An Act to amend the Consolidated Farm and Rural Development Act, provide an economic emergency loan program for farmers and ranchers, extend the Emergency Livestock Credit Act of 1974, and for other purposes.
PL 95-334 (H.R.11504), enacted 08/04/1978

92 STAT. 420 
PUBLIC LAW 95-334—AUG. 4, 1978 
Agricultural 
Credit Act of 
1978. 
7 use 1921 
note. 
Public Law 95-334 
95th Congress 
An Act 
Aug. 4, 197o 
r
p
Q amend the Consolidated Farm and Rural Development Act, provide an eco-
[H.R. 11504] 
• nomic emergency loan program for farmers and ranchers, extend the 
Emergency Livestock Credit Act of 1974, and for other purposes. 
Be it enacted hy the Senate and House of Representatwes 
of the 
United States of America 
in Congress assembled^ That this Act may 
be cited as the "Agricultural Credit Act of 1978". 
T I T L E I—AMENDMENTS T O T H E C O N S O L I D A T E D F A R M 
AND R U R A L D E V E L O P M E N T ACT 
ELIGIBILITY FOR FARM OWNERSHIP AND OTHER LOANS UNDER SUBTITLE A 
SEC. 101. Section 302 of the Consolidated Farm and Rural Develop-
7 use 1922. 
ment Act is amended to read as follows: 
"SEC. 302. The Secretary is authorized to make and insure loans 
under this subtitle to farmers and ranchers in the United States, and 
to farm cooperatives and private domestic corporations and partner-
ships that are controlled by farmers and ranchers and engaged pri-
marily and directly in farming or ranching in the United States, 
subject to the conditions specified in this section. To be eligible for such 
loans, applicants who are individuals, or, in the case of cooperatives, 
corporations, and partnerships, members, stockholders, or partners, as 
applicable, holding a majority interest in such entity, must (1) be 
citizens of the United States, (2) have either training or farming 
experience that the Secretary determines is sufficient to assure reason-
able prospects of success in the proposed farming operations, (3) be or 
will become owner-operators of not larger than family farms (or in 
the case of cooperatives, corporations, and partnerships in which a 
majority interest is held by members, stockholders, or partners, as 
applicable, who are related by blood or marriage, as defined by the 
Secretary, such individuals must be or will become either owners or 
operators of not larger than a family farm and at least one such indi-
vidual must be or will become an operator of not larger than a family 
farm), and (4) be unable to obtain sufficient credit elsewhere to 
finance their 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. In addition to the foregoing require-
ments of this section, in the case of cooperatives, corporations, and 
partnerships, the family farm requirement of clause (3) of the pre-
ceding sentence shall apply as well to the farm or farms in which the 
entity has an ownership and operator interest and the requirement 
of clause (4) of the preceding sentence shall apply as well to the 
entity.". 
PUBLIC LAW 95-334—AUG. 4, 1978 
92 STAT. 421 
LOANS FOR RECREATIONAL AND POLLUTION ABATEMENT FACILITIES 
SEC. 102. Section 304 of the Consolidated Farm and Kural Develop-
ment Act is amended by— 
7 USC 1924. 
(1) in subsection (a), striking out the word "individual"; and 
(2) adding at the end thereof a new subsection (c) as follows: 
"(c) Loans may also be made or insured under this subtitle to 
any farm owners or tenants without regard to the requirements 
of clauses (1), (2), and (3) of section 302 of this title for the pur- 7 USC 1922. 
poses of meeting Federal, State, or local requirements for agri-
cultural, animal, or poultry waste pollution abatement and 
control facilities, including the construction, modification, or 
relocation of farm or other structures necessary to comply with 
such pollution abatement requirements.". 
LIMITATIONS ON LOANS UNDER SECTIONS 302, 3 0 3 , 304, AND 31 CD OF 
THE ACT 
SEC 103. Section 305 of the Consolidated Farm and Rural Develop-
ment Act is amended by striking out the first sentence and inserting 7 USC 1925. 
in lieu thereof the following: "The Secretary shall make oi- insure 
no loan under sections 302, 303, 304, and 310D of this title that would 7 USC 1922, 
cause the unpaid indebtedness under such sections of any one borrower 1^23,1924. 
to exceed the smaller of (1) the value of the farm or other security, or Post, p. 424. 
(2) in the case of a loan other than a loan guaranteed by the Secretary, 
$200,000, or, in the case of a loan guaranteed by the Secretary, 
$300,000.". 
ELIMINATION OF REQUIREMENT FOR BOND COUNSEL FOR CERTAIN WATER 
AND WASTE DISPOSAL FACILITY LOANS 
SEC. 104. Section 306(a) (1) of the Consolidated Farm and Rural 
Development Act is amended by adding at the end thereof the follow- 7 USC 1926. 
in^: "With respect to loans of less than $500,000 made or insured under 
this paragraph that are evidenced by notes and mortgages, as distin-
guished from bond issues, borrowers shall not be required to appoint 
bond counsel to review the legal validity of the loan whenever the 
Secretary has available legal counsel to perform such review.". 
WATER AND WASTE DISPOSAL FACILITY GRANTS 
SEC. 105. Effective October 1, 1978, section 306(a) (2) of the Con-
solidated Farm and Rural Development Act is amended by— 
(1) striking out "$300,000,000" and inserting in lieu thereof 
"$500,000,000"; and 
(2) striking out "50 per centum" and inserting in lieu thereof 
"75 per centum". 
RURAL AREAS 
SEC. 106. Section 306(a) (7) of the Consolidated Farm and Rural 
Development Act is amended by striking out ", the Commonwealth 
of Puerto Rico and the Virgin Islands,". 
