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SEC. 211. DISSEMINATION OF QUARTERLY RE

PORTS. Section 5.17(a)(8) of the Farm Credit Act of 1971 (12 U.S.C. 2252(a)(8)) is amended by inserting after "except that the following: “the requirements of the Farm Credit Administration governing the dissemination to stockholders of quarterly reports of System institutions may not be more burdensome or costly than the requirements applicable to national banks, and”. SEC. 212. REGULATORY REVIEW.

(a) FINDINGS.-Congress finds that

(1) the Farm Credit Administration, in the role of the Administration as an arms-length safety and soundness regulator, has made considerable progress in reducing the regulatory burden on Farm Credit System institutions;

(2) the efforts of the Farm Credit Administration described in paragraph (1) have resulted in cost savings for Farm Credit System institutions; and

(3) the cost savings described in paragraph (2) ultimately benefit the farmers, ranchers, agricultural cooperatives, and rural residents of the United States.

(b) CONTINUATION OF REGULATORY REVIEW.-The Farm Credit Administration shall continue the comprehensive review of regulations governing the Farm Credit System to identify and eliminate, consistent with law, safety, and soundness, all regulations that are unnecessary, unduly burdensome or costly, or not based on law. SEC. 213. EXAMINATION OF FARM CREDIT SYS

TEM INSTITUTIONS. The first sentence of section 5.19(a) of the Farm Credit Act of 1971 (12 U.S.C. 2254(a)) is amended by striking "each year" and inserting "during each 18-month period”. SEC. 214. CONSERVATORSHIPS AND RECEIVER

SHIPS. (a) DEFINITIONS.-Section 5.51 of the Farm Credit Act of 1971 (12 U.S.C. 2277a) is amended

(1) by striking paragraph (5); and

(2) by redesignating paragraph (6) as paragraph (5).

(b) GENERAL CORPORATE POWERS.-Section 5.58 of the Farm Credit Act of 1971 (12 U.S.C. 2277a-7) is amended by striking paragraph (9) and inserting the following:

“(9) CONSERVATOR OR RECEIVER.—The Corporation may act as a conservator or receiver.”. SEC. 215. FARM CREDIT INSURANCE FUND OPER

ATIONS. (a) ADJUSTMENT OF PREMIUMS.

(1) IN GENERAL.-Section 5.55(a) of the Farm Credit Act of 1971 (12 U.S.C. 2277a-4(a)) is amended

(A) in paragraph (1), by striking "Until the aggregate of amounts in the Farm Credit Insurance Fund exceeds the secure base amount, the annual premium due from any insured System bank for any calendar year” and inserting the following: “If at the end of any calendar year the aggregate of amounts in the Farm Credit Insurance Fund does not exceed the secure base amount, subject to paragraph (2), the annual premium due from any insured System bank for the calendar year'';

(B) by redesignating paragraph (2) as paragraph (3); and

(C) by inserting after paragraph (1) the following:

“(2) REDUCED PREMIUMS.—The Corporation, in the sole discretion of the Corporation, may reduce by a percentage uniformly applied to all insured System banks the annual premium due from each insured System bank during any calendar year, as determined under paragraph (1).”.

(2) CONFORMING AMENDMENTS.

(A) Section 5.55(b) of the Farm Credit Act of 1971 (12 U.S.C. 2277a-4(b)) is amended

(i) by striking “Insurance Fund” each place it appears and inserting "Farm Credit Insurance Fund'';

(ii) by striking “for the following calendar year'; and

(iii) by striking "subsection (a)" and inserting "subsection (a)(1)".

(B) Section 5.56(a) of the Farm Credit Act of 1971 (12 U.S.C. 2277a-5(a)) is amended by striking "section 5.55(a)(2)" each place it appears in paragraphs (2) and (3) and inserting “section 5.55(a)(3)”.

(b) ALLOCATION TO INSURED SYSTEM BANKS AND OTHER SYSTEM INSTITUTIONS OF EXCESS AMOUNTS IN THE FARM CREDIT INSURANCE FUND.-Section 5.55 of the Farm Credit Act of 1971 (12 U.S.C. 2277a-4) is amended by adding at the end the following:

“(e) ALLOCATION TO SYSTEM INSTITUTIONS OF EXCESS RESERVES.

“(1) ESTABLISHMENT OF ALLOCATED INSURANCE RESERVES ACCOUNTS.—The Corporation shall establish an Allocated Insurance Reserves Account in the Farm Credit Insurance Fund

"(A) for each insured System bank; and

"(B) subject to paragraph (6)(C), for all holders, in the aggregate, of Financial Assistance Corporation stock.

“(2) TREATMENT.-Amounts in any Allocated Insurance Reserves Account shall be considered to be part of the Farm Credit Insurance Fund.

“(3) ANNUAL ALLOCATIONS.-If, at the end of any calendar year, the aggregate of the amounts in the Farm Credit Insurance Fund exceeds the average secure base amount for the calendar year (as calculated on an average daily balance basis), the Corporation shall allocate to the Allocated Insurance Reserves Accounts the excess amount less the amount that the Corporation, in its sole discretion, determines to be the sum of the estimated operating expenses and estimated insurance obligations of the Corporation for the immediately succeeding calendar year.

“(4) ALLOCATION FORMULA.—From the total amount required to be allocated at the end of a calendar year under paragraph (3)—

“(A) 10 percent of the total amount shall be credited to the Allocated Insurance Reserves Account established under paragraph (1)(B), subject to paragraph (6)(C); and

“(B) there shall be credited to the Allocated Insurance Reserves Account of each insured System bank an amount that bears the same ratio to the total amount (less any amount credited under subparagraph (A)) as the average principal outstanding for the 3year period ending on the end of the calendar year on loans made by the bank that are in accrual status bears to the average principal outstanding for the 3-year period ending on the end of the calendar year on loans made by all insured System banks that are in accrual status (excluding, in each case, the guaranteed portions of government-guaranteed loans described in subsection (a)(1)(C)).

