activities to promote and 
assist the development of cooperatively and 
mutually owned businesses; 
‘‘(ii) demonstrate previous expertise in 
providing technical assistance in rural 
areas to promote and assist the development 
of cooperatively and mutually owned busi-
nesses; 
‘‘(iii) demonstrate the ability to assist 
in the retention of businesses, facilitate the 
establishment of cooperatives and new coop-
erative approaches, and generate employ-
ment opportunities that will improve the 
economic conditions of rural areas; 
‘‘(iv) commit to providing technical as-
sistance and other services to underserved 
and economically distressed areas in rural 
areas of the United States; 
‘‘(v) demonstrate a commitment to— 
‘‘(I) networking with and sharing 
the results of the efforts of the center 
with other cooperative development
642 
† HR 2642 EAS 
centers and other organizations in-
volved in rural economic development 
efforts; and 
‘‘(II) developing multiorganiza-
tion and multistate approaches to ad-
dressing the economic development and 
cooperative needs of rural areas; and 
‘‘(vi) commit to providing a 25 percent 
matching contribution with private funds 
and in-kind contributions, except that the 
Secretary shall not require non-Federal fi-
nancial support in an amount that is great-
er than 5 percent in the case of a 1994 in-
stitution (as defined in section 532 of the 
Equity in Educational Land-Grant Status 
Act of 1994 (7 U.S.C. 301 note; Public Law 
103–382)). 
‘‘(6) GRANT PERIOD.— 
‘‘(A) IN GENERAL.—A grant awarded to a 
center that has received no prior funding under 
this subsection shall be made for a period of 1 
year. 
‘‘(B) MULTIYEAR GRANTS.—If the Secretary 
determines it to be in the best interest of the pro-
gram, the Secretary shall award grants for a pe-
643 
† HR 2642 EAS 
riod of more than 1 year, but not more than 3 
years, to a center that has successfully met the 
requirements of paragraph (5)(B), as determined 
by the Secretary. 
‘‘(7) AUTHORITY TO EXTEND GRANT PERIOD.— 
The Secretary may extend for 1 additional 12-month 
period the period during which a grantee may use a 
grant made under this subsection. 
‘‘(8) TECHNICAL ASSISTANCE TO PREVENT EX-
CESSIVE UNEMPLOYMENT OR UNDEREMPLOYMENT.— 
‘‘(A) IN
GENERAL.—In carrying out this 
subsection, the Secretary may provide technical 
assistance to alleviate or prevent conditions of 
excessive unemployment, underemployment, out-
migration, or low employment growth in eco-
nomically distressed rural areas that the Sec-
retary determines have a substantial need for the 
assistance. 
‘‘(B) INCLUSIONS.—The assistance may in-
clude planning and feasibility studies, manage-
ment and operational assistance, and studies 
evaluating the need for the development potential 
of projects that increase employment and im-
prove economic growth in the areas.
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† HR 2642 EAS 
‘‘(9) 
GRANTS
TO
DEFRAY
ADMINISTRATIVE 
COSTS.— 
‘‘(A) IN
GENERAL.—The Secretary may 
make grants to defray not to exceed 75 percent 
of the costs incurred by organizations and public 
bodies to carry out projects for which grants or 
loans are made under this subsection. 
‘‘(B) COST-SHARING.—For purposes of de-
termining the non-Federal share of the costs, the 
Secretary shall include contributions in cash and 
in kind, fairly evaluated, including premises, 
equipment, and services. 
‘‘(10) COOPERATIVE RESEARCH PROGRAM.—The 
Secretary shall offer to enter into a cooperative re-
search agreement with 1 or more qualified academic 
institutions in each fiscal year to conduct research on 
the effects of all types of cooperatives on the national 
economy. 
‘‘(11) ADDRESSING NEEDS OF MINORITY COMMU-
NITIES.— 
‘‘(A) IN GENERAL.—If the total amount ap-
propriated under paragraph (13) for a fiscal 
year exceeds $7,500,000, the Secretary shall re-
serve an amount equal to 20 percent of the total 
amount appropriated for grants for cooperative
645 
† HR 2642 EAS 
development centers, individual cooperatives, or 
groups of cooperatives— 
‘‘(i) that serve socially disadvantaged 
groups; and 
‘‘(ii) a majority of the boards of direc-
tors or governing boards of which are com-
prised of individuals who are members of 
socially disadvantaged groups. 
‘‘(B) INSUFFICIENT APPLICATIONS.—To the 
extent there are insufficient applications to carry 
out subparagraph (A), the Secretary shall use the 
funds as otherwise authorized by this subsection. 
‘‘(12) INTERAGENCY WORKING GROUP.—Not later 
than 90 days after the date of enactment of the Agri-
culture Reform, Food, and Jobs Act of 2013, the Sec-
retary shall coordinate and chair an interagency 
working group to foster cooperative development and 
ensure coordination with Federal agencies and na-
tional and local cooperative organizations that have 
cooperative programs and interests. 
‘‘(13) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated to carry out 
this subsection $50,000,000 for each of fiscal years 
2014 through 2018.
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† HR 2642 EAS 
‘‘(d) APPROPRIATE
TECHNOLOGY
TRANSFER
FOR 
RURAL AREAS PROGRAM.— 
‘‘(1) DEFINITION OF NATIONAL NONPROFIT AGRI-
CULTURAL
ASSISTANCE
INSTITUTION.—In this sub-
section, the term ‘national nonprofit agricultural as-
sistance institution’ means an organization that— 
‘‘(A) is described in section 501(c)(3) of the 
Internal Revenue Code of 1986 and exempt from 
taxation under 501(a) of that Code; 
‘‘(B) has staff and offices in multiple re-
gions of the United States; 
‘‘(C) has experience and expertise in oper-
ating national agricultural technical assistance 
programs; 
‘‘(D) expands markets for the agricultural 
commodities produced by producers through the 
use of practices that enhance the environment, 
natural resource base, and quality of life; and 
‘‘(E) improves the economic viability of ag-
ricultural operations. 
‘‘(2) ESTABLISHMENT.—The Secretary shall es-
tablish a national appropriate technology transfer for 
rural areas program to assist agricultural producers 
that are seeking information— 
‘‘(A) to reduce input costs;
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† HR 2642 EAS 
‘‘(B) to conserve energy resources; 
‘‘(C) to diversify operations through new 
energy crops and energy generation facilities; 
and 
‘‘(D) to expand markets for agricultural 
commodities produced by the producers by using 
practices that enhance the environment, natural 
resource base, and quality of life. 
‘‘(3) IMPLEMENTATION.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
carry out the program under this subsection by 
making a grant to, or offering to enter into a co-
operative agreement with, a national nonprofit 
agricultural assistance institution. 
‘‘(B) GRANT AMOUNT.—A grant made, or 
cooperative agreement entered into, under sub-
paragraph (A) shall provide 100 percent of the 
cost of providing information described in para-
graph (2). 
‘‘(4) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated to carry out 
this subsection $5,000,000 for each of fiscal years 
2014 through 2018. 
‘‘(e) BUSINESS AND INDUSTRY DIRECT AND GUARAN-
TEED LOANS.—
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† HR 2642 EAS 
‘‘(1) DEFINITION OF BUSINESS AND INDUSTRY 
LOAN.—In this section, the term ‘business and indus-
try loan’ means a direct loan that is made, or a loan 
that is guaranteed, by the Secretary under this sub-
section. 
‘‘(2) LOAN PURPOSES.—The Secretary may make 
business and industry loans to public, private, or co-
operative organizations organized for profit or non-
profit, private investment funds that invest primarily 
in cooperative organizations, or to individuals— 
‘‘(A) to improve, develop, or finance busi-
ness, industry, and employment and improve the 
economic and environmental climate in rural 
communities, including pollution abatement and 
control; 
‘‘(B) to conserve, develop, and use water for 
aquaculture purposes in rural areas; and 
‘‘(C) to reduce the reliance on nonrenewable 
energy resources by encouraging the development 
and construction of renewable energy systems 
(including solar energy systems, wind energy 
systems, and anaerobic digestors for the purpose 
of energy generation), including the modification 
of existing systems, in rural areas.
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† HR 2642 EAS 
‘‘(3) LOAN GUARANTEES FOR CERTAIN LOANS.— 
The Secretary may guarantee loans made under this 
subsection to finance the issuance of bonds for the 
projects described in paragraph (2). 
‘‘(4) MAXIMUM AMOUNT OF PRINCIPAL.— 
‘‘(A) IN
GENERAL.—Except as otherwise 
provided in this paragraph, no loan may be 
made or guaranteed under this subsection that 
exceeds $25,000,000 in principal amount. 