92 STAT. 422 
PUBLIC LAW 95-334—AUG. 4, 1978 
LOANS FOR POWER TRANSMISSION FACILITIES 
SEC. 107. (a) Section 306(a) of the Consolidated Farm and Kural 
7 use 1926. 
Development Act is amended by adding at the end thereof a new 
paragraph (14) as follows: 
"(14) (A) The Secretary may make or insure loans in the full 
amount thereof, but not to exceed $1,000,000 for any such loan, to 
associations, including corporations not operated for 
profit, 
Indian tribes on Federal and State reservations and other feder-
ally recognized Indian tribes, and public and quasi-public agen-
cies, for the purpose of financing the construction, acquisition, 
and operation of transmission facilities for any electric system 
that is owned and operated by a public body located in a rural 
area and as of October 1,1976, was receiving bulk power from any 
of the following agencies of the Department of the Interior: 
" (i) the Southwestern Power Administration, 
" (ii) the Southeastern Power Administration, 
" (iii) the Bonneville Power Administration, 
"(iv) the Bureau of Reclamation, or 
" (v) the Alaska Power Administration. 
A loan may not be made or insured imder this paragraph unless 
the Secretary determines that the applicant for the loan cannot 
obtain sufficient credit elsewhere from reliable sources at reason-
able rates and terms for financing the construction, acquisition, 
and operation of such facilities. 
"(B) Interest or other income from obligations evidencing 
loans guaranteed under this paragraph shall be included in gross 
income for the purposes of chapter 1 of the Internal Revenue 
26 use 1 et seq. 
Code of 1954. 
"(C) The Administrator of the Rural Electrification Adminis-
tration shall administer loans made or insured under this para-
graph. 
" ( D ) The authority provided to the Secretary by subparagraph 
(A) of this paragraph shall teraiinate September 30, 2006.". 
(b) Section 309A(a) of the Consolidated Farm and Rural Devel-
7 use 1929a. 
opment Act is amended by inserting "306(a) (14)," immediately after 
"sections 304(b), 306(a) (1),". 
INTEREST RATES FOR LOANS UNDER SUBTITLE A ; DELETION OF ESCROW 
AGENT PROVISION 
7 use 1927. 
SEC. 108. Section 307 of the Consolidated Farm and Rural Develop-
ment Act is amended by— 
(1) amending subsection (a) to read as follows: 
"(a) (1) The period for repayment of loans under this subtitle shall 
not exceed forty years. 
"(2) Except as otherwise provided in paragraphs (3), (4), and (5) 
of this subsection, the interest rates on loans under this subtitle shall 
be as determined by the Secretary, but not in excess of the current 
average market yield on outstanding marketable obligations of the 
United States Avith remaining periods to maturity comparable to the 
average maturities of such loans, plus not to exceed 1 per centum, as 
determined by the Secretary, and adjusted to the nearest one-eighth 
of 1 per centum. 
"(3) The interest rates on loans (other than guaranteed loans) 
Post, p. 424. 
under section 310D of this title, and loans (other than guaranteed 
loans) to public bodies or nonprofit associations (including Indian 
tribes on Federal and State reservations and other federally recog-
PUBLIC LAW 95-334—AUG. 4, 1978 
92 STAT. 423 
nized Indian tribal groups) for water and waste disposal facilities 
and essential community facilities shall be as determined by the Sec-
retary, but not in excess of 5 per centum per annum. 
"(4) The interest rates on loans under sections 304(b), 306(a) (1), 
and 310B of this title (other than guaranteed loans and loans as 
described in paragraph (3) of this subsection) shall be as determined 
by the Secretary, but not less than such rates as determined by the 
Secretary of the Treasury taking into consideration the current aver-
age market yield on outstanding marketable obligations of the United 
States with remaining periods to maturity comparable to tlie aver-
age maturities of such loans, adjusted in the judgment of the Secre-
tary of the Treasury to provide for rates comparable to the rates 
prevailing in the private market for similar loans and considering the 
Secretary's insurance of the loans, plus an additional charge, pre-
scribed by the Secretary, to cover the Secretary's losses and cost of 
administration, which charge shall be deposited in the Rural Develop-
ment Insurance Fund, and further adjusted to the nearest one-eighth 
of 1 per centum. 
"(5) The interest rate on any loan made under this subtitle as a 
guaranteed loan shall be such rate as may be agreed upon by the 
borrower and the lender, but not in excess of a rate as may be deter-
mined by the Secretary."; 
(2) redesignating subsection (b) as subsection (c) ; and 
(3) inserting a new subsection (b) as follows: 
"(b) The borrower shall pay such fees and other charges as the 
Secretary may require, and borrowers under this title shall prepay 
to the Secretary such taxes and insurance as the Secretary may require, 
on such terms and conditions as the Secretary may prescribe.". 
7 use 1924, 
1926, 1932. 
REPEAL OF LIMITATION ON AMOUNT OF OUTSTANDING LOANS UNDER THE 
AGRICULTURAL CREDIT INSURANCE F U N D ; USE OF THE AGRICULTURAL 
CREDIT INSURANCE FUND FOR PAYMENT OF COSTS OF ADMINISTRATION 
SEC. 109. (a) Section 309(f) of the Consolidated Farm and Rural 
Development Act is amended by— 
7 USC 1929. 
(1) in paragraph (1), changing the period at the end of the 
first sentence to a semicolon and striking out the second sentence 
therein which reads: "The aggregate of the principal of such 
loans made and not disposed of shall not exceed $500,000,000 at 
any one time;"; 
(2) striking out "and" at the end of paragraph (4), and 
changing the period at the end of paragraph (5) to a semicolon; 
and 
(3) adding at the end thereof 
new paragraph (6) as follows: 
"(6) to pay the Secretary's costs of administration necessary to 
insure, make grants, service, and otherwise carry out the programs 
under this title not specifically covered by the Rural Development 
Insurance Fund of section 309A, including costs of the Secretary 7 USC 1929a. 
incidental to guaranteeing loans under this title, either directly from 
the Fund or by transfers from the Fund to, and merger w ith, any 
appropriations for administrative expenses.". 
