II 118th CONGRESS 1st Session S. 2668 IN THE SENATE OF THE UNITED STATES July 27, 2023 Mrs. Gillibrand (for herself and Mr. Fetterman ) introduced the following bill; which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry A BILL To amend the Consolidated Farm and Rural Development Act to reform farm loans, to amend the Department of Agriculture Reorganization Act of 1994 to reform the National Appeals Division process, and for other purposes.

1. Short title This Act may be cited as the Fair Credit for Farmers Act of 2023 . 2. Deferment of payments for borrowers of farm loans (a) Definitions In this section: (1) Economically distressed farmer or rancher The term economically distressed farmer or rancher means a farmer or rancher that is— (A) delinquent, as described in the definition of the term delinquent borrower in section 761.2(b) of title 7, Code of Federal Regulations (or successor regulations); (B) financially distressed, as described in the definition of the term financially distressed borrower in section 761.2(b) of title 7, Code of Federal Regulations (or successor regulations); or (C) a borrower of a direct farm loan who is unable to develop a feasible plan (as defined in section 761.2(b) of title 7, Code of Federal Regulations (or successor regulations)) for the current or next production cycle with current available rates and terms. (2) Eligible borrower The term eligible borrower means a borrower that— (A) is an economically distressed farmer or rancher; and (B) did not receive assistance under section 22006 of Public Law 117–169 (commonly known as the Inflation Reduction Act ). (3) Farm loan (A) In general The term farm loan means a direct or guaranteed— (i) farm ownership loan under subtitle A of the Consolidated Farm and Rural Development Act ( 7 U.S.C. 1922 et seq. ); (ii) operating loan under subtitle B of that Act ( 7 U.S.C. 1941 et seq. ); or (iii) emergency loan under subtitle C of that Act ( 7 U.S.C. 1961 et seq. ). (B) Inclusion The term farm loan includes direct microloans of any type of loan described in clauses (i) through (iii) of subparagraph (A). (4) Historically underserved farmer or rancher The term historically underserved farmer or rancher means— (A) a limited resource farmer or rancher, as determined by the Secretary; (B) a socially disadvantaged farmer or rancher (as defined in section 2501(a) of the Food, Agriculture, Conservation, and Trade Act of 1990 ( 7 U.S.C. 2279(a) )); (C) a beginning farmer or rancher (as defined in that section); and (D) a veteran farmer or rancher (as defined in that section). (5) Secretary The term Secretary means the Secretary of Agriculture. (b) Deferment of payments on direct farm loans The Secretary shall— (1) defer payments of principal and interest due on direct farm loans by eligible borrowers during the 2-year period beginning on the date of enactment of this Act; and (2) extend the date required for repayment of direct farm loans by eligible borrowers subject to deferment under paragraph (1) by not less than 2 years after the end of the period described in that paragraph. (c) Zero percent interest The Secretary shall modify each direct farm loan of an eligible borrower that is outstanding as of the date of enactment of this Act such that the interest rate on the farm loan is zero percent during the 2-year period beginning on that date of enactment. (d) Waiver of guaranteed farm loan fees for historically underserved farmers and ranchers The Secretary shall require lenders of guaranteed farm loans to historically underserved farmers or ranchers to waive borrower fees on those loans during the period— (1) beginning on the date of enactment of this Act; and (2) ending not earlier than 2 years after that date of enactment. 3. Farm loan reform (a) In general Subtitle D of the Consolidated Farm and Rural Development Act is amended by inserting after section 374 ( 7 U.S.C. 2008i ) the following: 375. Farm loan reform (a) Definitions In this section: (1) Adverse decision The term adverse decision has the meaning given the term in section 271 of the Department of Agriculture Reorganization Act of 1994 ( 7 U.S.C. 6991 ). (2) Farm loan The term farm loan means a loan administered by the Farm Service Agency under subtitle A or B. (3) Principal residence The term principal residence means the principal residence of a borrower of a farm loan, including adjoining land of not more than 10 acres. (b) Determination letters and adverse decisions (1) In general In the case of any adverse decision relating to a farm loan, a Farm Service Agency program benefit, or the noninsured crop disaster assistance program established by section 196 of the Federal Agriculture Improvement and Reform Act of 1996 ( 7 U.S.C. 7333 ), the Secretary shall include in a determination letter provided to the applicant, to the maximum extent practicable— (A) a description of each reason known, or that reasonably should have been known, to the Secretary for that adverse decision; (B) a reference to each regulation, and Farm Loan Program handbook