‘‘(B) LIMITATIONS
ON
LOAN
GUARANTEES 
FOR COOPERATIVE ORGANIZATIONS.— 
‘‘(i) PRINCIPAL
AMOUNT.—Subject to 
clause (ii), the principal amount of a busi-
ness and industry loan made to a coopera-
tive organization and guaranteed under this 
subsection shall not exceed $40,000,000. 
‘‘(ii) USE.—To be eligible for a guar-
antee under this subsection for a business 
and industry loan made to a cooperative or-
ganization, the principal amount of the 
loan in excess of $25,000,000 shall be used 
to carry out a project that is in a rural 
area and—
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† HR 2642 EAS 
‘‘(I) provides for the value-added 
processing of agricultural commodities; 
or 
‘‘(II) significantly benefits 1 or 
more entities eligible for assistance for 
the purposes described in paragraph 
(2), as determined by the Secretary. 
‘‘(iii) APPLICATIONS.—If a cooperative 
organization submits an application for a 
guarantee under this paragraph, the Sec-
retary shall make the determination whether 
to approve the application, and the Sec-
retary may not delegate this authority. 
‘‘(iv) MAXIMUM
AMOUNT.—The total 
amount of business and industry loans 
made to cooperative organizations and 
guaranteed for a fiscal year under this sub-
section with principal amounts that are in 
excess of $25,000,000 may not exceed 10 
percent of the total amount of business and 
industry loans guaranteed for the fiscal 
year under this subsection. 
‘‘(5) FEES.—The Secretary may assess a 1-time 
fee and an annual renewal fee for any guaranteed 
business and industry loan in an amount that does
651 
† HR 2642 EAS 
not exceed 3 percent of the guaranteed principal por-
tion of the loan. 
‘‘(6) 
INTANGIBLE
ASSETS.—In 
determining 
whether a cooperative organization is eligible for a 
guaranteed business and industry loan, the Secretary 
may consider the market value of a properly ap-
praised brand name, patent, or trademark of the co-
operative. 
‘‘(7) LOAN APPRAISALS.—The Secretary may re-
quire that any appraisal made in connection with a 
business and industry loan be conducted by a special-
ized appraiser that uses standards that are com-
parable to standards used for similar purposes in the 
private sector, as determined by the Secretary. 
‘‘(8) LOAN GUARANTEES FOR THE PURCHASE OF 
COOPERATIVE STOCK.— 
‘‘(A) IN
GENERAL.—The Secretary may 
guarantee a business and industry loan to indi-
vidual farmers to purchase capital stock of a 
farmer cooperative established for the purpose of 
processing an agricultural commodity. 
‘‘(B) PROCESSING CONTRACTS DURING INI-
TIAL PERIOD.—A cooperative described in sub-
paragraph (A) for which a farmer receives a 
guarantee to purchase stock under that subpara-
652 
† HR 2642 EAS 
graph may contract for services to process agri-
cultural commodities or otherwise process value 
added for the period beginning on the date of the 
startup of the cooperative in order to provide 
adequate time for the planning and construction 
of the processing facility of the cooperative. 
‘‘(C) FINANCIAL INFORMATION.—Financial 
information required by the Secretary from a 
farmer as a condition of making a business and 
industry loan guarantee under this paragraph 
shall be provided in the manner generally re-
quired by commercial agricultural lenders in the 
applicable area. 
‘‘(9) LOANS TO COOPERATIVES.— 
‘‘(A) ELIGIBILITY.— 
‘‘(i) IN GENERAL.—The Secretary may 
make or guarantee a business and industry 
loan to a cooperative organization that is 
headquartered in a metropolitan area if the 
loan is— 
‘‘(I) used for a project or venture 
described in paragraph (2) that is lo-
cated in a rural area; or 
‘‘(II) a loan guarantee that meets 
the requirements of paragraph (10).
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† HR 2642 EAS 
‘‘(ii) EQUITY.—The Secretary may 
guarantee a loan made for the purchase of 
preferred stock or similar equity issued by 
a cooperative organization or a fund that 
invests primarily in cooperative organiza-
tions, if the guarantee significantly benefits 
1 or more entities eligible for assistance for 
the purposes described in paragraph (2)(A), 
as determined by the Secretary. 
‘‘(B) REFINANCING.—A cooperative organi-
zation that is eligible for a business and indus-
try loan shall be eligible to refinance an existing 
business and industry loan with a lender if— 
‘‘(i) the cooperative organization— 
‘‘(I) is current and performing 
with respect to the existing loan; and 
‘‘(II)(aa) is not, and has not been, 
in payment default, with respect to the 
existing loan; or 
‘‘(bb) has not converted any of the 
collateral with respect to the existing 
loan; and 
‘‘(ii) there is adequate security or full 
collateral for the refinanced loan.
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† HR 2642 EAS 
‘‘(10) 
LOAN
GUARANTEES
IN
NONRURAL 
AREAS.—The Secretary may guarantee a business 
and industry loan to a cooperative organization for 
a facility that is not located in a rural area if— 
‘‘(A) the primary purpose of the loan guar-
antee is for a facility to provide value-added 
processing for agricultural producers that are lo-
cated within 80 miles of the facility; 
‘‘(B) the applicant demonstrates to the Sec-
retary that the primary benefit of the loan guar-
antee will be to provide employment for residents 
of a rural area; and 
‘‘(C) the total amount of business and in-
dustry loans guaranteed for a fiscal year under 
this paragraph does not exceed 10 percent of the 
business and industry loans guaranteed for the 
fiscal year under this subsection. 
‘‘(11) LOCALLY OR REGIONALLY PRODUCED AG-
RICULTURAL FOOD PRODUCTS.— 
‘‘(A) DEFINITIONS.—In this paragraph: 
‘‘(i) LOCALLY
OR
REGIONALLY
PRO-
DUCED
AGRICULTURAL
FOOD
PRODUCT.— 
The term ‘locally or regionally produced ag-
ricultural food product’ means any agricul-
655 
† HR 2642 EAS 
tural food product that is raised, produced, 
and distributed in— 
‘‘(I) the locality or region in 
which the final product is marketed, so 
that the total distance that the product 
is transported is less than 400 miles 
from the origin of the product; or 
‘‘(II) the State in which the prod-
uct is produced. 
‘‘(ii) UNDERSERVED COMMUNITY.—The 
term ‘underserved community’ means a 
community (including an urban or rural 
community and an Indian tribal commu-
nity) that, as determined by the Secretary, 
has— 
‘‘(I) limited access to affordable, 
healthy foods, including fresh fruits 
and vegetables, in grocery retail stores 
or farmer-to-consumer direct markets; 
and 
‘‘(II) a high rate of hunger or food 
insecurity or a high poverty rate. 
‘‘(B) LOAN
AND
LOAN
GUARANTEE
PRO-
GRAM.—
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† HR 2642 EAS 
‘‘(i) IN GENERAL.—The Secretary shall 
make or guarantee loans to individuals, co-
operatives, cooperative organizations, busi-
nesses, and other entities to establish and 
facilitate enterprises that process, distribute, 
aggregate, store, and market locally or re-
gionally produced agricultural food prod-
ucts to support community development and 
farm income. 
‘‘(ii) REQUIREMENT.—The recipient of 
a loan or loan guarantee under this para-
graph shall include in an appropriate 
agreement with retail and institutional fa-
cilities to which the recipient sells locally or 
regionally produced agricultural food prod-
ucts a requirement to inform consumers of 
the retail or institutional facilities that the 
consumers are purchasing or consuming lo-
cally or regionally produced agricultural 
food products. 
‘‘(iii) PRIORITY.—In making or guar-
anteeing a loan under this paragraph, the 
Secretary shall give priority to projects that 
have components benefitting underserved 
communities.
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† HR 2642 EAS 
‘‘(iv) REPORTS.—Not later than 2 
years after the date of enactment of the Ag-
riculture Reform, Food, and Jobs Act of 
2013 and annually thereafter, the Secretary 
shall submit to the Committee on Agri-
culture of the House of Representatives and 
the Committee on Agriculture, Nutrition, 
and Forestry of the Senate, and publish on 
the Internet, a report that describes projects 
carried out using loans or loan guarantees 
made under clause (i), including— 
‘‘(I) summary information about 
all projects; 
‘‘(II) the characteristics of the 
communities served; and 
‘‘(III) resulting benefits. 
‘‘(v) RESERVATION
OF
FUNDS.—For 
each of fiscal years 2014 through 2018, the 
Secretary shall reserve not less than 5 per-
cent of the total amount of funds made 
available to carry out this subsection to 
carry out this paragraph until April 1 of 
the fiscal year. 