“(5) USE OF FUNDS IN ALLOCATED INSURANCE RESERVES ACCOUNTS.—To the extent that the sum of the operating expenses of the Corporation and the insurance obligations of the Corporation for a calendar year exceeds the sum of operating expenses and insurance obligations determined under paragraph (3) for the calendar year, the Corporation shall cover the expenses and obligations by

“(A) reducing each Allocated Insurance Reserves Account by the same proportion; and “(B) expending the

the amounts obtained under subparagraph (A) before expending other amounts in the Fund. "(6) OTHER DISPOSITION

OF

ACCOUNT FUNDS.

“(A) IN GENERAL.-As soon as practicable during each calendar year beginning more than 8 years after the date on which the aggregate of the amounts in the Farm Credit Insurance Fund exceeds the secure base

amount, but not earlier than January 1, 2005, the Corporation may

“(i) subject to subparagraphs (D) and (F), pay to each insured System bank, in a man

determined by the Corporation, an amount equal to the lesser of

"(I) 20 percent of the balance in the insured System bank's Allocated Insurance Reserves Account as of the preceding December 31; or

"(II) 20 percent of the balance in the bank's Allocated Insurance Reserves Account on the date of the payment; and

"(ii) subject to subparagraphs (C), (E), and (F), pay to each System bank and association holding Financial Assistance Corporation stock a proportionate share, determined by dividing the number of shares of Financial Assistance Corporation stock held by the institution by the total number of shares of Financial Assistance Corporation stock outstanding, of the lesser of

“(I) 20 percent of the balance in the Allocated Insurance Reserves Account established under paragraph (1)(B) as of the preceding December 31; or

“(II) 20 percent of the balance in the Allocated Insurance Reserves Account established under paragraph (1)(B) on the date of the payment.

“(B) AUTHORITY TO ELIMINATE OR REDUCE PAYMENTS.—The Corporation may eliminate or reduce payments during a calendar year under subparagraph (A) if the Corporation determines, in its sole discretion, that the payments, or other circumstances that might require use of the Farm Credit Insurance Fund, could cause the amount in the Farm Credit Insurance Fund during the calendar year to be less than the secure base amount.

“(C) REIMBURSEMENT FOR FINANCIAL ASSISTANCE CORPORATION STOCK.

"(i) SUFFICIENT FUNDING.-Notwithstanding paragraph (4)(A), on provision by the Corporation for the accumulation in the ACcount established under paragraph (1)(B) of funds in an amount equal to $56,000,000 (in addition to the amounts described in subparagraph (F)(ii)), the Corporation shall not allocate any further funds to the Account except to replenish the Account if funds are diminished below $56,000,000 by the Corporation under paragraph (5).

“(ii) WIND DOWN AND TERMINATION.

“(I) FINAL DISBURSEMENTS.-On disbursement of $53,000,000 (in addition to the amounts described in subparagraph (F)(ii)) from the Allocated Insurance Reserves ACcount, the Corporation shall disburse the remaining amounts in the Account, as determined under subparagraph (A)(ii), without regard to the percentage limitations in subclauses (I) and (II) of subparagraph (A)(ii).

“(II) TERMINATION OF ACCOUNT.-On disbursement of $56,000,000 (in addition to the amounts described in subparagraph (F)(ii)) from the Allocated Insurance Reserves Account, the Corporation shall close the Account established under paragraph (1)(B) and transfer any remaining funds in the Account to the remaining Allocated Insurance Reserves Accounts in accordance with paragraph (4)(B) for the calendar year in which the transfer occurs.

“(D) DISTRIBUTION OF PAYMENTS RECEIVED.-Not later than 60 days after receipt of a payment made under subparagraph (A)(i), each insured System bank, in consultation with affiliated associations of the insured System bank, and taking into account the direct or indirect payment of insurance premiums by the associations, shall develop and implement an equitable plan to distribute payments received under subparagraph (A)(i) among the bank and associations of the bank.

“(E) EXCEPTION FOR PREVIOUSLY REIMBURSED ASSOCIATIONS.–For purposes of subparagraph (A)(ii), in any Farm Credit district in which the funding bank has reimbursed 1 or more affiliated associations of the bank for the previously unreimbursed portion of the Financial Assistance Corporation stock held by the associations, the funding bank shall be deemed to be the holder of the shares of Financial Assistance Corporation stock for which the funding bank has provided the reimbursement.

"(F) INITIAL PAYMENT.-Notwithstanding subparagraph (A), the initial payment made to each payee under subparagraph (A) shall be in such amount determined by the Corporation to be equal to the sum of

"(i) the total of the amounts that would have been paid if payments under subparagraph (A) had been authorized to begin, under the same terms and conditions, in the first calendar year beginning more than 5 years after the date on which the aggregate of the amounts in the Farm Credit Insurance Fund exceeds the secure base amount and to continue through the 2 immediately subsequent years;

“(ii) interest earned on any amounts that would have been paid as described in clause (i) from the date on which the payments would have been paid as described in clause (i); and

“(iii) the payment to be made in the initial year described in subparagraph (A), based on the amount in each Account after subtracting the amounts to be paid under clauses (i) and (ii).".

