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SEC. 624. MAXIMUM EMERGENCY LOAN INDEBT

EDNESS. Section 324 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1964) is amended by striking "SEC. 324. (a) No loan" and all that follows through the end of subsection (a) and inserting the following: "SEC. 324. TERMS OF LOANS.

“(a) MAXIMUM AMOUNT OF LOAN.—The Secretary may not make a loan under this subtitle to a borrower who has suffered a loss in an amount that

“(1) exceeds the actual loss caused by a disaster; or

“(2) would cause the total indebtedness of the borrower under this subtitle to exceed $500,000.". SEC. 625. ESTABLISHMENT OF DATE FOR EMER

GENCY LOAN ASSET VALUATION. The last sentence of section 324(d) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1964(d)) is amended by striking “value the assets" and all that follows through the period and inserting “establish the value of the assets as of the day before the occurrence of the natural disaster, major disaster, or emergency that is the basis for a request for assistance under this subtitle or the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et

seq.).".

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production or marketing of an agricultural commodity that,

“(A) is eligible for a price support program of the Department of Agriculture; or

“(B) was eligible for a price support program of the Department of Agriculture on the day before the date of enactment of the Federal Agriculture Improvement and Reform Act of 1996.”. SEC. 615. INSURANCE OF OPERATING LOANS.

Section 317 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1947) is repealed. SEC. 616. SPECIAL ASSISTANCE FOR BEGINNING

FARMERS AND RANCHERS. (a) IN GENERAL.-Section 318 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1948) is repealed.

(b) CONFORMING AMENDMENT.-Section 310F of the Consolidated Farm and Rural Development Act (7 U.S.C. 1936) is repealed. SEC. 617. LIMITATION ON PERIOD FOR WHICH

BORROWERS ARE ELIGIBLE FOR

GUARANTEED ASSISTANCE. Section 319 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1949) is amended by striking subsection (b) and inserting the following:

“(b) LIMITATION ON PERIOD BORROWERS ARE ELIGIBLE FOR GUARANTEED ASSISTANCE.

"(1) GENERAL RULE.-Subject to paragraph (2), the Secretary shall not guarantee a loan under this subtitle for a borrower for any year after the 15th year that a loan is made to, or a guarantee is provided with respect to, the borrower under this subtitle.

“(2) TRANSITION RULE.—If, as of October 28, 1992, a farmer or rancher has received a direct or guaranteed operating loan under this subtitle during each of 10 or more previous years, the borrower shall be eligible to receive a guaranteed operating loan under this subtitle during 5 additional years after October 28, 1992.”.

Subtitle C-Emergency Loans
SEC. 621. HAZARD INSURANCE REQUIREMENT.

(a) IN GENERAL.-Section 321 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1961) is amended by striking subsection (b) and inserting the following:

"(b) HAZARD INSURANCE REQUIREMENT.

“(1) IN GENERAL.-After the Secretary makes the determination required by paragraph (2), the Secretary may not make a loan to a farmer or rancher under this subtitle to cover a property loss unless the farmer or rancher had hazard insurance that insured the property at the time of the loss.

“(2) DETERMINATION.—Not later than 180 days after the date of enactment of this paragraph, the Secretary shall determine the appropriate level of insurance to be required under paragraph (1).”.

(b) TRANSITIONAL PROVISION.-Section 321(b)(1) of the Consolidated Farm and Rural Development Act shall not apply until the Secretary of Agriculture makes the determination required by section 321(b)(2) of the Act. SEC. 622. NARROWING OF AUTHORITY TO WAIVE

APPLICATION OF THE CREDIT ELSE

WHERE TEST. The second proviso of section 322(b) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1962(b)) is amended by striking "$300,000 or less and inserting "$100,000 or less”. SEC. 623. LINKING OF EMERGENCY LOANS FOR

CROP OR LIVESTOCK CHANGES TO

NATURAL DISASTERS. Section 323 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1963) is amended by inserting “that are necessitated by a natural disaster, major disaster, or emergency and that are” after “livestock changes".

SEC. 626. INSURANCE OF EMERGENCY LOANS.

Section 328 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1968) is repealed.

Subtitle D-Administrative Provisions SEC. 631. TEMPORARY AUTHORITY TO ENTER

INTO CONTRACTS. Section 331 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1981) is amended by adding at the end the following:

“(d) TEMPORARY AUTHORITY TO ENTER INTO CONTRACTS.

“(1) DEFINITIONS.—In this subsection:

(A) ELIGIBLE FINANCIAL INSTITUTION.—The term 'eligible financial institution' means a financial institution with substantial experience in farm, ranch, or aquaculture lending that is regulated by the Comptroller of the Currency, the Farm Credit Administration, or a similar regulatory body.

“(B) PILOT PROJECT.-The term 'pilot project' includes services related to borrower loan documentation, financial information, credit history, and appraisals of real estate and chattel.

“(2) AUTHORITY.—The Secretary may enter into a contract with an eligible financial institution for servicing a farmer program loan under this title, including 1 or more pilot projects.

“(3) REPORT.-Not later than September 30, 1997, and September 30 of each year thereafter, the Secretary shall report to Congress on

“(A) the Secretary's experience in using contracts under paragraph (2); and

“(B) recommendations for legislation related to this subsection, if any.

