A bill to amend the Consolidated Farm and Rural Development Act.
PL 96-438 (S.985), enacted 10/13/1980

PUBLIC LAW 96-438~OCT. 13, 1980 
94 STAT. 1871 
Public Law 96-438 
96th Congress 
An Act 
To amend the Consolidated Farm and Rural Development Act. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
RENEWABLE RESOURCE ENERGY LOANS 
SECTION 1. The Consolidated Farm and Rural Development Act is 
amended by— 
(1) in section 303(b), amending paragraph (1) to read as follows: 
"(1) the term 'improving farms' includes, but is not limited 
to, the acquisition, installation, and modification of any 
qualified nonfossil energy system located on a family farm; 
and"; 
(2) in the first sentence of section 310B(a), striking out all 
that follows "individuals" down through the end of the 
sentence and inserting in lieu thereof the following: "for the 
purposes of (1) improving, developing, or financing business, 
industry, and employment and improving the economic and 
environmental climate in rural communities, including pol-
lution abatement and control, (2) the conservation, develop-
ment, and use of water for aquaculture purposes in rural 
areas, and (3) reducing the reliance on nonrenewable energy 
resources by encouraging the development and construction 
of solar energy systems, including the modification of exist-
ing systems, in rural areas. For the purposes of this subsec-
tion, the term 'solar energy' means energy derived from 
sources (other than fossil fuels) and technologies included in 
the Federal Nonnuclear Energy Research and Development 
Act of 1974, as amended."; and 
(3) in the first sentence of section 312(a), striking out "and" 
immediately before clause (10) and inserting immediately 
before the period at the end of the sentence a comma and the 
following: "and (11) assisting farmers and ranchers in reduc-
ing their dependence on nonrenewable energy resources 
through the development and construction of solar energy 
systems, including the modification of existing systems'. 
LOAN ELIGIBIUTY 
SEC. 2. The Consolidated Farm and Rural Development Act is 
amended by— 
(1) in section 306(a)(7), immediately after "in excess of ten 
thousand inhabitants, except that", inserting the following: "(A) 
for the purpose of loans for essential communitv facilities under 
subsection (a)(1) of this section, the terms 'rural and 'rural area' 
may include any area in any city or town that has a population 
not in excess of twenty thousand inhabitants; and (B)"; 
Oct. 13, 1980 
[S. 985] 
Consolidated 
Farm and Rural 
Development 
Act, 
amendment. 
7 u s e 1923. 
"Improving 
farms." 
7 u s e 1932. 
'Solar energy. 
42 u s e 5901 
note. 
7 u s e 1942. 
7 u s e 1926. 
"Rural." 
"Rural area." 
79-194 
O - 8 1 - p t . 2 
38 : QL3 
94 STAT. 1872 
PUBLIC LAW 96-438—OCT. 13, 1980 
"Owner-
operator." 
7 u s e 1991. 
Resident aliens. 
7 u s e 1996. 
8 u s e 1101 note. 
Regulations. 
Submittal to 
congressional 
committees. 
Repeal. 
Eligibility. 
7 u s e 1961. 
42 u s e 5121 
note. 
7 u s e 1983. 
(2) in section 343, inserting a new clause (3) as follows: "(3) the 
term 'owner-operator' shall include in the State of Hawaii the 
lessee-operator of real property in any case in which the Secre-
tary determines that such real property cannot be acquired in fee 
simple by such lessee-operator, that adequate security is pro-
vided for the loan with respect to such real property for which 
such lesseeH)perator appUes under this title, and that there is a 
reasonable probability of 
accomplishing the objectives and repay-
ment of 
such loan,"; and 
(3) adding at the end thereof a new section 348 as follows: 
"SEC. 348. Notwithstanding the provisions of this title limiting the 
making and insuring of loans to citizens of the United States, the 
Secretary ma^ make and insure loans under this title to aliens 
lawfully admitted to the United States for permanent residence 
under the Immigration and Nationality Act: Provided, That no loans 
may be made or insured under this title to such aliens until the 
Secretary issues regulations establishing the terms and conditions 
under which such aliens may receive loans: Provided further, That 
the Secretary shall submit the regulations to the Committee on 
Agriculture of the House of Representatives and the Committee on 
Agriculture, Nutrition, and Forestry of the Senate at least thirty 
days prior to the date the regulations are published in the Federal 
Register.". 