(c) TECHNICAL AMENDMENTS.-Section 5.55(d) of the Farm Credit Act of 1971 (12 U.S.C. 2277a-4(d)) is amended

(1) in the matter preceding paragraph (1)

(A) by striking "subsections (a) and (c)" and inserting "subsections (a), (c), and (e)"; and

(B) by striking “a Farm Credit Bank” and inserting "an insured System bank"; and

(2) in paragraphs (1), (2), and (3), by striking "Farm Credit Bank" each place it appears and inserting "insured System bank”. SEC. 216. EXAMINATIONS BY THE FARM CREDIT

SYSTEM INSURANCE CORPORATION. Section 5.59(b)(1)(A) of the Farm Credit Act of 1971 (12 U.S.C. 2277a-8(b)(1)(A)) is amended by adding at the end the following: “Notwithstanding any other provision of this Act, on cancellation of the charter of a System institution, the Corporation shall have authority to examine the system institution in receivership. An examination shall be performed at such intervals as the Corporation shall determine.”. SEC. 217. POWERS WITH RESPECT TO TROUBLED

INSURED SYSTEM BANKS. (a) LEAST-COST RESOLUTION.-Section 5.61(a)(3) of the Farm Credit Act of 1971 (12 U.S.C. 2277a-10(a)) is amended

(1) by redesignating subparagraph (B) as subparagraph (F); and

(2) by striking subparagraph (A) and inserting the following:

"(A) LEAST-COST RESOLUTION.—Assistance may not be provided to an insured System bank under this subsection unless the means of providing the assistance is the least costly means of providing the assistance by the Farm Credit Insurance Fund of all possible alternatives available to the Corporation, including liquidation of the bank (including paying the insured obligations issued on behalf of the bank). Before making a least-cost determination under this subparagraph, the Corporation shall accord such other insured System banks as the Corporation determines to be appropriate the opportunity to submit information relating to the determination.

“(B) DETERMINING LEAST COSTLY APPROACH.—In determining the least costly alternative under subparagraph (A), the Corporation shall

“(i) evaluate alternatives on a presentvalue basis, using a realistic discount rate;

“(ii) document the evaluation and the assumptions on which the evaluation is based, including any assumptions with regard to interest rates, asset recovery rates, asset holding costs, and payment of contingent liabilities; and

“(iii) retain the documentation for not less than 5 years.

(C) TIME OF DETERMINATION.

“(i) GENERAL RULE.-For purposes of this subsection, the determination of the costs of providing any assistance under any provision of this section with respect to any insured System bank shall be made as of the date on which the Corporation makes the determination to provide the assistance to the institution under this section.

"(ii) RULE FOR LIQUIDATIONS.—For purposes of this subsection, the determination of the costs of liquidation of any insured System bank shall be made as of the earliest of,

“(I) the date on which a conservator is appointed for the insured System bank;

“(II) the date on which a receiver is appointed for the insured System bank; or

"(III) the date on which the Corporation makes any determination to provide any assistance under this section with respect to the insured System bank.

(D) RULE FOR STAND-ALONE ASSISTANCE.Before providing any assistance under paragraph (1), the Corporation shall evaluate the adequacy of managerial resources of the insured System bank. The continued service of any director or senior ranking officer who serves in a policymaking role for the assisted insured System bank, as determined by the Corporation, shall be subject to approval by the Corporation as a condition of assistance.

“(E) DISCRETIONARY DETERMINATIONS.-Any determination that the Corporation makes under this paragraph shall be in the sole discretion of the Corporation.”.

(b) CONFORMING AMENDMENTS.-Section 5.61(a) of the Farm Credit Act of 1971 (12 U.S.C. 2277a-10(a)) is amended

(1) in paragraph (1) by striking "IN GENERAL.—” and inserting “STAND-ALONE ASSISTANCE.—”; and

(2) in paragraph (2)

(A) by striking "ENUMERATED POWERS.—” and inserting "FACILITATION OF MERGERS OR CONSOLIDATION.—”; and

(B) in subparagraph (A) by striking “FACILITATION OF MERGERS OR CONSOLIDATION." and inserting “IN GENERAL.—”. SEC. 218. OVERSIGHT AND REGULATORY AC

TIONS BY THE FARM CREDIT SYS

TEM INSURANCE CORPORATION. The Farm Credit Act of 1971 is amended by inserting after section 5.61 (12 U.S.C. 2279a10) the following: “SEC. 5.61A. OVERSIGHT ACTIONS BY THE COR

PORATION. “(a) DEFINITIONS.-In this section, the term 'institution' means

"(1) an insured System bank; and

"(2) a production credit association or other association making loans under section 7.6 with a direct loan payable to the funding bank of the association that comprises 20 percent or more of the funding bank's total loan volume net of nonaccrual loans.

“(b) CONSULTATION REGARDING PARTICIPATION OF UNDERCAPITALIZED BANKS IN ISSUANCE OF INSURED OBLIGATIONS.-The Farm Credit Administration shall consult with the Corporation prior to approving an insured obligation that is to be issued by or on behalf of, or participated in by, any insured System bank that fails to meet the minimum level for any capital requirement established by the Farm Credit Administration for the bank.

"(c) CONSULTATION REGARDING APPLICATIONS FOR MERGERS AND RESTRUCTURINGS.

“(1) CORPORATION TO RECEIVE COPY OF TRANSACTION APPLICATIONS.—On receiving an

application for a merger or restructuring of an institution, the Farm Credit Administration shall forward a copy of the application to the Corporation.