instruction, with the maximum practicable specificity, that forms the basis for each reason described in subparagraph (A); and (C) instructions for accessing the Electronic Code of Federal Regulations and Farm Loan Program handbook instructions online. (2) Effect of failure to state reasons If the Secretary issues any adverse decision relating to an application for a farm loan, a Farm Service Agency program benefit, or the noninsured crop disaster assistance program established by section 196 of the Federal Agriculture Improvement and Reform Act of 1996 ( 7 U.S.C. 7333 ) and does not include in a determination letter provided to the applicant a reason known to the Secretary for that adverse decision, the Secretary may not subsequently issue an adverse decision to that applicant on the basis of the same reason, unless the circumstances of the applicant have substantially changed since the issuance of the prior adverse decision. (c) Collateralization (1) Origination The Secretary may only secure a direct farm loan with a principal residence if the total value of other assets available to secure the farm loan does not provide adequate security (as defined in section 761.2(b) of title 7, Code of Federal Regulations (or successor regulations)) for the loan. (2) Partial release of principal residence security In the case of a farm loan secured in part by a principal residence, the Secretary shall initiate a partial release of the principal residence as security in accordance with subpart H of part 765 of title 7, Code of Federal Regulations (or successor regulations), without any action required by the borrower, when the total value of other assets securing the farm loan is equal to 100 percent of the remaining loan amount. (3) Loan servicing (A) In general In the case of a farm loan borrower who is delinquent prior to restructuring the farm loan, the borrower shall execute and provide to the Secretary a lien on assets necessary to achieve not more than 100 percent collateralization of the loan value. (B) Best lien Except as provided in section 764.106 of title 7, Code of Federal Regulations (or successor regulations), the Secretary shall take the best lien obtainable on assets described in subparagraph (A), subject to the condition that a primary residence shall be the last option available to the Secretary to achieve 100 percent collateralization of the loan value. (4) Prohibition on additional security The Secretary may not secure a direct farm loan with any property that provides security in excess of the amount of security value equal to the loan amount. (d) Eligibility requirements The Secretary shall not impose any limitation relating to the number of years in which a farm loan may be closed by a borrower. . (b) Refinancing of debt with farm loans (1) Purposes of farm ownership loans Section 303(a)(1) of the Consolidated Farm and Rural Development Act ( 7 U.S.C. 1923(a)(1) ) is amended by striking subparagraph (E) and inserting the following: (E) refinancing indebtedness. . (2) Purposes of operating loans Section 312(a) of the Consolidated Farm and Rural Development Act ( 7 U.S.C. 1942(a) ) is amended by striking paragraph (9) and inserting the following: (9) refinancing the indebtedness of a borrower; or . (c) Removal of eligibility restriction based on previous debt write-Down or other loss Section 373 of the Consolidated Farm and Rural Development Act ( 7 U.S.C. 2008h ) is amended— (1) in subsection (b)(2)(A)— (A) by striking clause (i); (B) in clause (ii), by striking chapters 11, 12, or 13 of Title 11 of the and inserting chapter 11, 12, or 13 of title 11, ; and (C) by redesignating clauses (ii) and (iii) as clauses (i) and (ii), respectively; and (2) by striking subsection (c) and inserting the following: (c) Prohibition on eligibility restriction based on debt write-Down or other loss The Secretary shall not restrict the eligibility of a borrower for a farm ownership or operating loan under subtitle A or B based on a previous debt write-down or other loss to the Secretary. . (d) Equitable relief Section 366 of the Consolidated Farm and Rural Development Act ( 7 U.S.C. 2008a ) is amended— (1) in subsection (a)— (A) in paragraph (1), by striking (1) received and inserting (1)(A) received ; (B) in paragraph (2)— (i) by striking the period at the end and inserting ; or ; and (ii) by striking (2) the Secretary and inserting (B) the Secretary ; and (C) by adding at the end the following: (2) (A) received a benefit under any other program administered by an agency (as defined in section 271 of the Department of Agriculture Reorganization Act of 1994 ( 7 U.S.C. 6991 )); and (B) the Secretary determines is not in compliance with the requirements of the provisions of law that authorize that program. ; (2) in subsection (b)(2), by inserting , including having made management or financial decisions for the farming or ranching operation of the farmer or rancher that were detrimental due to the erroneous nature of an official communication from the Department of Agriculture, regardless