(b) Section 328 of the Consolidated Farm and Rural Development 
Act is amended by striking out ": Provided, That loans made under 7 USC 1968. 
this section shall not be included in applying the $500,000,000 limita-
tion in section 309 (f) (1) ". 
7 USC 1929. 
92 STAT. 424 
PUBLIC LAW 95-334—AUG. 4, 1978 
TRANSFER OF ADMINISTRATIVE FUNDS 
SEC. 110. Section 309A(g) (8) of the Consolidated Farm and Eural 
7 use 1929a. 
Development Act is amended to read as follows: 
"(8) to pay the Secretary's costs of administration necessary to 
insure loans under the programs referred to in subsection (a) of this 
7 use 1926, 
section, make grants under sections 306 (a) and 310B of this title, serv-
1932. 
ice, and otherwise carry out such programs, including costs of the 
Secretary incidental to guaranteeing rural development loans under 
this title, either directly from the Insurance Fund or by transfers 
from the Fund to, and merger with, any appropriations for admin-
istative expenses.". 
PURCHASE BY THE SECRETARY OF GUARANTEED PORTIONS OF LOANS 
SEC. 111. The Consolidated Farm and Rural Development Act is 
amended bv adding immediately after section 309A a new section 
309B as follows: 
7 use 1929b. 
"SEC. 309B. The Secretary may purchase, on such terms and condi-
tions as the Secretary deems appropriate, the guaranteed portion of 
any loan guaranteed under this title: Provided^ That the Secretary 
may not pay for any such guaranteed portion of a loan in excess of 
an amount equal to the unpaid principal balance and accrued interest 
on the guaranteed portion of the loan. The Secretary may use for such 
purchases funds from the Rural Development Insurance Fund with 
respect to rural development loans as defined in section 309A(a) of 
this title and funds from the Agricultural Credit Insurance Fund with 
respect to all other loans under this title. This authority may be exer-
cised only if the Secretary determines that an adequate secondary 
market is not available in the private sector.". 
EXEMPTION OF SMALL BUSINESS PROJECTS FROM RESTRICTIONS ON RURAL 
INDUSTRIAL ASSISTANCE AND OTHER LOANS 
SEC. 112. Section 310B of the Consolidated Farm and Rural Devel-
7 use 1932. 
opment Act is amended by— 
(1) inserting in paragraphs (1), (2), and (3) (that follow 
subsection (d)) immediately after "312(b)", wherever that term 
appears therein, the following: ", except for cases in which such 
assistance does not exceed $1,000,000 or for cases in which direct 
employment will not be increased by more than fifty employ-
ees," ; and 
(2) in paragraph (3) (that follows subsection (d)), striking 
out "60" and inserting in lieu thereof "30". 
LOW-INCOME FARM OWNERSHIP LOAN PROGRAM 
SEC. 113. The Consolidated Farm and Rural Development Act is 
amended by adding immediately after section 310C a new section 
as follows: 
7 use 1934. 
"SEC. 310D. (a) The Secretary is authorized to make and insure 
loans for any of the purposes referred to in clauses (1) through (5) 
7 use 1923. 
of section 303(a) of this title to farmers and ranchers in the United 
States who (1) are citizens of the United States, (2) meet the 
7 use 1922. 
requirements of clauses (2) through (4) of section 302, (3) are unable 
to obtain sufficient credit under section 302 of this title to finance their 
actual needs, (4) are owners or operators of small or family farms 
(including new owners or operators), (5) are farmers or ranchers with 
PUBLIC LAW 95-334—AUG. 4, 1978 
92 STAT. 425 
a low income, and (6) demonstrate a need to maximize their income 
from farming or ranching operations. The Secretary is also authorized 
to make such loans to any farm cooperative or private domestic corpo-
ration or partnership that is controlled by farmers and ranchers and 
engaged primarily and directly in farming or ranching in the United 
States if all of its membei's, stockholders, or partners, as applicable, 
are citizens of the United States and the entity and all such members, 
stockholders, or partners meet the requirements of clauses (2) through 
(6) of the preceding sentence. 
"(b) Each loan made or insured under this section shall l>e repay-
able in such installments as the Secretary determines will provide 
for reduced payments during the initial repayment period of the loan 
and larger payments during the remainder of the i-epayuient [)eriod 
of the loan.''. 
ELIGIBILITY FOR OPKRATING LOANS 
SEC. 114. Section 311(a) of the Consolidated Farm and Rural 
Development Act is amended to read as follows: 
7 USC 1941. 
"(a) The Secretary is authorized to make and insure loans under 
this subtitle to farmei-s and ranchers in the United States, and to farm 
cooperatives and private domestic corporations and partnerships that 
are controlled by farmers and ranchers and engaged primarily and 
directly in farming or ranching in the United States, subject to the 
conditions specified in this section. To be eligible for such loans, 
applicants who are individuals, or, in the case of cooperatives, corpora-
tions, and partnerships, members, stockholders, or partners, as appli-
cable, holding a majority interest in such entity, must (1) be citizens 
of the United States, (2) have either training or farming experience 
that the Secretary determines is sufficient to assure reasonable pros-
pects of success in the proposed farming operations, (3) be or will 
become operators of not larger than family farms (or in the case of 
cooperatives, corporations, and partnerships in which a majority 
interest is held by members, stockholders, or jjartners, as applicable, 
who are related by blood or marriage, as defined by the Secretary, such 
individuals must be or will become either owners or operators of not 
larger than a family farm and at least one such individual must be or 
will become an of)erator of not larger than a family farm), and (4) 
be unable to obtain sufficient credit elsewhere to finance their actual 
needs at reasonable rates and terms, taking into consideration pre-
vailing 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. In addition to the foregoing requirements of this sub-
section, in the case of cooperatives, corporations, and paitnerships, 
the family farm requirement of clause (3) of the preceding sentence 
shall apply as well to the farm or farms in which the entity has an 
operator interest and the requirement of clause (4) of the preceding 
sentence shall apply as well to the entity.". 