"(2) CONSULTATION REQUIRED.-If the proposed merger or restructuring involves an institution that fails to meet the minimum level for any capital requirement established by the Farm Credit Administration applicable to the institution, the Farm Credit Administration shall allow 30 days within which the Corporation may submit the views and recommendations of the Corporation, including any conditions for approval. In determining whether to approve or disapprove any proposed merger or restructuring, the Farm Credit Administration shall give due consideration to the views and recommendations of the Corporation. "SEC. 5.61B. AUTHORITY TO REGULATE GOLDEN

PARACHUTE AND INDEMNIFICATION

PAYMENTS. “(a) DEFINITIONS.-In this section:

"(1) GOLDEN PARACHUTE PAYMENT.-The term 'golden parachute payment

“(A) means a payment (or any agreement to make a payment) in the nature of compensation by any Farm Credit System institution (including the Federal Agricultural Mortgage Corporation and any conservator or receiver for the Federal Agricultural Mortgage Corporation) for the benefit of any institution-related party under an obligation of the institution that,

"(i) is contingent on the termination of the party's relationship with the institution; and

“(ii) is received on or after the date on which,

“(I) the institution is insolvent;

“(II) a conservator or receiver is appointed for the institution;

“(III) the institution has been assigned by the Farm Credit Administration a composite CAMEL rating of 4 or 5 under the Farm Credit Administration Rating System, or an equivalent rating; or

(IV) the Corporation otherwise determines that the institution is in a troubled condition (as defined in regulations issued by the Corporation); and

“(B) includes a payment that would be a golden parachute payment but for the fact that the payment was made before the date referred to in subparagraph (A)(ii) if the payment was made in contemplation of the occurrence of an event described in any subclause of subparagraph (A); but

(C) does not include

“(i) a payment made under a retirement. plan that is qualified (or is intended to be qualified) under section 401 of the Internal Revenue Code of 1986 or other nondiscriminatory benefit plan;

"(ii) a payment made under a bona fide supplemental executive retirement plan, deferred compensation plan, or other arrangement that the Corporation determines, by regulation or order, to be permissible; or

“(iii) a payment made by reason of the death or disability of an institution-related party

“(2) INDEMNIFICATION PAYMENT.-The term 'indemnification payment' means a payment (or any agreement to make a payment) by any Farm Credit System institution for the benefit of any person who is or was an institution-related party, to pay or reimburse the person for any liability or legal expense with regard to any administrative proceeding or civil action instituted by the Farm Credit Administration that results in a final order under which the person

"(A) is assessed a civil money penalty; or

"(B) is removed or prohibited from participating in the conduct of the affairs of the institution.

"(3) INSTITUTION-RELATED PARTY.-The term 'institution-related party' means

"(A) a director, officer, employee, or agent for a Farm Credit System institution;

“(B) a stockholder (other than another Farm Credit System institution), consultant, joint venture partner, or any other person determined by the Farm Credit Administration to be a participant in the conduct of the affairs of a Farm Credit System institution; and

"(C) an independent contractor (including any attorney, appraiser, or accountant) that knowingly or recklessly participates in any violation of any law or regulation, any breach of fiduciary duty, or any unsafe or unsound practice that caused or is likely to cause more than a minimal financial loss to, or a significant adverse effect on, the Farm Credit System institution.

“(4) LIABILITY OR LEGAL EXPENSE.—The term 'liability or legal expense' means

"(A) a legal or other professional expense incurred in connection with any claim, proceeding, or action:

“(B) the amount of, and any cost incurred in connection with, any settlement of any claim, proceeding, or action; and

“(C) the amount of, and any cost incurred in connection with, any judgment or penalty imposed with respect to any claim, proceeding, or action.

"(5) PAYMENT.-The term 'payment means

(A) a direct or indirect transfer of any funds or any asset; and

“(B) any segregation of any funds or assets for the purpose of making, or under an agreement to make, any payment after the date on which the funds or assets are segregated, without regard to whether the obligation to make the payment is contingent on

“(i) the determination, after that date, of the liability for the payment of the amount; or

“(ii) the liquidation, after that date, of the amount of the payment.

(b) PROHIBITION.-The Corporation may prohibit or limit, by regulation or order, any golden parachute payment or indemnification payment by a Farm Credit System institution (including the Federal Agricultural Mortgage Corporation) in troubled condition (as defined in regulations issued by the Corporation).

“(C) FACTORS TO BE TAKEN INTO ACCOUNT.The Corporation shall prescribe, by regulation, the factors to be considered by the Corporation in taking any action under subsection (b). The factors may include

“(1) whether there is a reasonable basis to believe that an institution-related party has committed any fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse with regard to the Farm Credit System institution involved that has had a material effect on the financial condition of the institution;

“(2) whether there is a reasonable basis to believe that the institution-related party is substantially responsible for the insolvency of the Farm Credit System institution, the appointment of a conservator or receiver for the institution, or the institution's troubled condition (as defined in regulations prescribed by the Corporation);

“(3) whether there is a reasonable basis to believe that the institution-related party has materially violated any applicable law or regulation that has had a material effect on the financial condition of the institution;

“(4) whether there is a reasonable basis to believe that the institution-related party has violated or conspired to violate

“(A) section 215, 657, 1006, 1014, or 1344 of title 18, United States Code; or

"(B) section 1341 or 1343 of title 18, United States Code, affecting a Farm Credit System institution;

"(5) whether the institution-related party was in a position of managerial or fiduciary responsibility; and

“(6) the length of time that the party was related to the Farm Credit System institution and the degree to which

“(A) the payment reasonably reflects compensation earned over the period of employment; and

“(B) the compensation represents a reasonable payment for services rendered.

“(d) CERTAIN PAYMENTS PROHIBITED.-No Farm Credit System institution may prepay the salary or any liability or legal expense of any institution-related party if the payment is made

“(1) in contemplation of the insolvency of the institution or after the commission of an act of insolvency; and

“(2) with a view to, or with the result of,

"(A) preventing the proper application of the assets of the institution to creditors; or

"(B) preferring 1 creditor over another creditor.