EMERGENCY LOAN PROGRAM 
SEC. 3. (a) Section 120 of the Act of July 2, 1980 (94 Stat. 841), is 
repealed. 
Qo) Subtitle C of 
the Consolidated Farm and Rural Development Act 
is amended by— 
(1) amending sections 321,322, 323, and 324 to read as follows: 
"SEC. 321. (a) The Secretary shall make and insure loans under this 
subtitle to (1) established farmers, ranchers, or persons engaged in 
aquaculture, who are citizens of the United States, and (2) farm 
cooperatives or private domestic corporations or partnerships in 
which a majority interest is held by members, stockholders, or 
partners who are citizens of the United States if the cooperative, 
corporation, or partnership is engaged primarily in farming, ranch-
ing, or aquaculture, where the Secretary finds that the applicants* 
farming, rgmching, or aquaculture operations have been substantial-
ly affected by a natural disaster in the United States or by a major 
disaster or emergency designated by the President under the Disaster 
Relief Act of 1974: Provided, That they have experience and resources 
necessary to assure a reasonable prospect for successful operation 
with the assistance of such loan and are not able to obtain sufficient 
credit elsewhere. 
"(b) Notwithstanding the credit elsewhere requirements of subsec-
tion (a) of this section and section 333(a) of this title, the Secretary 
shall implement a program under which the Secretary may make or 
insure loans under this subtitle to applicants able to obtain sufficient 
credit elsewhere, subject to the other terms and conditions for loans 
made or insured under this subtitle and such other terms and 
conditions as the Secretary may, by regulation, prescribe. 
PUBLIC LAW 96-438—OCT. 13, 1980 
94 STAT. 1873 
"(c) The Secretary shall conduct the emergency loan program 
under this subtitle in a manner that will foster and encourage the 
family farm system of agriculture, consistent with the reaffirmation 
of policy and declaration of the intent of Congress contained in 
section 102(a) of the Food and Agriculture Act of 1977. 
"(d) For the purposes of this subtitle— 
"(1) 'aquaculture* means the husbandry of aquatic organisms 
under a controlled or selected environment; and 
"(2) 'able to obtain sufficient credit elsewhere' means able to 
obtain sufficient credit elsewhere to finance the applicant's 
actual needs at reasonable rates and terms, taking into consider-
ation prevailing private and cooperative rates and terms in the 
community in or near which the applicant resides for loans for 
similar purposes and periods of time. 
"SEC. 322. (a) For the purpose of determining whether to make or 
insure any loan under this subtitle, the Secretary shall take into 
consideration the net worth of the applicant involved, including all 
the assets and liabilities of 
the applicant. 
"(b) For the purpose of determining whether an applicant under 
this subtitle is not able to obtain sufficient credit elsewhere, the 
Secretary shall require at least one written indication of declination 
of credit, from a legally organized lending institution within reason-
able proximity to the applicant, that specifies the reasons for the 
declination: Provided, That for loans in excess of $300,000, the 
Secretary shall require at least two such written declinations: Pro-
vided further. That for loans of $300,000 or less, the Secretary may 
waive the requirement of this subsection if the Secretary determines 
that it would impose an undue burden on the applicant. 
"SEC, 323. Loans may be made or insured under this subtitle for any 
purpose authorized for loans under subtitle A or B of this title and for 
crop or livestock changes deemed desirable by the applicant, subject 
to the limitations on the amounts of loans provided in section 324(a) 
of 
this title. 
"SEC. 324. (a)(1) Except as otherwise provided in paragraph (2) of 
this subsection, no loan made or insured under this subtitle may 
exceed the amount of the actual loss caused by the disaster or 
$500,000, whichever is less, for each disaster. 