OPERATIXO LOANS FOR RECREATIONAL FACILITIES 
SEC. 115. Section 312(a) of the Consolidated Farm and Rural 
Development Act is amended by striking out "individual". 
7 USC 1942. 
92 STAT. 426 
PUBLIC LAW 95-334—AUG. 4, 1978 
LIMITATIONS ON FARM OPERATING LOANS 
SEC. 116. Section 313 of the Consolidated Farm and Rural Develop-
7 use 1943. 
ment Act is amended to read as follows: 
"SEC. 313. The Secretary shall make or insure no loan under this 
subtitle (1) that would cause the total principal indebtedness out-
standing at any one time for loans made under this subtitle to any 
one borrower to exceed, in the case of a loan other than a loan guaran-
teed by the Secretary, $100,000, or, in the case of a loan guaranteed by 
the Secretary, $200,000; or (2) for the purchasing or leasing of land 
other than for cash rent, or for carrying on any land leasing or land 
purchasing program.". 
FARM OPERATING LOAN INTEREST RATES; CONSOLIDATION AND 
RESCHEDULING OF LOANS 
SEC. 117. Section 816 of the Consolidated Farm and Rural Develop-
7 use 1946. 
ment Act is amended to read as follows: 
"SEC. 316. (a) The Secretary shall make all loans under this subtitle 
upon the full personal liability of the borrower and upon such 
security as the Secretary may prescribe. The interest rates on such 
loans, except for guaranteed loans, shall be as determined by the 
Secretary, but not in excess of the current average market yield on 
outstanding marketable obligations of the United States with remain-
ing periods to maturity comparable to the average maturities of such 
loans, plus an additional charge not to exceed 1 per centum as deter-
mined by the Secretary, which charge shall be deposited in the Rural 
Development Insurance Fund or the Agricultural Credit Insurance 
Fund, as appropriate, and adjusted to the nearest one-eighth of 1 per 
centum. The interest rate on any guaranteed loan made under this sub-
title shall be such rate as may be agreed upon by the borrower and 
lender, but not in excess of a rate as may be determined by the 
Secretary. 
"(b) Loans made under this subtitle shall be payable in not to exceed 
seven years. The Secretary may consolidate or reschedule outstanding-
loans for payment over a period not to exceed seven years from the 
date of such consolidation or rescheduling, and the amount of unpaid 
principal and interest of the prior loans so consolidated or rescheduled 
shall not create a new charge against any loan levels authorized by 
law. A new loan may be included in a consolidation. Such new loan 
shall be charged against any loan level authorized by law. The interest 
rate on such consolidated or rescheduled loans, other than guaranteed 
loans, may be changed by the Secretary to a rate not to exceed the rate, 
being charged for loans made under this subtitle at the time of the 
consolidation or rescheduling. The interest rate on any guaranteed 
loan under this subtitle that may be consolidated or rescheduled for 
payment shall be such rate as may be agreed upon by the borrower 
and the lender, but not in excess of a rate as may be determined by the 
Secretary.". 
E M E R G E N C Y 
L O A N 
ELIGIBILITY 
SEC. 118. Section 321 of the Consolidated Farm and Rural Develop-
7 use 1961. 
ment Act is amended to read as follows: 
"SEC. 321. 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) to farm 
cooperatives or private domestic corporations or partnerships in which 
a majority interest is held by members, stockholders, or partners who 
PUBLIC LAW 95-334—AUG. 4, 1978 
92 STAT. 427 
are citizens of the United States if the cooperative, corporation, or 
partnership is engaged primarily in farming, ranching, or aquaculture, 
where the Secretary finds that the applicants' farming, ranching, or 
aquaculture operations have been substantially affected by a natural 
disaster in the United States or by a major disaster or emergency desig-
nated by the President pursuant to the provisions of the Disaster Belief 
Act of 1974: Provided^ That they have experience and resources neces-
sary to assure a reasonable prospect for successful operation with the 
assistance of such loan and are unable to obtain sufficient credit else-
where to finance their actual needs at reasonable rates and terms, tak-
ing into consideration prevailing private and cooperative rates and 
terms in the community in or near which they reside for loans for 
similar purposes and periods of time. For the purposes of this subtitle 
'aquaculture' means husbandry of aquatic organisms under a controlled 
or selected environment.". 
42 use 5121 
note. 
'Aquaculture.' 
DELETION o r REQUIREMENT FOR EMERGENCY LOAN INTEREST RATES TO BE 
BASED ON SMALL BUSINESS ADMINISTRATION LOAN RATES 
SEC. 119. Section 324 of the Consolidated Farm and Kural Develop-
ment Act is amended, effective October 1, 1978, by striking out sub- 7 USC 1964. 
section (b) and redesignating subsection (c) as subsection (b). 
CONFORMING AMENDMENT 
SEC. 120. The Consolidated Farm and Rural Development Act is Repeal, 
amended by repealing section 325. 