“(e) RULE OF CONSTRUCTION.-Nothing in this section

"(1) prohibits any Farm Credit System institution from purchasing any commercial insurance policy or fidelity bond, so long as the insurance policy or bond does not cover any legal or liability expense of an institution described in subsection (a)(2); or

“(2) limits the powers, functions, or responsibilities of the Farm Credit Administration.". SEC. 219. FARM CREDIT SYSTEM INSURANCE

CORPORATION BOARD OF DIREC

TORS. Section 201 of the Farm Credit Banks and Associations Safety and Soundness Act of 1992 (106 Stat. 4104) is repealed. SEC. 220. INTEREST RATE REDUCTION PROGRAM.

Section 351(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1999) is amended

(A) by striking "SEC. 351. (a) The” and inserting the following: "SEC. 351. INTEREST RATE REDUCTION PRO

GRAM. “(a) ESTABLISHMENT OF PROGRAM.“(1) IN GENERAL.-The’’; and (B) by adding at the end the following:

“(2) TERMINATION OF AUTHORITY.–The authority provided by this subsection shall terminate on September 30, 2002.”. SEC. 221. LIABILITY FOR MAKING CRIMINAL RE

FERRALS. (a) IN GENERAL.-Any institution of the Farm Credit System, or any director, officer, employee, or agent of a Farm Credit System institution, that discloses to a Government authority information proffered in good faith that may be relevant to a possible violation of any law or regulation shall not be liable to any person under any law of the United States or any State

(1) for the disclosure; or

(2) for any failure to notify the person involved in the possible violation.

(b) No PROHIBITION ON DISCLOSURE.-Any institution of the Farm Credit System, or any director, officer, employee, or agent of a Farm Credit System institution, may disclose information to a Government authority that may be relevant to a possible violation of any law or regulation. TITLE III-NATIONAL NATURAL RE

SOURCES CONSERVATION FOUNDATION SEC. 301. SHORT TITLE.

This title may be cited as the “National Natural Resources Conservation Foundation Act". SEC. 302. DEFINITIONS.

In this title (unless the context otherwise requires):

(1) BOARD.-The term “Board” means the Board of Trustees established under section 304.

(2) DEPARTMENT.-The term “Department” means the United States Department of Agriculture.

(3) FOUNDATION.- The term “Foundation" means the National Natural Resources Conservation Foundation established by section 303(a).

(4) SECRETARY.—The term "Secretary” means the Secretary of Agriculture. SEC. 303. NATIONAL NATURAL RESOURCES CON.

SERVATION FOUNDATION. (a) ESTABLISHMENT.-A National Natural Resources Conservation Foundation is established as a charitable and nonprofit corporation for charitable, scientific, and educational purposes specified in subsection (b). The Foundation is not an agency or instrumentality of the United States.

(b) PURPOSES.—The purposes of the Foundation are to

(1) promote innovative solutions to the problems associated with the conservation of natural resources on private lands, particularly with respect to agriculture and soil and water conservation;

(2) promote voluntary partnerships between government and private interests in the conservation of natural resources;

(3) conduct research and undertake educational activities, conduct and support demonstration projects, and make grants to State and local agencies and nonprofit organizations;

(4) provide such other leadership and support as may be necessary to address conservation challenges, such as the prevention of excessive soil erosion, enhancement of soil and water quality, and the protection of wetlands, wildlife habitat, and strategically important farmland subject to urban conversion and fragmentation;

(5) encourage, accept, and administer private gifts of money and real and personal property for the benefit of, or in connection with, the conservation and related activities and services of the Department, particularly the Natural Resources Conservation Service;

(6) undertake, conduct, and encourage educational, technical, and other assistance, and other activities, that support the conservation and related programs administered by the Department (other than activities carried out on National Forest System lands), particularly the Natural Resources Conservation Service, except that the Foundation may not enforce or administer a regulation of the Department; and

(7) raise private funds to promote the purposes of the Foundation.

(c) LIMITATIONS AND CONFLICTS OF INTERESTS.

(1) POLITICAL ACTIVITIES.—The Foundation shall not participate or intervene in a political campaign on behalf of any candidate for public office.

(2) CONFLICTS OF INTEREST.-No director, officer, or employee of the Foundation shall participate, directly or indirectly, in the consideration or determination of any question before the Foundation affecting

(A) the financial interests of the director, officer, or employee; or

(B) the interests of any corporation, partnership, entity, organization, or other person in which the director, officer, or employee

(i) is an officer, director, or trustee; or

(ii) has any direct or indirect financial interest.

(3) LEGISLATION OR GOVERNMENT ACTION OR POLICY.-No funds of the Foundation may be used in any manner for the purpose of influencing legislation or government action or policy.

(4) LITIGATION.—No funds of the Foundation may be used to bring or join an action against the United States.

(d) TAX EXEMPT STATUS.

(1) 1996 TAXABLE YEAR.-In the case of the 1996 taxable year, the Foundation shall be treated as organized and operated exclusively for charitable purposes for purposes of section 501(c)(3) of the Internal Revenue Code of 1986.

(2) 1997 AND SUBSEQUENT TAXABLE YEARS.In the case of the 1997 and subsequent taxable years, the Foundation shall be required to maintain the tax exempt status of the Foundation in the manner prescribed by the Secretary of the Treasury for similar tax exempt organizations. SEC. 304. COMPOSITION AND OPERATION.