"(2) Through September 30, 1982, loans may be made or insured 
under this subtitle in amounts in excess of the amount of actual loss 
(as limited under paragraph (1) of this subsection) to applicants who 
are not able to obtain sufficient credit elsewhere, within the following 
limits: 
"(A) Through the end of fiscal year 1980, no such loan may be 
made or insured in an amount that would cause the total unpaid 
principal indebtedness of the applicant for loans or portions of 
loans in excess of the amount of actual loss to exceed $1,500,000; 
"(B) During fiscal year 1981, no such loan may be made or 
insured in an amount that would cause the total unpaid principal 
indebtedness of the applicant for loans or portions of loans in 
excess of the amount of 
actual loss to exceed $1,000,000; 
"(C) During fiscal year 1982, no such loan may be made or 
insured in an amount that would cause the total unpaid principal 
Family farm 
system. 
7 u s e 2266. 
Definitions. 
Loan 
determination 
factors. 
7 u s e 1962. 
Written credit 
declination. 
Loans, extent. 
7 u s e 1963. 
7 u s e 1922, 
1941. 
Loan limitation. 
7 u s e 1964. 
Excess loan 
amounts. 
94 STAT. 1874 
PUBLIC LAW 96-438—OCT. 13, 1980 
Interest rates. 
Interest 
subsidies. 
Repayment. 
7 u s e 1922, 
1941. 
Security. 
indebtedness of the applicant for loans or portions of loans in 
excess of the amount of actual loss to exceed $500,000; and 
"(D) No loan or portion of a loan in excess of the amount of 
actual loss that is for more than $300,000 may be made or insured 
under this subtitle unless the Secretary determines that the 
applicant is not able to obtain from a private or cooperative 
lending agency a loan guaranteed by the Secretary under this 
subtitle sufficient to finance the applicant's actual needs at 
reasonable rates and terms (taking into consideration prevailing 
private and cooperative rates and terms in the community in or 
near which the applicant resides for loans for similar purposes 
and periods of time). 
"(h) Loans under this subtitle shall be at rates of interest as follows: 
"(1) For loans or portions of loans up to the amount of the 
applicant's actual loss caused by the disaster, as limited under 
subsection (a)(1) of this section, the interest shall be at rates 
prescribed by the Secretary, but (A) if the applicant is not able to 
obtain sufficient credit elsewhere, not in excess of 5 per centum 
per annum, and (B) if the applicant is able to obtain sufficient 
credit elsewhere, not in excess of the current average market 
yield on outstanding marketable obligations of the United States 
with remaining periods to maturity comparable to the average 
maturities of such loans, plus an additional charge of not to 
exceed 1 per centum per annum as determined by the Secretary, 
and adjusted to the nearest one-eighth of 1 per centum; and 
"(2) For loans or portions of loans in excess of the amount of the 
applicant's actual loss caused by the disaster, as limited under 
subsection (a)(1) of this section, (A) the interest for insured loans 
shall be at rates prevailing in the private market for similar 
loans, as determined by the Secretary, and (B) the interest for 
guaranteed loans shall be at rates agreed on by the borrower and 
lender, but not in excess of such rates as may be determined by 
the Secretary. 
"(c) For guaranteed loans under this subtitle, the Secretary may 
pay interest subsidies to the lenders for those portions of the loans up 
to the amount of the actual loss caused by the disaster, as limited 
under subsection (a)(1) of this section. Any such subsidy shall not 
exceed the difference between the interest rate being charged for 
loans up to the amount of the actual loss, as established under 
subsection (b)(1) of this section, and the maximum interest rate for 
guaranteed loans, as established under subsection Ot>)(2) of this 
section. 