7 USC 1965. 
DELEGATION OF AUTHORITY TO COMPROMISE CLAIMS ; AUTHORITY IN AREAS 
THAT HAVE CEASED TO BE RURAL 
SEC. 121. Section 331 of the Consolidated Farm and Rural Develop-
ment Act is amended by— 
(1) in clause (a), striking out "and in Puerto Rico and the 
Virgin Islands"; 
(2) in clause (d), striking out "$15,000" and inserting in lieu 
thereof "$25,000"; 
(3) at the end of clause (i), striking out the period and insert-
ing lieu thereof "; and"; and 
(4) adding at the end thereof a new clause (j) to read as 
follows: 
" (i) notwithstanding that an area ceases, or has ceased, to be 
'rural', in a 'rural area', or an eligible area, make loans and grants, 
and approve transfers and assumptions, under this title on the 
same basis as though the area still was rural in connection with 
property securing any loan made, insured, or held by the Secre-
tary under this title or in connection with any property held by 
the Secretary under this title.". 
7 USC 1981. 
LOAN MORATORIUM AND POLICY ON FORECLOSURES 
SEC. 122. The Consolidated Farm and Rural Development Act is 
amended by adding after section 331 a new section 331A as follows: 
"SEC. 33iA. In addition to any other authority that the Secretary 7 USC 1981a. 
may have to defer principal and interest and forego foreclosure, the 
Secretary may permit, at the request of the borrower, the deferral of 
principal and interest on any outstanding loan made, insured, or held 
by the Secretary under this title, or under the provisions of any other 
39-194 O—80—pt. 1 
31 : QL3 
92 STAT. 428 
PUBLIC LAW 95-334—AUG. 4, 1978 
law administered by the Farmers Home Administration, and may 
forego foreclosure of any such loan, for such period as the Secretary 
deems necessary upon a showing by the borrower that due to circum-
stances beyond the borrower's control, the borrower is temporarily 
unable to continue making payments of such principal and interest 
when due without unduly impairing the standard of living of the 
borrower. The Secretary may permit interest that accrues during the 
deferral period on any loan deferred under this section to bear no 
interest during or after such period: Provided, 
That if the security 
instrument securing such loan is foreclosed such interest as is included 
in the purchase price at such foreclosure shall become part of the prin-
cipal and draw interest from the date of foreclosure at the rate pre-
scribed by law.". 
APPEAL AND REVIEW OF COUNTY COMMITTEE DETERMINATIONS; EXEMPTION 
OF GUARANTEED LOANS FROM "GRADUATION" REQUIREMENT 
SEC. 123. Section 333 of the Consolidated Farm and Rural Develop-
7 use 1983. 
ment Act is amended by— 
(1) at the end of subsection (b), striking out the semicolon and 
inserting in lieu thereof the following: ": Provided, 
That the 
Secretary may provide a procedure for appeal and review of any 
determination relating to a certification or 
recommendation 
required to be made by the county committee, and for reversal or 
modification thereof should the facts warrant such action;"; 
(2) in subsection (c), inserting "except for guaranteed loans," 
immediately before "an agreement by the borrower"; and 
(3) in subsection (c), inserting after "private credit source" 
Ante, p. 424. 
the following: "(or, in the case of a borrower under section 310D 
of this title, the borrower may be able to obtain a loan under sec-
7 use 1922. 
tion 302 of this title)". 
DEFINITION OF "UNITED STATES" AND 
" S T A T E " 
SEC. 124. Section 343 of the Consolidated Farm and Rural Develop-
7 use 1991. 
ment Act is amended by striking out "and" immediately before " ( 5 ) " 
and inserting immediately before the period at the end of the section 
the following: ", and (6) the terms 'United States' and 'State' shall 
include each of the several States, the Commonwealth of Puerto Rico, 
the Virgin Islands of the United States, Guam, American Samoa, the 
Commonwealth of the Northern Mariana Islands, and, to the extent 
the Secretary determines it to be feasible and appropriate, the Trust 
Territory of the Pacific Islands". 
AUTHORIZATION OF INSURED AND GUARANTEED LOANS AMOUNTS ; PARTICI-
PATION BY OTHER DEPARTMENTS AND AGENCIES 
SEC. 125. The Consolidated Farm and Rural Development Act is 
amended by adding at the end thereof new sections 346 and 347 as 
follows: 
7 use 1994. 
"SEC. 346. Effective October 1,1979, the aggregate principal amount 
of loans under the programs authorized under each subtitle of this 
title during each three-year period thereafter shall not exceed such 
amounts as may be authorized by law after the date of enactment of 
this section. There shall be two amounts so established for each of such 
programs and for any maximum levels provided in appropriation 
Acts for the programs authorized under this title, one against which 
direct and insured loans shall be charged and the other against which 
PUBLIC LAW 95-334—AUG. 4, 1978 
92 STAT. 429 
guaranteed loans shall be charged, with or without authority for the 
Secretary to transfer amounts between such categories within a given 
program for more effective administration. 
"SEC. 347. Notwithstanding any other provision of law, other 7 USC 1995. 
departments, agencies, and executive establishments of the Federal 
Government may participate and provide financial and technical assist-
ance jointly with the Secretary to any applicant to whom assistance is 
being provided under any program administered by the Farmers Home 
Administration. Participation by any other department, agency, or 
executive establishment shall be only to the extent authorized for, and 
subject to the authorities of, such other department, agency, or execu-
tive establishment, except that any limitation on joint participation is 
superseded by this section.". 
USE OF QUALIFIED PERSONNEL BY THE DEPARTMENT OF AGRICULTURE 
SEC. 126. It is the sense of Congress that, in carrying out the pro-
visions of the Consolidated Farm and Rural Development Act, the 7 USC 1921 note. 
Secretary of Agriculture should ensure that— 
(1) only officers and employees of the Department of Agricul-
ture who are adequately prepared to understand the particular 
needs and problems of farmers in an area are assigned to such area; 
and 
(2) a high priority is placed on keeping existing farm opera-
tions operating. 