(a) COMPOSITION.-The Foundation shall be administered by a Board of Trustees that shall consist of 9 voting members, each of whom shall be a United States citizen and not a Federal officer. The Board shall be composed of,

(1) individuals with expertise in agricultural conservation policy matters;

(2) a representative of private sector organizations with a demonstrable interest in natural resources conservation;

(3) a representative of statewide conservation organizations;

(4) a representative of soil and water conservation districts;

(5) a representative of organizations outside the Federal Government that are dedicated to natural resources conservation education; and

(6) a farmer or rancher.

(b) NONGOVERNMENTAL EMPLOYEES.-Service as a member of the Board shall not constitute employment by, or the holding of, an office of the United States for the purposes of any Federal law.

(c) MEMBERSHIP.

(1) INITIAL MEMBERS.—The Secretary shall appoint 9 persons who meet the criteria established under subsection (a) as the initial members of the Board and designate 1 of the members as the initial chairperson for a 2year term.

(2) TERMS OF OFFICE.

(A) IN GENERAL.-A member of the Board shall serve for a term of 3 years, except that the members appointed to the initial Board shall serve, proportionately, for terms of 1, 2, and 3 years, as determined by the Secretary.

(B) LIMITATION ON TERMS.—No individual may serve more than 2 consecutive 3-year terms as a member. (3)

SUBSEQUENT MEMBERS.—The initial members of the Board shall adopt procedures in the constitution of the Foundation for the nomination and selection of subsequent members of the Board. The procedures shall require that each member, at a minimum, meets the criteria established under subsection (a) and shall provide for the selection of an individual, who is not a Federal officer or a member of the Board, to be provided with the power to select subsequent members of the Board.

(d) CHAIRPERSON.-After the appointment of an initial chairperson under subsection (c)(1), each succeeding chairperson of the Board shall be elected by the members of the Board for a 2-year term.

(e) VACANCIES.-A vacancy on the Board shall be filled by the Board not later than 60 days after the occurrence of the vacancy.

(f) COMPENSATION.-A member of the Board shall receive no compensation from the Foundation for the service of the member on the Board.

(g) TRAVEL EXPENSES.—While away from the home or regular place of business of a member of the Board in the performance of services for the Board, the member shall be allowed travel expenses paid by the Foundation, including per diem in lieu of subsistence, at the same rate as a person employed intermittently in the Government service would be allowed under section 5703 of title 5, United States Code. SEC. 305. OFFICERS AND EMPLOYEES.

(a) IN GENERAL.-The Board may

(1) appoint, hire, and discharge the officers and employees of the Foundation, other than the appointment of the initial Executive Director of the Foundation;

(2) adopt a constitution and bylaws for the Foundation that are consistent with the purposes of the Foundation and this title; and

(3) undertake any other activities that may be necessary to carry out this title.

(b) OFFICERS AND EMPLOYEES.

(1) APPOINTMENT AND HIRING.-An officer or employee of the Foundation

(A) shall not, by virtue of the appointment or employment of the officer or employee, be considered a Federal employee for any purpose, including the provisions of title 5, United States Code, governing appointments in the competitive service, except that such an individual may participate in the Federal employee retirement system as if the individual were a Federal employee; and

(B) may not be paid by the Foundation a salary in excess of $125,000 per year.

(2) EXECUTIVE DIRECTOR.

(A) INITIAL DIRECTOR.—The Secretary shall appoint an individual to serve as the initial Executive Director of the Foundation who shall serve, at the direction of the Board, as the chief operating officer of the Foundation.

(B) SUBSEQUENT DIRECTORS.—The Board shall appoint each subsequent Executive Director of the Foundation who shall serve, at the direction of the Board, as the chief operating officer of the Foundation.

(C) QUALIFICATIONS.—The Executive Director shall be knowledgeable and experienced in matters relating to natural resources conservation. SEC. 306. CORPORATE POWERS AND OBLIGA

TIONS OF THE FOUNDATION. (a) IN GENERAL.-The Foundation

(1) may conduct business throughout the United States and the territories and possessions of the United States; and

(2) shall at all times maintain a designated agent who is authorized to accept service of process for the Foundation, so that the serving of notice to, or service of process on, the agent, or mailed to the business address of the agent, shall be considered as service on or notice to the Foundation.

(b) SEAL.--The Foundation shall have an official seal selected by the Board that shall be judicially noticed.

(c) POWERS.-To carry out the purposes of the Foundation under section 303(b), the Foundation shall have, in addition to the powers otherwise provided under this title, the usual powers of a corporation, including the power

(1) to accept, receive, solicit, hold, administer, and use any gift, devise, or bequest, either absolutely or in trust, of real or personal property or any income from, or other interest in, the gift, devise, or bequest;

(2) to acquire by purchase or exchange any real or personal property or interest in property;

(3) unless otherwise required by ment of transfer, to sell, donate, lease, invest, reinvest, retain, or otherwise dispose of any property or income from property;

(4) to borrow money from private sources and issue bonds, debentures, or other debt instruments, subject to section 309, except that the aggregate amount of the borrowing and debt instruments outstanding at any time may not exceed $1,000,000;

(5) to sue and be sued, and complain and defend itself, in any court of competent jurisdiction, except that a member of the Board shall not be personally liable for an action in the performance of services for the Board, except for gross negligence;

(6) to enter into a contract or other agreement with an agency of State or local government, educational institution, or other

private organization or person and to make such payments as may be necessary to carry out the functions of the Foundation; and

(7) to do any and all acts that are necessary to carry out the purposes of the Foundation.

(d) INTEREST IN PROPERTY.

(1) IN GENERAL.—The Foundation may acquire, hold, and dispose of lands, waters, or other interests in real property by donation, gift, devise, purchase, or exchange.