‘‘(vi) OUTREACH.—The Secretary shall 
develop and implement an outreach plan to
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† HR 2642 EAS 
publicize the availability of loans and loan 
guarantees under this paragraph, working 
closely with rural cooperative development 
centers, credit unions, community develop-
ment financial institutions, regional eco-
nomic development authorities, and other fi-
nancial and economic development entities. 
‘‘(12) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated to carry out 
this subsection $75,000,000 for each of fiscal years 
2014 through 2018. 
‘‘(f) RELENDING PROGRAMS.— 
‘‘(1) INTERMEDIATE RELENDING PROGRAM.— 
‘‘(A) IN
GENERAL.—The Secretary may 
make or guarantee loans to eligible entities de-
scribed in subparagraph (B) so that the eligible 
entities may relend the funds to individuals and 
entities for the purposes described in subpara-
graph (C). 
‘‘(B) ELIGIBLE ENTITIES.—Entities eligible 
for loans and loan guarantees described in sub-
paragraph (A) are— 
‘‘(i) public agencies; 
‘‘(ii) Indian tribes; 
‘‘(iii) cooperatives; and
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† HR 2642 EAS 
‘‘(iv) nonprofit corporations. 
‘‘(C) ELIGIBLE
PURPOSES.—The proceeds 
from loans made or guaranteed by the Secretary 
pursuant to subparagraph (A) may be relent by 
eligible entities for projects that— 
‘‘(i) predominately serve communities 
in rural areas; and 
‘‘(ii) as determined by the Secretary— 
‘‘(I) promote community develop-
ment; 
‘‘(II) establish new businesses; 
‘‘(III) 
establish 
and 
support 
microlending programs; and 
‘‘(IV) create or retain employment 
opportunities. 
‘‘(D) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—There is authorized to be appropriated 
to carry out this subsection $50,000,000 for each 
of fiscal years 2014 through 2018. 
‘‘(2) RURAL MICROENTREPRENEUR ASSISTANCE 
PROGRAM.— 
‘‘(A) DEFINITIONS.—In this paragraph: 
‘‘(i) MICROENTREPRENEUR.—The term 
‘microentrepreneur’ means an owner and 
operator, or prospective owner and operator,
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† HR 2642 EAS 
of a rural microenterprise who is unable to 
obtain sufficient training, technical assist-
ance, or credit other than under this sub-
section, as determined by the Secretary. 
‘‘(ii) 
MICROENTERPRISE
DEVELOP-
MENT ORGANIZATION.—The term ‘microen-
terprise development organization’ means 
an organization that is— 
‘‘(I) a nonprofit entity; 
‘‘(II) an Indian tribe, the tribal 
government of which certifies to the 
Secretary that— 
‘‘(aa) no microenterprise de-
velopment organization serves the 
Indian tribe; and 
‘‘(bb) no rural microentre-
preneur assistance program exists 
under the jurisdiction of the In-
dian tribe; 
‘‘(III) a public institution of 
higher education; or 
‘‘(IV) a collaboration of rural 
nonprofit entities serving a region or 
State, if 1 lead nonprofit entity is the
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† HR 2642 EAS 
sole underwriter of all loans and is re-
sponsible for associated risks. 
‘‘(iii) 
MICROLOAN.—The 
term 
‘microloan’ means a business loan of not 
more than $50,000 that is provided to a 
rural microenterprise. 
‘‘(iv) PROGRAM.—The term ‘program’ 
means the rural microentrepreneur assist-
ance program established under subpara-
graph (B). 
‘‘(v) RURAL
MICROENTERPRISE.—The 
term ‘rural microenterprise’ means a busi-
ness entity with not more than 10 full-time 
equivalent employees located in a rural 
area. 
‘‘(vi) TRAINING.—The term ‘training’ 
means teaching broad business principles or 
general business skills in a group or public 
setting. 
‘‘(vii) TECHNICAL
ASSISTANCE.—The 
term ‘technical assistance’ means working 
with a business client in a 1-to-1 manner to 
provide business and financial management 
counseling, assist in the preparation of 
business or marketing plans, or provide
662 
† HR 2642 EAS 
other skills tailored to an individual micro-
entrepreneur. 
‘‘(B) RURAL MICROENTREPRENEUR ASSIST-
ANCE PROGRAM.— 
‘‘(i) ESTABLISHMENT.—The Secretary 
shall establish a rural microentrepreneur 
assistance program to provide loans and 
grants to support microentrepreneurs in the 
development and ongoing success of rural 
microenterprises. 
‘‘(ii) PURPOSE.—The purpose of the 
program is to provide microentrepreneurs 
with— 
‘‘(I) the skills necessary to estab-
lish new rural microenterprises; and 
‘‘(II) continuing technical and fi-
nancial assistance related to the suc-
cessful operation of rural microenter-
prises. 
‘‘(iii) LOANS.— 
‘‘(I) IN GENERAL.—The Secretary 
shall make loans to microenterprise de-
velopment organizations for the pur-
pose of providing fixed-interest rate 
microloans to microentrepreneurs for
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† HR 2642 EAS 
startup and growing rural microenter-
prises. 
‘‘(II) LOAN TERMS.—A loan made 
by the Secretary to a microenterprise 
development organization under this 
subparagraph shall— 
‘‘(aa) be for a term not to ex-
ceed 20 years; and 
‘‘(bb) bear an annual interest 
rate of at least 1 percent. 
‘‘(III) 
LOAN
LOSS
RESERVE 
FUND.—The Secretary shall require 
each microenterprise development orga-
nization that receives a loan under this 
subparagraph to— 
‘‘(aa) establish a loan loss re-
serve fund; and 
‘‘(bb) maintain the reserve 
fund in an amount equal to at 
least 5 percent of the outstanding 
balance of such loans owed by the 
microenterprise development orga-
nization, until all obligations 
owed to the Secretary under this 
subparagraph are repaid.
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† HR 2642 EAS 
‘‘(IV) DEFERRAL
OF
INTEREST 
AND
PRINCIPAL.—The Secretary may 
permit the deferral of payments on 
principal and interest due on a loan to 
a microenterprise development organi-
zation made under this paragraph for 
a 2-year period beginning on the date 
on which the loan is made. 
‘‘(iv) GRANTS TO SUPPORT RURAL MI-
CROENTERPRISE DEVELOPMENT.— 
‘‘(I) IN GENERAL.—The Secretary 
shall make grants to microenterprise 
development organizations— 
‘‘(aa) to provide training 
and 
technical 
assistance, 
and 
other related services to rural 
microentrepreneurs; and 
‘‘(bb) to carry out such other 
projects and activities as the Sec-
retary determines appropriate to 
further the purposes of the pro-
gram. 
‘‘(II) 
SELECTION.—In 
making 
grants under subclause (I), the Sec-
retary shall—
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† HR 2642 EAS 
‘‘(aa) place an emphasis on 
microenterprise development orga-
nizations that serve microentre-
preneurs that are located in rural 
areas that have suffered signifi-
cant outward migration, as deter-
mined by the Secretary; and 
‘‘(bb) ensure, to the max-
imum extent practicable, that 
grant recipients include microen-
terprise 
development 
organiza-
tions of varying sizes and that 
serve racially and ethnically di-
verse populations. 
‘‘(v) GRANTS TO ASSIST MICROENTRE-
PRENEURS.— 
‘‘(I) IN GENERAL.—The Secretary 
shall make annual grants to microen-
terprise development organizations to 
provide technical assistance to micro-
entrepreneurs that— 
‘‘(aa) received a loan from 
the microenterprise development 
organization under subparagraph 
(B)(iii); or
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† HR 2642 EAS 
‘‘(bb) are seeking a loan from 
the microenterprise development 
organization under subparagraph 
(B)(iii). 
‘‘(II) 
MAXIMUM
AMOUNT
OF 
TECHNICAL
ASSISTANCE
GRANT.—The 
maximum amount of a grant under 
this clause shall be in an amount equal 
to not more than 25 percent of the 
total outstanding balance of microloans 
made by the microenterprise develop-
ment organization under clause (iii), 
as of the date the grant is awarded. 
‘‘(vi) ADMINISTRATIVE
EXPENSES.— 
Not more than 10 percent of a grant re-
ceived by a microenterprise development or-
ganization for a fiscal year under this sub-
paragraph may be used to pay administra-
tive expenses. 