of whether a financial benefit was received or only promised before the period at the end; (3) in subsection (c)(1), by striking (a)(2) and inserting (a)(1)(B) ; (4) in subsection (e), by striking section in the matter preceding paragraph (1) and all that follows through shall not be in paragraph (2) and inserting section shall be ; and (5) by adding at the end the following: (f) Authority of National Appeals Division Administrative Judges (1) In general An Administrative Judge of the National Appeals Division may provide equitable relief under this section. (2) Review The Secretary may review a decision of an Administrative Judge to grant equitable relief pursuant to paragraph (1). (g) Cases in which an applicant is eligible (1) Definitions In this subsection: (A) Adverse decision The term adverse decision has the meaning given the term in section 271 of the Department of Agriculture Reorganization Act of 1994 ( 7 U.S.C. 6991 ). (B) Applicant The term applicant means a person who submitted to the Farm Service Agency an application for— (i) a direct farm ownership, operating, or emergency loan under this title; (ii) a Farm Service Agency program benefit; or (iii) the noninsured crop disaster assistance program established by section 196 of the Federal Agriculture Improvement and Reform Act of 1996 ( 7 U.S.C. 7333 ). (2) Denial based on feasibility (A) In general A loan applicant shall be eligible for equitable relief under this section if— (i) the National Appeals Division determines that the Farm Service Agency was in error in denying the loan, benefit, or payment based on feasibility; (ii) the National Appeals Division has confirmed the accuracy of the projected income and projected expenses described in the original application submitted by the applicant; and (iii) the original application submitted by the applicant is no longer feasible due to the delay caused by the erroneous denial by the Farm Service Agency and the length of the appeals process. (B) Amount The amount of equitable relief under subparagraph (A) shall be the amount equal to the difference between— (i) the projected income described in the application; and (ii) the projected expenses described in the application. (3) Denial based on eligibility A loan applicant shall be eligible for equitable relief under this section if— (A) feasibility was not listed as a reason for an adverse decision in the determination letter provided to the applicant; (B) eligibility was listed as a reason for an adverse decision in the determination letter provided to the applicant; (C) the National Appeals Division determines that the Farm Service Agency was in error in denying the loan based on eligibility; and (D) the original application submitted by the applicant is no longer feasible due to the delay caused by the erroneous denial by the Farm Service Agency and the length of the appeals process. (4) Subsequently withdrawn adverse decision An applicant shall be eligible for equitable relief under this section if— (A) the Farm Service Agency issued an adverse decision on an application that the Farm Service Agency subsequently withdrew; and (B) the original application submitted by the applicant is no longer feasible due to the delay caused by the adverse decision. (5) Promised program benefits not received An applicant shall be eligible for equitable relief under this section if— (A) the Farm Service Agency indicated in an official communication made after the date of enactment of this subsection that the applicant could expect the loan, benefit, or payment, and then reversed its decision; and (B) the applicant acted in good faith. . 4. National appeals division reform (a) Burden of proof Section 277(c)(4) of the Department of Agriculture Reorganization Act of 1994 ( 7 U.S.C. 6997(c)(4) ) is amended— (1) by striking The appellant and inserting the following: (A) In general Except as provided in subparagraph (B), the appellant ; and (2) by adding at the end the following: (B) Appellants below income threshold (i) In general In the case of an appellant described in clause (ii), the agency shall bear the burden of proving by substantial evidence that the adverse decision of the agency was not erroneous. (ii) Appellants described An appellant referred to in clause (i) is an appellant— (I) the adjusted gross income of which for the previous year is not more than $300,000; or (II) the average annual adjusted gross income of which for the previous 5-year period is not more than $300,000. . (b) Implementation Section 280 of the Department of Agriculture Reorganization Act of 1994 ( 7 U.S.C. 7000 ) is amended— (1) by redesignating subsection (b) as subsection (c); and (2) by inserting after subsection (a) the following: (b) Requirement In implementing a final determination in accordance with subsection (a), the head of an agency shall use the information used by the Division to make the final determination, without requiring additional information, except as otherwise provided in the decision letter relating to the final determination. .