(2) INTERESTS IN REAL PROPERTY.-For purposes of this title, an interest in real property shall be treated, among other things, as including an easement or other right for the preservation, conservation, protection, or enhancement of agricultural, natural, scenic, historic, scientific, educational, inspirational, or recreational resources.

(3) GIFTS.-A gift, devise, or bequest may be accepted by the Foundation even though the gift, devise, or bequest is encumbered, restricted, or subject to a beneficial interest of a private person if any current or future interest in the gift, devise, or bequest is for the benefit of the Foundation. SEC. 307. ADMINISTRATIVE SERVICES AND SUP

PORT. The Secretary may provide, without reimbursement, personnel, facilities, and other administrative services of the Department to the Foundation. SEC. 308. AUDITS AND PETITION OF ATTORNEY

GENERAL FOR EQUITABLE RELIEF. (a) AUDITS.

(1) IN GENERAL.The accounts of the Foundation shall be audited in accordance with Public Law 88–504 (36 U.S.C. 1101 et seq.), including an audit of lobbying and litigation activities carried out by the Foundation.

(2) CONFORMING AMENDMENT.-The first section of Public Law 88-504 (36 U.S.C. 1101) is amended by adding at the end the following:

(77) The National Natural Resources Conservation Foundation.".

(b) RELIEF WITH RESPECT TO CERTAIN FOUNDATION ACTS OR FAILURE TO ACT.-The Attorney General may petition in the United States District Court for the District of Columbia for such equitable relief as may be necessary or appropriate, if the Foundation

(1) engages in, or threatens to engage in, any act, practice, or policy that is inconsistent with this title; or

(2) refuses, fails, neglects, or threatens to refuse, fail, or neglect, to discharge the obligations of the Foundation under this title. SEC. 309. RELEASE FROM LIABILITY.

(a) IN GENERAL.The United States shall not be liable for any debt, default, act, or omission of the Foundation. The full faith and credit of the United States shall not extend to the Foundation.

(b) STATEMENT.-An obligation issued by the Foundation, and a document offering an obligation, shall include a prominent statement that the obligation is not directly or indirectly guaranteed, in whole or in part, by the United States (or an agency or instrumentality of the United States). SEC. 310. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated to the Department to be made available to the Foundation such sums as are necessary for each of fiscal years 1997 through 1999 to initially establish and carry out activities of the Foundation. TITLE IV-IMPLEMENTATION AND

EFFECTIVE DATE SEC. 401. IMPLEMENTATION.

The Secretary of Agriculture and the Farm Credit Administration shall promulgate regulations and take other required actions to implement the provisions of this Act not later than 90 days after the effective date of this Act.

SEC. 402. EFFECTIVE DATE.

Except as otherwise provided in this Act, this Act and the amendments made by this Act shall become effective on the date of enactment.

Amend the title so as to read: “An Act to amend the Farm Credit Act of 1971 to provide regulatory relief, and for other purposes.".

On motion of Mr. EMERSON, said Senate amendment to the text was agreed to with the following amendment:

In lieu of the matter inserted by the Senate amendment to the text of the bill, insert the following: SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the “Farm Credit System Reform Act of 1996”.

(b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. TITLE I-AGRICULTURAL MORTGAGE

SECONDARY MARKET Sec. 101. Definition of real estate. Sec. 102. Definition of certified facility. Sec. 103. Duties of Federal Agricultural

Mortgage Corporation. Sec. 104. Powers of the Corporation. Sec. 105. Federal reserve banks as deposi

taries and fiscal agents. Sec. 106. Certification of agricultural mort

gage marketing facilities. Sec. 107. Guarantee of qualified loans. Sec. 108. Mandatory reserves and subordi

nated participation interests

eliminated. Sec. 109. Standards requiring diversified

pools. Sec. 110. Small farms. Sec. 111. Definition of an affiliate. Sec. 112. State usury laws superseded. Sec. 113. Extension of capital transition pe

riod. Sec. 114. Minimum capital level. Sec. 115. Critical capital level. Sec. 116. Enforcement levels. Sec. 117. Recapitalization of the Corpora

tion. Sec. 118. Liquidation of the Federal Agricul

tural Mortgage Corporation. TITLE II–REGULATORY RELIEF Sec. 201. Compensation of association per

sonnel. Sec. 202. Use of private mortgage insurance. Sec. 203. Removal of certain borrower re

porting requirement. Sec. 204. Reform of regulatory limitations

on dividend, member business, and voting practices of eligible

farmer-owned cooperatives. Sec. 205. Removal of Federal Government

certification requirement for certain private sector

financings. Sec. 206. Borrower stock. Sec. 207. Disclosure relating to adjustable

rate loans. Sec. 208. Borrowers' rights. Sec. 209. Formation of administrative serv

ice entities. Sec. 210. Joint management agreements. Sec. 211. Dissemination of quarterly reports. Sec. 212. Regulatory review. Sec. 213. Examination of farm credit system

institutions. Sec. 214. Conservatorships and receiverships. Sec. 215. Farm Credit Insurance Fund oper

ations. Sec. 216. Examinations by the Farm Credit

System Insurance Corporation. Sec. 217. Powers with respect to troubled in

sured System banks. Sec. 218. Oversight and regulatory actions

by the Farm Credit System Insurance Corporation.

Sec. 219. Farm Credit System Insurance Cor

poration board of directors. Sec. 220. Interest rate reduction program. Sec. 221. Liability for making criminal re

ferrals.
TITLE III—IMPLEMENTATION AND

EFFECTIVE DATE
Sec. 301. Implementation.
Sec. 302. Effective date.
TITLE I-AGRICULTURAL MORTGAGE

SECONDARY MARKET
SEC. 101. DEFINITION OF REAL ESTATE.