‘‘(C) ADMINISTRATION.— 
‘‘(i) MATCHING REQUIREMENT.—As a 
condition of any grant made under clauses 
(iv) and (v) of subparagraph (B), the Sec-
retary shall require the microenterprise de-
velopment organization to match not less
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† HR 2642 EAS 
than 15 percent of the total amount of the 
grant in the form of matching funds (in-
cluding 
community 
development 
block 
grants), indirect costs, or in-kind goods or 
services. 
‘‘(ii) OVERSIGHT.—At a minimum, 
not later than December 1 of each fiscal 
year, a microenterprise development organi-
zation that receives a loan or grant under 
this section shall provide to the Secretary 
such information as the Secretary may re-
quire to ensure that assistance provided 
under this section is used for the purposes 
for which the loan or grant was made. 
‘‘(D) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—There is authorized to be appropriated 
to carry out this paragraph $40,000,000 for each 
of fiscal years 2014 through 2018. 
‘‘(E) MANDATORY
FUNDING
FOR
FISCAL 
YEARS 2014 THROUGH 2018.—Of the funds of the 
Commodity Credit Corporation, the Secretary 
shall use to carry out this paragraph $3,000,000 
for each of fiscal years 2014 through 2018, to re-
main available until expended.
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† HR 2642 EAS 
‘‘SEC. 3602. RURAL BUSINESS INVESTMENT PROGRAM. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(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. 
‘‘(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’ in-
clude— 
‘‘(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
669 
† HR 2642 EAS 
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. 
‘‘(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 the Agriculture Reform, 
Food, and Jobs Act of 2013. 
‘‘(6) LICENSE.—The term ‘license’ means a li-
cense issued by the Secretary in accordance with in 
subsection (d)(5). 
‘‘(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.
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† HR 2642 EAS 
‘‘(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. 
‘‘(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 subsection 
(d)(5), 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)(I) the paid-in capital and paid-in 
surplus of a corporate rural business invest-
ment company; 
‘‘(II) the contributed capital of the 
partners of a partnership rural business in-
vestment company; or
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† HR 2642 EAS 
‘‘(III) the equity investment of the 
members of a limited liability company 
rural business investment company; and 
‘‘(ii) unfunded binding commitments 
from investors that meet criteria established 
by the Secretary to contribute capital to the 
rural business investment company, except 
that— 
‘‘(I) unfunded commitments may 
be counted as private capital for pur-
poses of approval by the Secretary of 
any request for leverage; but 
‘‘(II) 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-
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† HR 2642 EAS 
sion, agency, or instrumentality of the Fed-
eral Government or a State), except for— 
‘‘(I) funds obtained from the busi-
ness revenues (excluding any govern-
mental appropriation) of any Feder-
ally chartered or government-sponsored 
enterprise established prior to the date 
of enactment of the Agriculture Re-
form, Food, and Jobs Act of 2013; 
‘‘(II) funds invested by an em-
ployee welfare benefit plan or pension 
plan; and 
‘‘(III) 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 com-
pany on or before the date of enactment of the 
Agriculture Reform, Food, and Jobs Act of 2013
673 
† HR 2642 EAS 
by any Federal agency, other than the Depart-
ment, under a provision of law explicitly man-
dating the inclusion of those funds in the defini-
tion 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 political 
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; or 
‘‘(C) any other person or entity that pri-
marily operates in a rural area, as determined 
by the Secretary. 
‘‘(14) RURAL
BUSINESS
INVESTMENT
COM-
PANY.—The term ‘rural business investment company’ 
means a company that—
674 
† HR 2642 EAS 
‘‘(A) has been granted final approval by the 
Secretary under subsection (d)(5); and 
‘‘(B) has entered into a participation agree-
ment with the Secretary. 
‘‘(15) SMALLER ENTERPRISE.— 
‘‘(A) IN GENERAL.—The term ‘smaller en-
terprise’ means any rural business concern that, 
together with its affiliates— 
‘‘(i) has— 
‘‘(I) a net financial worth of not 
more than $6,000,000, as of the date 
on which assistance is provided under 
this section to the rural business con-
cern; and 
‘‘(II) except as provided in sub-
paragraph (B), an average net income 
for the 2-year period preceding the 
date on which assistance is provided 
under this section to the rural business 
concern, of not more than $2,000,000, 
after Federal income taxes (excluding 
any carryover losses); or 
‘‘(ii) satisfies the standard industrial 
classification size standards established by 
the Administrator of the Small Business
675 
† HR 2642 EAS 
Administration for the industry in which 
the rural business concern is primarily en-
gaged. 
‘‘(B) EXCEPTION.—For purposes of sub-
paragraph (A)(i)(II), if the rural business con-
cern is not required by law to pay Federal in-
come taxes at the enterprise level, but is required 
to pass income through to the shareholders, part-
ners, beneficiaries, or other equitable owners of 
the business concern, the net income of the busi-
ness 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 (and local, if 
any) income taxes at the enterprise level, 
the product obtained by multiplying— 
‘‘(I) the net income (determined 
without regard to this subparagraph); 
by 
‘‘(II) the marginal State income 
tax rate (or by the combined State and 
local income tax rates, as applicable) 
that would have applied if the business 
concern were a corporation; and
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† HR 2642 EAS 
‘‘(ii) the product obtained by multi-
plying— 
‘‘(I) the net income (so deter-
mined) less any deduction for State 
(and local) income taxes calculated 
under clause (i); by 
‘‘(II) the marginal Federal income 
tax rate that would have applied if the 
rural business concern were a corpora-
tion. 
‘‘(b) PURPOSES.—The purposes of the Rural Business 
Investment Program established under this section are— 
‘‘(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;
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† HR 2642 EAS 
‘‘(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 fi-
nanced, by rural business investment companies. 
‘‘(c) ESTABLISHMENT.—In accordance with this sub-
title, the Secretary shall establish a Rural Business Invest-
ment Program, under which the Secretary may— 
‘‘(1) enter into participation agreements with 
companies granted final approval under subsection 
(d)(5) for the purposes described in subsection (b); 
‘‘(2) guarantee the debentures issued by rural 
business investment companies as provided in sub-
section (e); and 
‘‘(3) make grants to rural business investment 
companies, and to other entities, under subsection (h). 
‘‘(d) SELECTION OF RURAL BUSINESS INVESTMENT 
COMPANIES.— 
‘‘(1) ELIGIBILITY.—A company shall be eligible 
to apply to participate, as a rural business invest-
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† HR 2642 EAS 
ment company, in the program established under this 
section if— 
‘‘(A) the company is a newly formed for- 
profit entity or a newly formed for-profit sub-
sidiary of such an entity; 
‘‘(B) the company has a management team 
with experience in community development fi-
nancing or relevant venture capital financing; 
and 
‘‘(C) the company will invest in enterprises 
that will create wealth and job opportunities in 
rural areas, with an emphasis on smaller enter-
prises. 
‘‘(2) APPLICATION.—To participate, as a rural 
business investment company, in the program estab-
lished under this section, a company meeting the eli-
gibility requirements of paragraph (1) shall submit 
an application to the Secretary that includes— 
‘‘(A) a business plan describing how the 
company intends to make successful develop-
mental venture capital investments in identified 
rural areas; 
‘‘(B) information regarding the community 
development finance or relevant venture capital
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† HR 2642 EAS 
qualifications and general reputation of the 
management of the company; 
‘‘(C) a description of how the company in-
tends to work with community-based organiza-
tions and local entities (including local economic 
development companies, local lenders, and local 
investors) and to seek to address the unmet eq-
uity capital needs of the communities served; 
‘‘(D) a proposal describing how the com-
pany intends to use the grant funds provided 
under this section to provide operational assist-
ance to smaller enterprises financed by the com-
pany, including information regarding whether 
the company intends to use licensed profes-
sionals, as necessary, on the staff of the company 
or from an outside entity; 
‘‘(E) with respect to binding commitments 
to be made to the company under this section, an 
estimate of the ratio of cash to in-kind contribu-
tions; 
‘‘(F) a description of the criteria to be used 
to evaluate whether and to what extent the com-
pany meets the purposes of the program estab-
lished under this section;
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† HR 2642 EAS 
‘‘(G) information regarding the manage-
ment and financial strength of any parent firm, 
affiliated firm, or any other firm essential to the 
success of the business plan of the company; and 
‘‘(H) such other information as the Sec-
retary may require. 
‘‘(3) STATUS.—Not later than 90 days after the 
initial receipt by the Secretary of an application 
under this subsection, the Secretary shall provide to 
the applicant a written report describing the status of 
the application and any requirements remaining for 
completion of the application. 