"(d) All loans under this subtitle shall be repayable at such times as 
the Secretary may determine, taking into account the purposes of the 
loan and the nature and effect of the disaster, but not later than as 
provided for loans for similar purposes under subtitles A and B of this 
title, and upon the full personal liability of the borrower and upon the 
best security available, as the Secretary may prescribe: Provided, 
That the security is adequate to assure repayment of the loans, except 
that if such security is not available because of the disaster, the 
Secretary shall (1) accept as security such collateral as is available, a 
portion or all of which may have depreciated in value due to the 
PUBLIC LAW 96-438—OCT. 13, 1980 
94 STAT. 1875 
disaster and which in the opinion of the Secretary, together with the 
Secretary's confidence in the repayment ability of the applicant, is 
adequate security for the loan, and (2) make such loan repayable at 
such times as the Secretary may determine, not later than as 
provided under subtitles A and B of this title, as justified by the needs 
of the applicant: Provided further. That for any disaster occurring 
after January 1, 1975, the Secretary, if the loan is for a purpose 
described in subtitle B of this title, may make the loan repayable at 
the end of a period of more than seven years, but not more than 
twenty years, if the Secretary determines that the need of the loan 
applicant justifies such a longer repayment period: Provided further, 
That for any direct or insured loan (other than a guaranteed loan) 
approved under section 321(b) of this title, three years after the loan 
is made or insured, and every two years thereafter for the term of the 
loan, the Secretary shall review the loan; and if, based on such 
review, the Secretary determines that the borrower is able to obtain a 
loan from non-Federal sources at reasonable rates and terms for 
loans for similar purposes and periods of time, the borrower shall on 
request by the Secretary, apply for and accept such non-Federal loan 
in sufficient amount to repay the Secretary. 
"(e) Any political subdivision of a State with a population of less 
than ten thousand inhabitants that, if such subdivision had a popula-
tion often thousand or more inhabitants, would be eligible for a grant 
under the first title of the Community Emergency Drought Relief Act 
of 1977 shall be eligible for a grant under the Consolidated Farm and 
Rural Development Act during any period in which the Community 
Emergency Drought Relief Act of 1977 is or has been in effect."; and 
(2) amending section 330 to read as follows: 
"SEC. 330. Subsequent loans to continue the farming, ranching, or 
aquaculture operation may be made under this subtitle on an annual 
basis, for not to exceed two additional years, to eligible borrowers, 
subject to the limits on loans and the rates of interest established 
under section 324 of this title.". 
(c) Section 333(b) of the Consolidated Farm and Rural Development 
Act is amended by striking out "321(b)(2)" wherever it appears and 
inserting in lieu thereof "321(a)(2)". 
(d) The amendments to subtitle C of the Consolidated Farm and 
Rural Development Act made by subsection (b) of this section shall be 
effective with respect to loans approved by the Secretary of Agricul-
ture under subtitle C after the date of enactment of this Act, except 
that, for borrowers with loans outstanding under subtitle C as of 
December 15,1979— 
(1) the limits on loans under section 324 of the Consolidated 
Farm and Rural Development Act made by subsection (b)(1) of 
this section, and 
(2) the reduction in the time limit on subsequent emergency 
loans under section 330 of the Consolidated Farm and Rural 
Development Act made by subsection (b)(2) of this section 
shall not apply to subsequent emergency loans under section 330 (as 
in effect on the date preceding the date of enactment of this Act) that 
are made to such borrowers for the disasters for which the borrowers 
obtained loans under subtitle C prior to December 16,1979. 
7 u s e 1922, 
1941. 
Repayment 
period, 
extension. 
Review; non-
Federal loans. 
Ante, p. 1872. 
Grant eligibility. 
42 u s e 5184 
note. 
7 u s e 1921 note. 
7 u s e 1971. 
Ante, p. 1873. 
7 u s e 1983. 
7 u s e 1961 note. 
7 u s e 1961. 
Ante, p. 1873. 
94 STAT. 1876 
PUBLIC LAW 96-438—OCT. 13, 1980 
7 u s e 1994. 
Cost projections. 
Submittal to 
congressional 
committees. 