TITLE II—EMERGENCY AGRICULTURAL CREDIT 
ADJUSTMENT ACT OF 1978 
SHORT TITLE 
SEC. 201. This title may be cited as the "Emergency Agricultural 7 U
S
C prec. 1961 
Credit Adjustment Act of 1978". 
note. 
AUTHORITY TO INSURE OR GUARANTEE LOANS 
SEC. 202. The Secretary of Agriculture may insure or guarantee 7 USC prec. 1961 
loans to (1) bona fide farmers and ranchers who are primarily and note, 
directly engaged in agricultural production and who are citizens of the 
United States and (2) farm cooperatives and private domestic cor-
porations and partnerships that are primarily and directly engaged in 
agricultural production and in which a majority interest is held by 
members, stockholders, or partners, as applicable, who themselves are 
citizens of the United States and are primarily and directly engaged 
in agricultural production, if the applicant for such loan— 
(A) has the experience or training and resources necessary to 
assure a reasonable prospect for successful operation with the 
assistance of such loan; 
(B) needs such credit in order to maintain a viable agricul-
tural production operation; and 
(C) is unable at the time the loan application is filed to obtain 
sufficient credit from normal credit sources to finance actual needs 
at reasonable rates and terms due to national or areawide eco-
nomic stresses, such as a general tightening of agricultui'al credit 
or an unfavorable relationship between production costs and 
prices received for agricultural commodities. 
92 STAT. 430 
PUBLIC LAW 95-334—AUG. 4, 1978 
"Agricultural 
As used in this title, the term "agricultural production" shall include 
production." 
aquaculture; and the term "Secretary" shall mean the Secretary of 
Agriculture. 
PURPOSES OF LOANS 
TUSCprec. 1961 
SEC. 203. (a) Loans may be insured or guaranteed under this title 
°'*t®- 
for (1) refinancing outstanding indebtedness, including the making of 
installment payments of principal and interest, on farm or home real 
estate and other farm and essential home debts that cannot be paid 
unless assistance is provided under this title to provide adequate terms 
within the applicant's repayment ability and assure continuation of 
the applicant's farming, ranching, or aquaculture operation, (2) 
reorganization of the farming, ranching, or aquaculture operation, 
including changes in the nature or method of operation, necessary to 
provide an economically sound operating unit, (3) purchase of essen-
tial water rights, supplies, and irrigation facilities, (4) purchase of 
essential livestock, poultry, and farm equipment, (5) purchase of 
feed, seed, fertilizer, insecticides, and farm supplies and other essen-
tial farm operating expenses, including cash rent, (6) financing essen-
tial land and water development, use, and conservation, (T) other 
essential farm, ranch, and aquaculture needs, including, but not 
limited to, family subsistence, and (8) loan closing costs. No loan may 
be insured or guaranteed under this title the purpose of which is to 
purchase or lease additional land. 
(b) In making loans under this title, preference shall be given to 
owners or operators of not larger than family farms. In the case of 
farm cooperatives, corporations, and partnerships, the family farm 
preference shall apply to the farm or farms in which both the entity 
and its principal members, stockholders, or partners, as applicable, 
have an ownership or operator interest and are primarily and directly 
engaged in agricultural production. 
OUARANTEED LOAN LIMITS; RATES OF INTEREST; REPAYMENT PERIOD; 
RESTRlOnONS 
7 useprec. 1961 
SEC. 204. (a) The Secretary may guarantee under this title the 
°o*®- 
principal and interest on any loan that is made by a legally organized 
lending agency, and that otherwise meets the purposes and conditions 
of this title, except that such guarantee shall not exceed 90 per centum 
of the principal and interest of the loan. 
(b) Loans guaranteed under this title shall bear interest at rates 
to be agreed upon by the lender and borrower. Loans insured under 
this title shall bear interest at rates determined by the Secretary tak-
ing into consideration the current average market yield on outstand-
ing marketable obligations of the United States with remaining 
periods to maturity comparable to the average maturities of such loans, 
plus not to exceed 1 per centum, as determined by the Secretary, and 
adjusted to the nearest one-eighth of 1 per centum. 
(c) Loans insured and guaranteed under this title shall be repay-
able at such times as the Secretary may determine, taking into account 
the purpose of, and ne-ed for, the loan, but not later than provided for 
loans for similar purposes under the Consolidated Farm and Rural 
7 use 1921 note. Development Act: Prmnded, That, if the loan is for a purpose 
7 use 1941. 
described in subtitle B of such Act, the Secretary may make the loan 
repayable at the end of a period not exceeding twenty years if the 
Secretary determines that the need of the applicant justifies a longer 
repayment period. 
PUBLIC LAW 95-334—AUG. 4, 1978 
92 STAT. 431 
(d) No fees or charges shall be assessed by the Secretary for any 
loan insured or for any guarantee provided under this title. 
LOAX CERTIFICATIONS AND CONDITIONS 
SEC. 205. (a) As a condition of the Secretary's guaranteeing any 7 USC prec. 1961 
loan under this title, the lender shall certify that— 
note. 
(1) the lender is unwilling to provide credit to, or continue 
with, the loan applicant in the absence of the guarantee authorized 
by this title; 
(2) the loan applicant is directly and in good faith engaged in 
agricultural production; and 
(3) the financing to be furnished the loan applicant is to be 
used for one or more of the purposes set forth in section 203 of 
this title. 
(b) As a condition of the Secretary's insuring any loan under this 
title, the loan applicant shall certify that— 
(1) the loan applicant will be unable to obtain financing in the 
absence of the assistance authorized by this title; 
(2) the loan applicant is directly and in good faith engaged in 
agricultural production; and 
(3) the financing to be furnished the loan applicant is to be 
used for one or more of the purposes set forth in section 203 of 
this title. 