‘‘(4) MATTERS CONSIDERED.—In reviewing and 
processing any application under this subsection, the 
Secretary shall— 
‘‘(A) determine whether— 
‘‘(i) the applicant meets the require-
ments of paragraph (5); and 
‘‘(ii) the management of the applicant 
is qualified and has the knowledge, experi-
ence, and capability necessary to comply 
with this section; 
‘‘(B) take into consideration— 
‘‘(i) the need for and availability of fi-
nancing for rural business concerns in the
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† HR 2642 EAS 
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) not take into consideration any pro-
jected shortage or unavailability of grant funds 
or leverage. 
‘‘(5) APPROVAL; LICENSE.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the Secretary may approve 
an applicant to operate as a rural business in-
vestment company under this subtitle and license 
the applicant as a rural business investment 
company, if— 
‘‘(i) the Secretary determines that the 
application satisfies the requirements of 
paragraph (2); 
‘‘(ii) the area in which the rural busi-
ness investment company is to conduct its 
operations, and establishment of branch of-
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† HR 2642 EAS 
fices or agencies (if authorized by the arti-
cles), are approved by the Secretary; and 
‘‘(iii) the applicant enters into a par-
ticipation agreement with the Secretary. 
‘‘(B) CAPITAL REQUIREMENTS.— 
‘‘(i) IN
GENERAL.—Notwithstanding 
any other provision of this section, the Sec-
retary may approve an applicant to operate 
as a rural business investment company 
under this section and designate the appli-
cant as a rural business investment com-
pany, if the Secretary determines that the 
applicant— 
‘‘(I) has private capital as deter-
mined by the Secretary; 
‘‘(II) would otherwise be approved 
under this section, except that the ap-
plicant does not satisfy the require-
ments of subsection (i)(3); and 
‘‘(III) has a viable business plan 
that— 
‘‘(aa) 
reasonably 
projects 
profitable operations; and 
‘‘(bb) has a reasonable time-
table for achieving a level of pri-
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† HR 2642 EAS 
vate capital that satisfies the re-
quirements of subsection (i)(3). 
‘‘(ii) LEVERAGE.—An applicant ap-
proved under clause (i) shall not be eligible 
to receive leverage under this section until 
the applicant satisfies the requirements of 
section 3602(i)(3). 
‘‘(iii) GRANTS.—An applicant ap-
proved under clause (i) shall be eligible for 
grants under subsection (h) in proportion to 
the private capital of the applicant, as de-
termined by the Secretary. 
‘‘(e) DEBENTURES.— 
‘‘(1) IN
GENERAL.—The Secretary may guar-
antee the timely payment of principal and interest, 
as scheduled, on debentures issued by any rural busi-
ness investment company. 
‘‘(2) TERMS
AND
CONDITIONS.—The Secretary 
may make guarantees under this subsection on such 
terms and conditions as the Secretary considers ap-
propriate, except that the term of any debenture guar-
anteed under this section shall not exceed 15 years. 
‘‘(3) FULL FAITH AND CREDIT OF THE UNITED 
STATES.—Section 3901 shall apply to any guarantee 
under this subsection.
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† HR 2642 EAS 
‘‘(4) MAXIMUM
GUARANTEE.—Under this sub-
section, the Secretary may— 
‘‘(A) guarantee the debentures issued by a 
rural business investment company only to the 
extent that the total face amount of outstanding 
guaranteed debentures of the rural business in-
vestment company does not exceed the lesser of— 
‘‘(i) 300 percent of the private capital 
of the rural business investment company; 
or 
‘‘(ii) $105,000,000; and 
‘‘(B) provide for the use of discounted de-
bentures. 
‘‘(f) ISSUANCE AND GUARANTEE OF TRUST CERTIFI-
CATES.— 
‘‘(1) ISSUANCE.—The Secretary may issue trust 
certificates representing ownership of all or a frac-
tional part of debentures issued by a rural business 
investment company and guaranteed by the Secretary 
under this section, if the certificates are based on and 
backed by a trust or pool approved by the Secretary 
and composed solely of guaranteed debentures. 
‘‘(2) GUARANTEE.— 
‘‘(A) IN
GENERAL.—The Secretary may, 
under such terms and conditions as the Sec-
685 
† HR 2642 EAS 
retary considers appropriate, guarantee the time-
ly payment of the principal of and interest on 
trust certificates issued by the Secretary or 
agents of the Secretary for purposes of this sub-
section. 
‘‘(B) LIMITATION.—Each guarantee under 
this paragraph shall be limited to the extent of 
principal and interest on the guaranteed deben-
tures that compose the trust or pool. 
‘‘(C) PREPAYMENT OR DEFAULT.— 
‘‘(i) IN GENERAL.— 
‘‘(I) AUTHORITY TO PREPAY.—A 
debenture may be prepaid at any time 
without penalty. 
‘‘(II) 
REDUCTION
OF
GUAR-
ANTEE.—Subject to subclause (I), if a 
debenture in a trust or pool is prepaid, 
or in the event of default of such a de-
benture, the guarantee of timely pay-
ment of principal and interest on the 
trust certificates shall be reduced in 
proportion to the amount of principal 
and interest the prepaid debenture rep-
resents in the trust or pool.
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† HR 2642 EAS 
‘‘(ii) INTEREST.—Interest on prepaid 
or defaulted debentures shall accrue and be 
guaranteed by the Secretary only through 
the date of payment of the guarantee. 
‘‘(iii) REDEMPTION.—At any time 
during the term of a trust certificate, the 
trust certificate may be called for redemp-
tion due to prepayment or default of all de-
bentures. 
‘‘(3) FULL FAITH AND CREDIT OF THE UNITED 
STATES.—Section 3901 shall apply to any guarantee 
of a trust certificate issued by the Secretary under 
this section. 
‘‘(4) SUBROGATION AND OWNERSHIP RIGHTS.— 
‘‘(A) SUBROGATION.—If the Secretary pays 
a claim under a guarantee issued under this sec-
tion, the claim shall be subrogated fully to the 
rights satisfied by the payment. 
‘‘(B) OWNERSHIP
RIGHTS.—No Federal, 
State, or local law shall preclude or limit the ex-
ercise 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 subsection. 
‘‘(5) MANAGEMENT AND ADMINISTRATION.—
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† HR 2642 EAS 
‘‘(A) REGISTRATION.—The Secretary shall 
provide for a central registration of all trust cer-
tificates issued under this subsection. 
‘‘(B) CREATION OF POOLS.—The Secretary 
may— 
‘‘(i) maintain such commercial bank 
accounts or investments in obligations of the 
United States as may be necessary to facili-
tate the creation of trusts or pools backed by 
debentures guaranteed under this subtitle; 
and 
‘‘(ii) issue trust certificates to facilitate 
the creation of those trusts or pools. 
‘‘(C) FIDELITY
BOND
OR
INSURANCE
RE-
QUIREMENT.—Any agent performing functions 
on behalf of the Secretary under this paragraph 
shall provide a fidelity bond or insurance in 
such amount as the Secretary considers to be 
necessary to fully protect the interests of the 
United States. 
‘‘(D) REGULATION OF BROKERS AND DEAL-
ERS.—The Secretary may regulate brokers and 
dealers in trust certificates issued under this sub-
section.
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† HR 2642 EAS 
‘‘(E) ELECTRONIC REGISTRATION.—Nothing 
in this paragraph prohibits the use of a book- 
entry or other electronic form of registration for 
trust certificates issued under this subsection. 
‘‘(g) FEES.— 
‘‘(1) IN GENERAL.—The Secretary may charge a 
fee that does not exceed $500 with respect to any 
guarantee or grant issued under this section. 
‘‘(2) 
TRUST
CERTIFICATE.—Notwithstanding 
paragraph (1), the Secretary shall not collect a fee for 
any guarantee of a trust certificate under subsection 
(f), except that any agent of the Secretary may collect 
a fee that does not exceed $500 for the functions de-
scribed in subsection (f)(5)(B). 
‘‘(3) LICENSE.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (C), the Secretary may prescribe 
fees to be paid by each applicant for a license to 
operate as a rural business investment company 
under this section. 
‘‘(B) USE
OF
AMOUNTS.—Fees collected 
under this paragraph— 
‘‘(i) shall be deposited in the account 
for salaries and expenses of the Secretary;
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† HR 2642 EAS 
‘‘(ii) are authorized to be appropriated 
solely to cover the costs of licensing exami-
nations; and 
‘‘(iii) shall— 
‘‘(I) in the case of a license issued 
before the date of enactment of the Ag-
riculture Reform, Food, and Jobs Act 
of 2013, not exceed $500 for any fee 
collected under this paragraph; and 
‘‘(II) in the case of a license 
issued after the date of enactment of 
the Agriculture Reform, Food, and 
Jobs Act of 2013, be a rate as deter-
mined by the Secretary. 