LENDING UMITS UNDER THE CONSOLIDATED FARM AND RURAL 
DEVELOPMENT ACT 
SEC. 4. Section 346 of the Consolidated Farm and Rural Develop-
ment Act is amended by inserting "(a)" after "SEC. 346" and adding at 
the end thereof new subsections (b) and (c) as follows: 
"(b)(1) Loans for each of the fiscal years 1980, 1981, and 1982 
are authorized to be insured, or made to be sold and insured, or 
guaranteed under the Agricultural Credit Insurance Fund as 
follows: 
"(A) 
real 
estate 
loans, 
$1,615,000,000, 
including 
$1,500,000,000 for farm 
ownership loans of which 
$1,400,000,000 may be for insured loans and $100,000,000 
may be for guaranteed loans with authority to transfer 25 
per centum of such amounts between categories, and 
$100,000,000 for water development, use, and conservation 
loans of which $90,000,000 may be for insured loans and 
$10,000,000 may be for guaranteed loans with authority to 
transfer 25 per centum of such amounts between categories; 
"(B) 
operating 
loans, 
$1,200,000,000 
of 
which 
$1,150,000,000 may be for insured loans and $50,000,000 may 
be for guaranteed loans with authority to transfer 25 per 
centum of such amounts between categories; and 
"(C) emergency insured and guaranteed loans in amounts 
necessary to meet the needs resulting from natural disast-
ers. 
Not more than 75 per centum of the insured loans authorized for 
farm ownership purposes and not more than 75 per centum of the 
insured loans authorized for farm operating purposes may be for 
applicants other than low-income, limited-resource borrowers. 
^^(2) Loans for each of the fiscal years 1980,1981, and 1982 are 
authorized to be insured, or made to be sold and insured, or 
guaranteed under the Rural Development Insurance Fund as 
follows: 
"(A) insured water and sewer facility loans, $1,000,000,000; 
"(B) industrial development loans, $1,500,000,000 of which 
$100,000,000 may be for insured loans and $1,400,000,000 
may be for guaranteed loans with authority to transfer 
amounts between categories; and 
"(C) insured community facility loans, $500,000,000. 
"(c) The Secretary shall develop long-term cost projections for 
loan program authorizations required under subsection (a) of this 
section. Each such projection shall include analyses of (1) the 
long-term costs of the lending levels that the Secretary requests 
to be authorized under subsection (a) of this section and (2) the 
long-term costs for increases in lending levels bevond those 
requested to be authorized, based on increments of $10,000,000 or 
such other levels as the Secretary deems appropriate. Long-term 
cost projections for the three-year period beginning with fiscal 
year 1983 and each three-year period thereafter shall be submit-
ted to the House Committee on Agriculture, the House Commit-
tee on Appropriations, the Senate Committee on Agriculture, 
Nutrition, and Forestry, and the Senate Committee on Appropri-
PUBLIC LAW 96-438—OCT. 13, 1980 
94 STAT. 1877 
ations at the time the requests for authorizations for those 
periods are submitted to Congress. Not later than fifteen days 
after the date of enactment of this subsection the Secretary shall 
submit to such committees long-term cost projections covering 
authorized lending levels for the loan programs for fiscal years 
1981 and 1982.". 
Approved October 13, 1980. 
LEGISLATIVE HISTORY: 
HOUSE REPORTS: No. 96-153 and No. 96-153, Pt. 2, accompanying H.R. 3683 (Comm. 
on Agriculture) and No. 96-1394 (Comm. of Conference). 
SENATE REPORT No. 96-168 (Comm. on Agriculture, Nutrition, and Forestry). 
CONGRESSIONAL RECORD: 
Vol. 125 (1979): May 23, considered and passed Senate. 
Oct. 24, H.R. 3683 considered and passed House; passage 
vacated and S. 985, amended, passed in lieu. 
Dec. 14, Senate concurred in House amendments 
with 
amendments. 
Vol. 126 (1980): Sept. 30, Senate agreed to conference report. 
Oct. 1, House agreed to conference report.