(c) As a condition of insuring or guaranteeing any loan under this 
title, the Secretary must find that there is reasonable probability of 
accomplishing the objectives of this title and repayment of the loan. 
(d) The Secretary shall require— 
(1) the county connnittee authorized under section 332 of the 
Consolidated Farm and Rural Development Act to certify in 7 USC 1982. 
writing that the applicant for a loan under this title meets the 
eligibility requirements for the loan, has the character, industry, 
and ability to carry out the proposed operations, and will, in the 
opinion of the committee, honestly endeavor to carry out the 
applicant's undertakings and obligations; and 
(2) except for guaranteed loans, an agreement by the applicant 
for a loan under this title that if at any time it shall appear to the 
Secretary that the applicant may be able to obtain a loan from a 
production credit association, a Federal land bank, or other respon-
sible cooperative or private credit source, at reasonable rates and 
terms for loans for similar purposes and periods of time, the 
applicant will, upon request by the Secretary, apply for and accept 
such loan in an amount sufficient to repay the Secretary or the 
insured lender, or both, and pay for any stock in a cooperative 
lending agency that must be purchased in connection with such 
loan. 
LOAN 
SECURITY 
SEC 206. Ix)ans shall be insured or guaranteed under this title upon 7 USC prec. 1961 
the full personal liability of the borrower secured by such collateral note, 
as is available that, together with the confidence of the Secretary, and, 
for guaranteed loans, the confidence of the lender, in the repayment 
ability of the loan applicant, is deemed by the Secretary adequate to 
protect the Government's interest. The collateral may be subject to 
a prior lien or may be collateral that has depreciated in value owing 
to temporary economic conditions. 
92 STAT. 432 
PUBLIC LAW 95-334—AUG. 4, 1978 
FUNDING; 
LIMITATION ON OUTSTANDING 
LOANS 
7USCprec.l961 
SEC. 207. (a) The fund created in section 309 of the Consolidated 
7
*
*
f
f
<
5
r 1Q90 
Farm and Rural Development Act shall be used by the Secretary for 
7 UbC 1929. 
^YiQ operation of the loan program, and for the discharge of the obli-
gations incurred by the Secretary, under this title. The Secretary may 
use such fund to (1) pay administrative expenses of the Secretary 
necessary to insure, guarantee, and service loans, and otherwise carry 
out the provisions of this title, and (2) purchase, on such terms and 
conditions as the Secretary may deem appropriate, all or any portion 
of any loan insured or guaranteed under this title, or to defer pay-
ments of principal and interest with respect to such loan and pay 
expenses and fees incident to such purchase or deferral. There shall 
be reimbursed to such fund by appropriations annually an amount 
equal to the costs incurred in the operation and administration of the 
program created by this title. 
(b) The total principal balance outstanding at any time on loans 
insured or guaranteed under this title for any borrower shall not 
exceed $400,000: Provided, That no loan may be insured or guaran-
teed under this title to a borrower who has any loans outstanding 
under subtitle A or B of the Consolidated Farm and Rural Develop-
ment Act that would cause the total outstanding principal indebted-
ness under this title and subtitles A and B of the Consolidated Farm 
7 use 1922, 
and Rural Development Act to exceed $650,000, and no loan may be 
1941. 
made, insured, or guaranteed under subtitle A or B of the Consoli-
dated Farm and Rural Development Act to any borrower who has 
any loans outstanding under this title that would cause the total out-
standing principal indebtedness under subtitles A and B of the Con-
solidated Farm and Rural Development Act and this title to exceed 
$650,000. 
(c) The total principal balance outstanding at any time on loans 
insured or guaranteed under this title shall not exceed $4,000,000,000. 
FULL FAITH AND CREDIT 
7 use prec. 1961 
SEC. 208. Any contract of guarantee or insurance executed by the 
°ot^- 
Secretary under this title shall be an obligation supported by the full 
faith and credit of the United States and incontestable except for 
fraud or misrepresentation of which the holder has actual knowledge 
at the time it becomes a holder. 
ISSUANCE OF C E R T I F I C A ' I ' E S OF BENEFICIAL OWNERSHIP; CONTRACTS OF 
GUARANTEE ASSIGNABLE; REGULATIONS 
7 use prec. 1961 
SEC. 209. (a) The provisions of section 310B(6) of the Consolidated 
note. 
Farm and Rural Development Act shall apply to loans insured or 
7 use 1932. 
guaranteed under this title. The Secretary is authorized to handle 
loans guaranteed jmder this title in the same manner as loans guar-
7 use 1921 note, anteed under the Consolidated Farm and Rural Development Act. 
(b) Contracts of guarantee executed pursuant to the provisions of 
this title shall be fully assignable. 
(c) The Secretary is authorized to issue such regulations as the 
Secretary determines necessary to carry out this title. Final regula-
tions shall be issued as soon as possible, but in no event later than thirty 
days after the date of enactment of this title. Insofar as practicable, the 
Secretary shall complete action on each loan application within thirty 
days after its receipt. 
PUBLIC LAW 95-334—AUG. 4, 1978 
92 STAT. 433 
AVAILABILITY OF THE PROGRAM 
SEC.210. Financial assistance may be made available under this title 
throughout the "United States" as that term is defined in section 848 
of the Consolidated Farm and Rural Development Act. 
7 u s e prec. 1961 
note. 
7 u s e 1991. 
EFFECTIVE PERIOD 
SEC. 211. The provisions of this title shall become effective upon 
enactment, and the authority to make new contracts of insurance or 
guarantee under this title shall terminate May 15,1980. 