‘‘(C) PROHIBITION ON COLLECTION OF CER-
TAIN FEES.—In the case of a license described in 
subparagraph (A) that was approved before July 
1, 2007, the Secretary shall not collect any fees 
due on or after the date of enactment of the Agri-
culture Reform, Food, and Jobs Act of 2013. 
‘‘(h) OPERATIONAL ASSISTANCE GRANTS.— 
‘‘(1) IN GENERAL.—In accordance with this sub-
section, the Secretary may make grants to rural busi-
ness investment companies and to other entities, as 
authorized by this section, to provide operational as-
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† HR 2642 EAS 
sistance to smaller enterprises financed, or expected to 
be financed, by the entities. 
‘‘(2) TERMS.—Grants made under this sub-
section shall be made over a multiyear period (not to 
exceed 10 years) under such terms as the Secretary 
may require. 
‘‘(3) USE OF FUNDS.—The proceeds of a grant 
made under this subsection may be used by the rural 
business investment company receiving the grant only 
to provide operational assistance in connection with 
an equity or prospective equity investment in a busi-
ness located in a rural area. 
‘‘(4) SUBMISSION OF PLANS.—A rural business 
investment company shall be eligible for a grant 
under this subsection only if the rural business invest-
ment company submits to the Secretary, in such form 
and manner as the Secretary may require, a plan for 
use of the grant. 
‘‘(5) GRANT AMOUNT.— 
‘‘(A) RURAL BUSINESS INVESTMENT COMPA-
NIES.—The amount of a grant made under this 
subsection to a rural business investment com-
pany shall be equal to the lesser of—
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† HR 2642 EAS 
‘‘(i) 10 percent of the private capital 
raised by the rural business investment 
company; or 
‘‘(ii) $1,000,000. 
‘‘(6) OTHER ENTITIES.—The amount of a grant 
made under this subsection to any entity other than 
a rural business investment company shall be equal 
to the resources (in cash or in kind) raised by the en-
tity in accordance with the requirements applicable to 
rural business investment companies under this sec-
tion. 
‘‘(i) RURAL BUSINESS INVESTMENT COMPANIES.— 
‘‘(1) ORGANIZATION.—For purposes of this sub-
section, a rural business investment company shall— 
‘‘(A) be an incorporated body, a limited li-
ability company, or a limited partnership orga-
nized and chartered or otherwise existing under 
State law solely for the purpose of performing 
the functions and conducting the activities au-
thorized by this section; and 
‘‘(B)(i) if incorporated, have succession for 
a period of not less than 30 years unless earlier 
dissolved by the shareholders of the rural busi-
ness investment company; and
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† HR 2642 EAS 
‘‘(ii) if a limited partnership or a limited 
liability company, have succession for a period 
of not less than 10 years; and 
‘‘(iii) possess the powers reasonably nec-
essary to perform the functions and conduct the 
activities. 
‘‘(2) ARTICLES.—The articles of any rural busi-
ness investment company— 
‘‘(A) shall specify in general terms— 
‘‘(i) the purposes for which the rural 
business investment company is formed; 
‘‘(ii) the name of the rural business in-
vestment company; 
‘‘(iii) the 1 or more areas in which the 
operations of the rural business investment 
company are to be carried out; 
‘‘(iv) the place where the principal of-
fice of the rural business investment com-
pany is to be located; and 
‘‘(v) the amount and classes of the 
shares of capital stock of the rural business 
investment company; 
‘‘(B) may contain any other provisions con-
sistent with this section that the rural business 
investment company may determine appropriate
693 
† HR 2642 EAS 
to adopt for the regulation of the business of the 
rural business investment company and the con-
duct of the affairs of the rural business invest-
ment company; and 
‘‘(C) shall be subject to the approval of the 
Secretary. 
‘‘(3) CAPITAL REQUIREMENTS.— 
‘‘(A) IN GENERAL.—Each rural business in-
vestment company shall be required to meet the 
capital requirements as provided by the Sec-
retary. 
‘‘(B) TIME
FRAME.—Each rural business 
investment company shall have a period of 2 
years to meet the capital requirements of this 
paragraph. 
‘‘(C) ADEQUACY.—In addition to the re-
quirements of subparagraph (A), the Secretary 
shall— 
‘‘(i) determine whether the private cap-
ital of each rural business investment com-
pany is adequate to ensure a reasonable 
prospect that the rural business investment 
company will be operated soundly and prof-
itably, and managed actively and prudently
694 
† HR 2642 EAS 
in accordance with the articles of the rural 
business investment company; 
‘‘(ii) determine that the rural business 
investment company will be able to comply 
with the requirements of this section; 
‘‘(iii) require that at least 75 percent 
of the capital of each rural business invest-
ment company is invested in rural business 
concerns; 
‘‘(iv) ensure that the rural business in-
vestment company is designed primarily to 
meet equity capital needs of the businesses 
in which the rural business investment com-
pany invests and not to compete with tradi-
tional small business financing by commer-
cial lenders; and 
‘‘(v) require that the rural business in-
vestment company makes short-term non-eq-
uity investments of less than 5 years only 
to the extent necessary to preserve an exist-
ing investment. 
‘‘(4) DIVERSIFICATION
OF
OWNERSHIP.—The 
Secretary shall ensure that the management of each 
rural business investment company licensed after the 
date of enactment of the Agriculture Reform, Food,
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† HR 2642 EAS 
and Jobs Act of 2013 is sufficiently diversified from 
and unaffiliated with the ownership of the rural busi-
ness investment company so as to ensure independ-
ence and objectivity in the financial management and 
oversight of the investments and operations of the 
rural business investment company. 
‘‘(j) FINANCIAL INSTITUTION INVESTMENTS.— 
‘‘(1) IN GENERAL.—Except as otherwise provided 
in this subsection and notwithstanding any other pro-
vision of law, the following banks, associations, and 
institutions are eligible both to establish and invest in 
any rural business investment company or in any en-
tity established to invest solely in rural business in-
vestment companies: 
‘‘(A) Any bank or savings association the 
deposits of which are insured under the Federal 
Deposit Insurance Act (12 U.S.C. 1811 et seq.), 
including an investment pool created entirely by 
such bank or savings association. 
‘‘(B) Any Farm Credit System institution 
described in subsection 1.2(a) of the Farm Credit 
Act of 1971 (12 U.S.C. 2002(a)). 
‘‘(2) LIMITATION.—No bank, association, or in-
stitution described in paragraph (1) may make in-
vestments described in paragraph (1) that are greater
696 
† HR 2642 EAS 
than 5 percent of the capital and surplus of the bank, 
association, or institution. 
‘‘(3) LIMITATION ON RURAL BUSINESS INVEST-
MENT COMPANIES CONTROLLED BY FARM CREDIT SYS-
TEM INSTITUTIONS.—If a Farm Credit System insti-
tution described in section 1.2(a) of the Farm Credit 
Act of 1971 (12 U.S.C. 2002(a)) holds more than 25 
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 invest-
ments in, or provide other financial assistance to, en-
tities that are not otherwise eligible to receive financ-
ing from the Farm Credit System under that Act (12 
U.S.C. 2001 et seq.). 
‘‘(k) EXAMINATIONS.— 
‘‘(1) IN GENERAL.—Each rural business invest-
ment company that participates in the program es-
tablished under this section shall be subject to exami-
nations made at the direction of the Secretary in ac-
cordance with this subsection. 
‘‘(2) ASSISTANCE
OF
PRIVATE
SECTOR
ENTI-
TIES.—An examination under this subsection may be 
conducted with the assistance of a private sector enti-
697 
† HR 2642 EAS 
ty that has the qualifications and the expertise nec-
essary to conduct such an examination. 
‘‘(3) COSTS.— 
‘‘(A) IN GENERAL.—The Secretary may as-
sess the cost of an examination under this sec-
tion, including compensation of the examiners, 
against the rural business investment company 
examined. 
‘‘(B) PAYMENT.—Any rural business invest-
ment company against which the Secretary as-
sesses costs under this subparagraph shall pay 
the costs. 
‘‘(4) DEPOSIT OF FUNDS.—Funds collected under 
this subsection shall— 
‘‘(A) be deposited in the account that in-
curred the costs for carrying out this subsection; 
‘‘(B) be made available to the Secretary to 
carry out this subsection, without further appro-
priation; and 
‘‘(C) remain available until expended. 