Section 8.0(1)(B)(ii) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa(1)(B)(ii)) is amended by striking “with a purchase price” and inserting ", excluding the land to which the dwelling is affixed, with a value”. SEC. 102. DEFINITION OF CERTIFIED FACILITY.

Section 8.0(3) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa(3)) is amended

(1) in subparagraph (A), by striking “a secondary marketing agricultural loan” and inserting an agricultural mortgage keting''; and

(2) in subparagraph (B), by striking “, but only” and all that follows through “(9)(B)”. SEC. 103. DUTIES OF FEDERAL AGRICULTURAL

MORTGAGE CORPORATION. Section 8.1(b) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-1(b)) is amended

(1) in paragraph (2), by striking "and" at the end;

(2) in paragraph (3), by striking the period at the end and inserting “; and”; and

(3) by adding at the end the following:

"(4) purchase qualified loans and issue securities representing interests in, or obligations backed by, the qualified loans, guaranteed for the timely repayment of principal and interest.”. SEC. 104. POWERS OF THE CORPORATION.

Section 8.3(c) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-3(c)) is amended

(1) by redesignating paragraphs (13) and (14) as paragraphs (14) and (15), respectively; and

(2) by inserting after paragraph (12) the following:

"(13) To purchase, hold, sell, or assign a qualified loan, to issue a guaranteed security, representing an interest in, or an obligation backed by, the qualified loan, and to perform all the functions and responsibilities of an agricultural mortgage marketing facility operating as a certified facility under this title.". SEC. 105. FEDERAL RESERVE BANKS AS DEPOSI

TARIES AND FISCAL AGENTS. Section 8.3 of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-3) is amended

(1) in subsection (d), by striking "may act as depositories for, or” and inserting “shall act as depositories for, and”; and

(2) in subsection (e), by striking "Secretary of the Treasury may authorize the Corporation to use” and inserting “Corporation shall have access to”. SEC. 106. CERTIFICATION OF AGRICULTURAL

MORTGAGE MARKETING FACILITIES. Section 8.5 of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-5) is amended

(1) in subsection (a)

(A) in paragraph (1), by inserting “(other than the Corporation)" after "agricultural mortgage marketing facilities”; and

(B) in paragraph (2), by inserting “(other than the Corporation)” after “agricultural mortgage marketing facility"; and

(2) in subsection (e)(1), by striking "(other than the Corporation)”. SEC. 107. GUARANTEE OF QUALIFIED LOANS.

Section 8.6 of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-6) is amended

(1) in subsection (a)(1)

(A) by striking "Corporation shall guarantee” and inserting the following: “Corporation

(A) shall guarantee";

(B) by striking the period at the end and inserting “; and”?; and

(C) by adding at the end the following:

“(B) may issue a security, guaranteed as to the timely payment of principal and interest, that represents an interest solely in, or an obligation fully backed by, a pool consisting of qualified loans that

“(i) meet the standards established under section 8.8; and

“(ii) have been purchased and held by the Corporation.";

(2) in subsection (d)
(A) by striking paragraph (4); and

(B) by redesignating paragraphs (5), (6), and (7) as paragraphs (4), (5), and (6), respectively; and

(3) in subsection (g)(2), by striking section 8.0(9)(B))” and inserting "section 8.0(9))”. SEC. 108. MANDATORY RESERVES AND SUBORDI

NATED PARTICIPATION INTERESTS

ELIMINATED. (a) GUARANTEE OF QUALIFIED LOANS.-Section 8.6 of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-6) is amended by striking subsection (b).

(b) RESERVES AND SUBORDINATED PARTICIPATION INTERESTS.-Section 8.7 of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-7) is repealed.

(c) CONFORMING AMENDMENTS.

(1) Section 8.0(9)(B)(i) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa(9)(B)(i)) is amended by striking “8.7, 8.8," and inserting “8.8''.

(2) Section 8.6(a)(2) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-6(a)(2)) is amended by striking “subject to the provisions of subsection (b)". SEC. 109. STANDARDS REQUIRING DIVERSIFIED

POOLS. (a) IN GENERAL.-Section 8.6 of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-6) (as amended by section 108) is amended

(1) by striking subsection (c); and

(2) by redesignating subsections (d) through (g) as subsections (b) through (e), respectively.

(b) CONFORMING AMENDMENTS.

(1) Section 8.0(9)(B)(i) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa(9)(B)(i)) is amended by striking "(f)" and inserting "(d)”.

(2) Section 8.13(a) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-13(a)) is amended by striking “sections 8.6(b) and” in each place it appears and inserting "section".

(3) Section 8.32(b)(1)(C) of the Farm Credit Act of 1971 (12 U.S.C. 2279bb-1(b)(1)(C)) is amended

(A) by striking "shall” and inserting “may”; and

(B) by inserting “(as in effect before the date of the enactment of the Farm Credit System Reform Act of 1996)\' before the semicolon.

(4) Section 8.6(b) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-6(b)) (as redesignated by subsection (a)(2)) is amended

(A) by striking paragraph (4) (as redesignated by section 107(2)(B)); and

(B) by redesignating paragraphs (5) and (6) (as redesignated by section 107(2)(B) as paragraphs (4) and (5), respectively. SEC. 110. SMALL FARMS.

Section 8.8(e) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa-8(e)) is amended by adding at the end the following: “The Board shall promote and encourage the inclusion of qualified loans for small farms and family farmers in the agricultural mortgage secondary market.”. SEC. 111. DEFINITION OF AN AFFILIATE.

Section 8.11(e) of the Farm Credit Act of 1971 (21 U.S.C. 2279aa-11(e)) is amended

(1) by striking "a certified facility or”; and

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