TITLE 
III—EXTENSION AND AMENDMENT 
OF 
THE 
EMERGENCY LIVESTOCK CREDIT ACT OF 1974 AND 
AMENDMENT OF THE BEEF RESEARCH AND INFOR-
MATION ACT 
7 u s e prec. 1961 
note. 
E M E R G E N C Y 
L I V E S T O C K CREDIT ACT 
OF 
197 4 
SEC. 301. The Emergencv Livestock Credit Act of 1974 is amended 
b y -
(1) in section 2, inserting after the words ''bona fide farmers 
and ranchers" the following: ", including bona fide farmers or 
ranchers owning livestock that are fed in custom feedyards,": 
(2) amending section 8 to read as follows: 
"SEC. 8. The provisions of this Act shall become effective upon 
enactment, and the authority to make new guarantees shall expire Sep-
tember 80. 1979, except that, with respect to any loan for a line of 
credit guaranteed tmder this Act, if the lender advances loan funds 
within the line of credit at any time during the remaining term or 
authorized renewal period of the loan after September 80, 1979, the 
guarantee of such advances shall not be considered new guarantees."; 
(8) in section 11, amending the first sentence to read as follows: 
"The Secretary shall, not later than December 15 of each year, 
report to the House Committee on Agriculture and the Senate 
Committee on Agriculture, Nutrition, and Forestry on the effec-
tiveness of this Act.": and 
(4) adding at the end thereof a new section 12 as follows: 
"SEC. 12. Financial assistance may be m.ade available under this Act 
throughout the 'Ignited States' as that term is defined in section 848 
of the Consolidated Farm and Rural Development Act.". 
BEEF RESEARCH AND INFORMATION ACT 
SEC. 802. Section 9 of the Beef Research and Information Act (7 
U.S.C. 2908) is amended by striking out in the third sentence the 
words "not less than two-thirds" and inserting in lieu thereof "a 
majority". 
TITLE IV—EMERGENCY CONSERVATION PROGRAM 
SEC. 401. The Secretary of Agriculture is authorized to make pay-
ments to agricultural producers who carry out emergency measures to 
control wind erosion on farmlands or to rehabilitate farmlands dam-
aged by wind erosion, floods, hurricanes, or other natural disasters 
when, as a result of the foregoing, new conservation problems have 
been created that (1) if not treated, will impair or endanger the land, 
(2) materially affect the productive capacity of the land, (3) represent 
7 u s e prec. 1961 
note. 
Effective date. 
Report to 
congressional 
committees. 
7 u s e 1991. 
16 u s e 2201. 
92 STAT. 434 
PUBLIC LAW 95-334—AUG. 4, 1978 
16 use 2202. 
16 use 2203. 
Appropriation 
authorization. 
16 use 2204. 
Regulations. 
16 use 2205. 
Effective date. 
16 use 2201. 
note. 
7 u s e 1309. 
Effective date. 
7 u s e 1309 note. 
7 u s e 1281 note. 
7 u s e 1309. 
damage that is unusual in character and, except for wind erosion, is 
not the type that would recur frequently in the same area, and (4) 
will be so costly to rehabilitate that Federal assistance is or will be 
required to return the land to productive agricultural use. 
SEC. 402. The Secretary of Agriculture is authorized to make pay-
ments to agricultural producers who carry out emergency water con-
servation or water enhancing measures during periods of severe 
drought as determined by the Secretary. 
SEC. 403. The Secretary of Agriculture is authorized to undertake 
emergency measures for runoff retardation and soil-erosion preven-
tion, in cooperation with landowners and land users, as the Secretary 
deems necessary to safeguard lives and property from floods, drought, 
and the products of erosion on any watershed whenever fire, flood, or 
any other natural occurrence is causing or has caused a sudden impair-
ment of that watershed. 
SEC. 404. There are authorized to be appropriated such funds as 
may be necessary to carry out the purposes of this title. Such funds 
shall remain available until expended. In implementing the provi-
sions of this title, the Secretary of Agriculture may use the facilities, 
services, and authorities of the Commodity Credit Corporation. The 
Corporation shall not make any expenditures to carry out the provi-
sions of this title unless funds specifically appropriated for such 
purpose have been transferred to it. 
SEC. 405. The Secretary of Agriculture is authorized to prescribe 
such regulations as the Secretary determines necessary to carry out the 
provisions of this title. 
SEC. 406. The provisions of this title shall become effective October 1, 
1978. 
TITLE 
V—PRICE SUPPORT FOR PRODUCERS OF RICE 
SEC. 501. (a) Section 1001(b) of the Food and Agriculture Act of 
1977 is amended by striking out "and upland cotton" and inserting in 
lieu thereof "upland cotton, and rice". 
(b) This section shall become effective October 1, 1978, and any 
producers who, prior to such date, receive payments on the 1978 crop 
of rice as computed under the Agricultural Act of 1949, as amended 
by the Food and Agriculture Act of 1977, may elect after September 30, 
1978, to receive payments as computed under section 1001(b) of the 
Food and Agriculture Act of 1977, as amended by this section. 
Approved August 4, 1978. 
LEGISLATIVE HISTORY: 
HOUSE REPORTS: No. 95-986 (eomm. on Agriculture) and No. 95-1344 (eomm. of 
eonference). 
SENATE REPORT No. 95-752 accompanying S. 2146 (eomm. on Agriculture, Nutri-
tion, and Forestry). 
CONGRESSIONAL RECORD, Vol. 124 (1978): 
Apr. 24, considered and passed House. 
May 1, 2, S. 2146 considered in Senate. 
May 2, considered and passed Senate, amended, in lieu of S. 2146. 
July 19, House agreed to conference report. 
July 20, Senate agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 14, No. 31: 
Aug. 4, Presidential statement.