‘‘(l) REPORTING REQUIREMENTS.— 
‘‘(1) RURAL
BUSINESS
INVESTMENT
COMPA-
NIES.—Each entity that participates in a program 
established under this section shall provide to the Sec-
698 
† HR 2642 EAS 
retary such information as the Secretary may re-
quire, including— 
‘‘(A) information relating to the measure-
ment criteria that the entity proposed in the pro-
gram application of the rural business invest-
ment company; and 
‘‘(B) in each case in which the entity under 
this section makes an investment in, or a loan 
or grant to, a business that is not located in a 
rural area, a report on the number and percent-
age of employees of the business who reside in 
those areas. 
‘‘(2) PUBLIC REPORTS.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
prepare and make available to the public an an-
nual report on the programs established under 
this section, including detailed information on— 
‘‘(i) the number of rural business in-
vestment companies licensed by the Sec-
retary during the previous fiscal year; 
‘‘(ii) the aggregate amount of leverage 
that rural business investment companies 
have received from the Federal Government 
during the previous fiscal year;
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† HR 2642 EAS 
‘‘(iii) 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; 
‘‘(iv) the number of rural business in-
vestment company licenses surrendered and 
the number of rural business investment 
companies placed in liquidation during the 
previous fiscal year, identifying the amount 
of leverage each rural business investment 
company has received from the Federal Gov-
ernment and the type of leverage instru-
ments each rural business investment com-
pany has used; 
‘‘(v) the amount of losses sustained by 
the Federal Government as a result of oper-
ations under this section during the pre-
vious fiscal year and an estimate of the 
total losses that the Federal Government can 
reasonably expect to incur as a result of the 
operations during the current fiscal year; 
‘‘(vi) actions taken by the Secretary to 
maximize recoupment of funds of the Fed-
eral Government expended to implement
700 
† HR 2642 EAS 
and administer the Rural Business Invest-
ment Program under this section during the 
previous fiscal year and to ensure compli-
ance with the requirements of this section 
(including regulations); 
‘‘(vii) the amount of Federal Govern-
ment leverage that each licensee received in 
the previous fiscal year and the types of le-
verage instruments each licensee used; 
‘‘(viii) for each type of financing in-
strument, the sizes, types of geographic loca-
tions, and other characteristics of the small 
business investment companies using the in-
strument during the previous fiscal year, 
including the extent to which the investment 
companies have used the leverage from each 
instrument to make loans or equity invest-
ments in rural areas; and 
‘‘(ix) the actions of the Secretary to 
carry out this section 
‘‘(B) PROHIBITION.—In compiling the re-
port required under subparagraph (A), the Sec-
retary may not— 
‘‘(i) compile the report in a manner 
that permits identification of any par-
701 
† HR 2642 EAS 
ticular type of investment by an individual 
rural business investment company or small 
business concern in which a rural business 
investment company invests; or 
‘‘(ii) release any information that is 
prohibited under section 1905 of title 18, 
United States Code. 
‘‘(m) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to carry out this section 
$25,000,000 for the period of fiscal years 2008 through 
2018.’’. 
‘‘CHAPTER 3—GENERAL RURAL 
DEVELOPMENT PROVISIONS 
‘‘SEC. 
3701. 
GENERAL 
PROVISIONS 
FOR 
LOANS 
AND 
GRANTS. 
‘‘(a) PERIOD FOR REPAYMENT.—Unless otherwise spe-
cifically provided for in this subtitle, the period for repay-
ment of a loan under this subtitle shall not exceed 40 years. 
‘‘(b) INTEREST RATES.— 
‘‘(1) IN GENERAL.—Except as otherwise provided 
in this title, the interest rate on a loan under this 
subtitle shall be determined by the Secretary at a 
rate— 
‘‘(A) not to exceed a sum obtained by add-
ing—
702 
† HR 2642 EAS 
‘‘(i) the current average market yield 
on outstanding marketable obligations of the 
United States with remaining periods to 
maturity comparable to the average matu-
rity of the loan; and 
‘‘(ii) an amount not to exceed 1 per-
cent, as determined by the Secretary; and 
‘‘(B) adjusted to the nearest 1⁄8 of 1 percent. 
‘‘(2) WATER AND WASTE FACILITY LOANS AND 
COMMUNITY FACILITIES LOANS.— 
‘‘(A) IN
GENERAL.—Notwithstanding any 
provision of State law limiting the rate or 
amount of interest that may be charged, taken, 
received, or reserved, except as provided in sub-
paragraph (C) and paragraph (4), the interest 
rate on a loan (other than a guaranteed loan) to 
a public body or nonprofit association (including 
an Indian tribe) for a water or waste disposal 
facility or essential community facility shall be 
determined by the Secretary at a rate not to ex-
ceed— 
‘‘(i) the current market yield on out-
standing municipal obligations with re-
maining periods to maturity comparable to
703 
† HR 2642 EAS 
the average maturity for the loan, and ad-
justed to the nearest 1⁄8 of 1 percent; 
‘‘(ii) 5 percent per year for a loan that 
is for the upgrading of a facility or con-
struction of a new facility as required to 
meet applicable health or sanitary stand-
ards in— 
‘‘(I) an area in which the median 
family income of the persons to be 
served by the facility is below the pov-
erty line (as defined in section 673 of 
the Community Services Block Grant 
Act (42 U.S.C. 9902)); and 
‘‘(II) any areas the Secretary may 
designate in which a significant per-
centage of the persons to be served by 
the facilities are low income persons, 
as determined by the Secretary; and 
‘‘(iii) 7 percent per year for a loan for 
a facility that does not qualify for the 5 
percent per year interest rate prescribed in 
clause (ii) but that is located in an area in 
a State in which the median household in-
come of the persons to be served by the facil-
ity does not exceed 100 percent of the state-
704 
† HR 2642 EAS 
wide nonmetropolitan median household in-
come for the State. 
‘‘(B) HEALTH CARE AND RELATED FACILI-
TIES.—Notwithstanding subparagraph (A), the 
Secretary shall establish a rate for a loan for a 
health care or related facility that is— 
‘‘(i) based solely on the income of the 
area to be served; and 
‘‘(ii) otherwise consistent with sub-
paragraph (A). 
‘‘(C) INTEREST
RATES
FOR
WATER
AND 
WASTE DISPOSAL FACILITIES LOANS.— 
‘‘(i) IN GENERAL.—Except as provided 
in clause (ii) and notwithstanding subpara-
graph (A), in the case of a direct loan for 
a water or waste disposal facility— 
‘‘(I) in the case of a loan that 
would be subject to the 5 percent inter-
est rate limitation under subparagraph 
(A), the Secretary shall establish the 
interest rate at a rate that is equal to 
60 percent of the current market yield 
for outstanding municipal obligations 
with remaining periods to maturity 
comparable to the average maturity of
705 
† HR 2642 EAS 
the loan, adjusted to the nearest 1⁄8 of 
1 percent; and 
‘‘(II) in the case of a loan that 
would be subject to the 7 percent limi-
tation under subparagraph (A), the 
Secretary shall establish the interest 
rate at a rate that is equal to 80 per-
cent of the current market yield for 
outstanding 
municipal 
obligations 
with remaining periods to maturity 
comparable to the average maturity of 
the loan, adjusted to the nearest 1⁄8 of 
1 percent. 
‘‘(ii) EXCEPTION.—Clause (i) does not 
apply to a loan for a specific project that 
is the subject of a loan that has been ap-
proved, but not closed, as of the date of en-
actment of the Agriculture Reform, Food, 
and Jobs Act of 2013. 
‘‘(3) INTEREST RATES ON BUSINESS AND OTHER 
LOANS.— 
‘‘(A) IN GENERAL.—Except as provided in 
paragraph (4), the interest rates on loans under 
sections 3501(a)(1) (other than guaranteed loans 
and loans as described in paragraph (2)(A))
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† HR 2642 EAS 
shall be as determined by the Secretary in ac-
cordance with subparagraph (B). 
‘‘(B) MINIMUM
RATE.—The interest rates 
described in subparagraph (A) shall be not less 
than the sum obtained by adding— 
‘‘(i) such rates as determined by the 
Secretary of the Treasury taking into con-
sideration the current average market yield 
on outstanding marketable obligations of the 
United States with remaining periods to 
maturity comparable to the average matu-
rities of such loans, adjusted in the judg-
ment of the Secretary of the Treasury to 
provide for rates comparable to the rates 
prevailing in the private market for similar 
loans and considering the insurance by the 
Secretary of the loans; and 
‘‘(ii) an additional charge, prescribed 
by the Secretary, to cover the losses of the 
Secretary and cost of administration, which 
shall be deposited in the Rural Development 
Insurance Fund, and further adjusted to the 
nearest 1⁄8 of 1 percent. 
‘‘(4) INTEREST RATES ADJUSTMENTS.—
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† HR 2642 EAS 
‘‘(A) ADJUSTMENTS.—Notwithstanding any 
other provision of this subsection, in the case of 
loans (other than guaranteed loans) made or 
guaranteed under the authorities of this title 
specified in subparagraph (C) for activities that 
involve the use of prime farmland, the interest 
rates shall be the interest rates otherwise appli-
cable under this section increased by 2 percent 
per year. 
‘‘(B) PRIME FARMLAND.— 
‘‘(i) IN
GENERAL.—Wherever prac-
ticable, construction by a State, munici-
pality, or other political subdivision of local 
government that is supported by loans de-
scribed in subparagraph (A) shall be placed 
on land that is not prime farmland, in 
order to preserve the maximum practicable 
quantity of prime farmlands for production 
of food and fiber. 
‘‘(ii) INCREASED RATE.—In any case 
in which other options exist for the siting of 
construction described in clause (i) and the 
governmental authority still desires to carry 
out the construction on prime farmland, the 
2-percent interest rate increase provided by
708 
† HR 2642 EAS 
this paragraph shall apply, but that in-
creased interest rate shall not apply where 
such other options do not exist. 
‘‘(C) APPLICABLE AUTHORITIES.—The au-
thorities referred to in subparagraph (A) are— 
‘‘(i) the provisions of section 3502(a) 
relating to loans for recreational develop-
ments and essential community facilities; 
‘‘(ii) section 3601(e)(2)(A); and 
‘‘(iii) section 3601(c). 
‘‘(c) PAYMENT OF CHARGES.—A borrower of a loan 
made or guaranteed under this subtitle shall pay such fees 
and other charges as the Secretary may require, and prepay 
to the Secretary such taxes and insurance as the Secretary 
may require, on such terms and conditions as the Secretary 
may prescribe. 
‘‘(d) SECURITY.— 
‘‘(1) IN GENERAL.—The Secretary shall take as 
security for an obligation entered into in connection 
with a loan made under this subtitle such security as 
the Secretary may require. 
‘‘(2) LIENS TO UNITED STATES.—An instrument 
for security under paragraph (1) may constitute a 
lien running to the United States notwithstanding the
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fact that the note for the security may be held by a 
lender other than the United States. 
‘‘(3) MULTIPLE LOANS.—A borrower may use the 
same collateral to secure 2 or more loans made or 
guaranteed under this subtitle, except that the out-
standing amount of the loans may not exceed the total 
value of the collateral. 
‘‘(e) LEGAL COUNSEL FOR SMALL LOANS.—In the case 
of a loan of less than $500,000 made or guaranteed under 
section 3501 that is evidenced by a note or mortgage (as 
distinguished from a bond issue), the borrower shall not be 
required to appoint bond counsel to review the legal validity 
of the loan if the Secretary has available legal counsel to 
perform the review. 
‘‘SEC. 3702. STRATEGIC ECONOMIC AND COMMUNITY DE-
VELOPMENT. 
‘‘(a) PRIORITY.—In the case of any rural development 
program authorized by this subtitle, the Secretary may give 
priority to applications that are otherwise eligible and sup-
port strategic community and economic development plans 
on a multijurisdictional basis, as approved by the Sec-
retary. 
‘‘(b) EVALUATION.—In evaluating strategic applica-
tions, the Secretary shall give a higher priority to strategic
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applications for a plan described in subsection (a) that 
demonstrate— 
‘‘(1) the plan was developed through the collabo-
ration of multiple stakeholders in the service area of 
the plan, including the participation of combinations 
of stakeholders such as State, local, and tribal govern-
ments, nonprofit institutions, institutions of higher 
education, and private entities; 
‘‘(2) an understanding of the applicable regional 
resources that could support the plan, including nat-
ural resources, human resources, infrastructure, and 
financial resources; 
‘‘(3) investment from other Federal agencies; 
‘‘(4) investment from philanthropic organiza-
tions; and 
‘‘(5) clear objectives for the plan and the ability 
to establish measurable performance measures and to 
track progress toward meeting the objectives. 
‘‘(c) FUNDS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (3), the 
Secretary may reserve for projects that support multi-
jurisdictional strategic community and economic de-
velopment plans described in subsection (a) an 
amount that does not exceed—
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‘‘(A) 20 percent of the funds made available 
for a fiscal year for a functional category de-
scribed in paragraph (2); and 
‘‘(B) 15 percent of the total funds available 
for all functional categories. 
‘‘(2) FUNCTIONAL
CATEGORIES.—The function 
categories described in this subsection are the fol-
lowing: 
‘‘(A) RURAL COMMUNITY FACILITIES.—The 
rural community development category consists 
of all amounts made available for community fa-
cility grants and direct and guaranteed loans 
under section 3502. 
‘‘(B) RURAL UTILITIES.—The rural utilities 
category consists of all amounts made available 
for— 
‘‘(i) water or waste disposal grants or 
direct or guaranteed loans under section 
3501(a); 
‘‘(ii) emergency community water as-
sistance grants under section 3501(e)(2); 
‘‘(iii) solid waste management grants 
under section 3501(e)(4); or
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‘‘(iv) rural water or wastewater tech-
nical assistance and training grants under 
section 3501(e)(5). 
‘‘(C) RURAL BUSINESS AND COOPERATIVE 
DEVELOPMENT.—The rural business and cooper-
ative development category consists of all 
amounts made available for— 
‘‘(i) rural business opportunity grants, 
rural business enterprise grants, or rural 
educational network grants under section 
3601(a); or 
‘‘(ii) business and industry direct and 
guaranteed loans under section 3601(e). 
‘‘(3) LIMITATION.—The reservation of funds de-
scribed in paragraph (2) may only extend through 
June 30 of the fiscal year in which the funds were 
first made available. 
‘‘SEC. 3703. GUARANTEED RURAL DEVELOPMENT LOANS. 
‘‘(a) IN GENERAL.—The Secretary may provide finan-
cial assistance to a borrower for a purpose provided in this 
subtitle by guaranteeing a loan made by any Federal or 
State chartered bank, savings and loan association, cooper-
ative lending agency, or other legally organized lending 
agency.
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‘‘(b) INTEREST RATE.—The interest rate payable by 
a borrower on the portion of a guaranteed loan that is sold 
by a lender to the secondary market under this subtitle may 
be lower than the interest rate charged on the portion re-
tained by the lender. 
‘‘(c) MAXIMUM GUARANTEE OF 90 PERCENT.—Except 
as provided in subsections (d) and (e), a loan guarantee 
under this subtitle shall be for not more than 90 percent 
of the principal and interest due on the loan. 
‘‘(d) REFINANCED LOANS GUARANTEED AT 95 PER-
CENT.—The Secretary shall guarantee 95 percent of— 
‘‘(1) in the case of a loan that solely refinances 
a direct loan made under this subtitle, the principal 
and interest due on the loan on the date of the refi-
nancing; or 
‘‘(2) in the case of a loan that is used for mul-
tiple purposes, the portion of the loan that refinances 
the principal and interest due on a direct loan made 
under this subtitle that is outstanding on the date on 
which the loan is guaranteed. 
‘‘(e) RISK OF LOSS.— 
‘‘(1) IN GENERAL.—Subject to subsection (b), the 
Secretary may not make a loan under section 3501 
or 3601 unless the Secretary determines that no other 
lender is willing to make the loan and assume 10 per-
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cent of the potential loss to be sustained from the 
loan. 
‘‘(2) EXCEPTION
FOR
NONPROFIT
GROUPS.— 
Paragraph (1) shall not apply to a public body or 
nonprofit association, including an Indian tribe. 
‘‘SEC. 3704. RURAL DEVELOPMENT INSURANCE FUND. 
‘‘(a) DEFINITION OF RURAL DEVELOPMENT LOAN.— 
In this section, the term ‘rural development loan’ means 
a loan provided for by section 3501 or 3601. 
‘‘(b) ESTABLISHMENT.—There is established in the 
Treasury of the United States a fund to be known as the 
‘Rural Development Insurance Fund’ that shall be used by 
the Secretary to discharge the obligations of the Secretary 
under contracts making or guaranteeing rural development 
loans. 
‘‘SEC. 3705. RURAL ECONOMIC AREA PARTNERSHIP ZONES. 
‘‘(a) IN GENERAL.—The Secretary may designate ad-
ditional areas as rural economic area partnership zones to 
be assisted under this chapter— 
‘‘(1) through an open, competitive process; and 
‘‘(2) with priority given to rural areas— 
‘‘(A) 
with 
excessive 
unemployment 
or 
underemployment, a high percentage of low-in-
come residents, or high rates of outmigration, as 
determined by the Secretary; and