“(4) SAVINGS CLAUSE.—Nothing in this subsection shall limit the authority of the Secretary or an eligible financial institution to contract for any services under this Act or any other law.

“(5) SUNSET PROVISION.—This subsection shall be effective until September 30, 2002.". SEC. 632. USE OF COLLECTION AGENCIES.

Section 331 of the Consolidated Farm and Rural Development Act 17 U.S.C. 1981) (as amended by section 631) is amended by adding at the end the following:

“(e) PRIVATE COLLECTION AGENCY.—The Secretary may use a private collection agency to collect a claim or obligation described in subsection (b)(5).”. SEC. 633. NOTICE OF LOAN SERVICE PROGRAMS.

Section 331D(a) of the Consolidated Farm and Rural Development Act (7 U.S.C.

1981d(a) is amended by striking "180 days delinquent in” and inserting "90 days past due on”. SEC. 634. CLARIFICATION OF WRITTEN STATE

MENT REQUIRED OF BORROWERS. Section 333(1)(B) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1983(1)(B)) is amended by striking “a written statement showing the applicant's net worth” and inserting “an appropriate written financial statement”. SEC. 635. ANNUAL REVIEW OF THE CREDIT HIS

TORY, BUSINESS OPERATION, AND
CONTINUED ELIGIBILITY OF A BOR-

ROWER. (a) IN GENERAL.-Section 333 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1983) is amended

(1) by redesignating paragraphs (2), (3), and (4) as paragraphs (3), (4), and (5), respectively; and

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

“(2) except with respect to a loan under section 306, 310B, or 314, the county or area committee established under section 8(b)(5)(B) of the Soil Conservation and Domestic Allotment Act (16 U.S.C. 590h(b)(5)(B)) to certify in writing

“(A) that an annual review of the credit history and business operation of the borrower has been conducted; and

“(B) that a review of the continued eligibility of the borrower for the loan has been conducted;'.

(b) CONFORMING AMENDMENT.—The third sentence of section 310B(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1932(a) is amended by striking (3) of” and inserting “(4) of”. SEC. 636. EXTENSION OF VETERANS PREF

ERENCE. Section 333 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1983) (as amended by section 635(a)) is amended by striking paragraph (5) and inserting the following:

"(5) the application of a person who is a veteran of any war, as defined in section 101(12) of title 38, United States Code, for a loan under subtitle A or B to be given preference over a similar application from a person who is not a veteran of any war, if the applications are on file in a county or area office at the same time.”. SEC. 637. VERIFICATION OF THE CREDIT ELSE

WHERE TEST. Section 333 A(f)(4) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1983a(f)(4)) is amended

(1) by striking “(4) With” and all that follows through “seasoned” and inserting the following:

(4) VERIFICATION.

“(A) IN GENERAL.—The Secretary shall provide a prospectus of a seasoned"; and

(2) by striking "If the Secretary” and inserting the following:

“(B) NOTIFICATION.—The Secretary shall notify each borrower of a loan that a prospectus has been provided to a lender under subparagraph (A).

“(C) CREDIT EXTENDED.-If the Secretary”. SEC. 638. SALE OF PROPERTY.

Section 335 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1985) is amended,

(1) in subsection (b), by striking 'subsection (e)” and inserting “subsections (c) and (e)";

(2) by striking subsection (c) and inserting the following:

“(C) SALE OF PROPERTY.

“(1) IN GENERAL.-Subject to this subsection and subsection (e)(1)(A), the Secretary shall offer to sell real property that is acquired by the Secretary under this title using the following order and method of sale:

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“(A) ADVERTISEMENT.-Not later than 15 days after acquiring real property, the Secretary shall publicly advertise the property for sale.

“(B) BEGINNING FARMER OR RANCHER.

"(i) IN GENERAL.-Not later than 75 days after acquiring real property, the Secretary shall offer to sell the property to a qualified beginning farmer or rancher at current market value based on a current appraisal.

“(ii) RANDOM SELECTION.—If more than 1 qualified beginning farmer or rancher offers to purchase the property, the Secretary shall select between the qualified applicants on a random basis.

“(iii) APPEAL OF RANDOM SELECTION.—A random selection or denial by the Secretary of a beginning farmer or rancher for farm inventory property under this subparagraph shall be final and not administratively appealable.

“(C) PUBLIC SALE.—If no acceptable offer is received from a qualified beginning farmer or rancher under subparagraph (B) not later than 75 days after acquiring the real property, the Secretary shall, not later than 30 days after the 75-day period, sell the property after public notice at a public sale, and, if no acceptable bid is received, by negotiated sale, at the best price obtainable.

“(2) TRANSITIONAL RULES.

“(A) PREVIOUS LEASE.—In the case of real property acquired prior to the date of enactment of this subparagraph that the Secretary leased prior to the date of enactment of this subparagraph, not later than 60 days after the lease expires, the Secretary shall offer to sell the property in accordance with paragraph (1).

“(B) PREVIOUSLY IN INVENTORY.-In the case of real property acquired prior to the date of enactment of this subparagraph that the Secretary has not leased, not later than 60 days after the date of enactment of this subparagraph, the Secretary shall offer to sell the property in accordance with paragraph (1).

“(3) INTEREST.

"(A) IN GENERAL.-Subject to subparagraph (B), any conveyance of real property under this subsection shall include all of the interest of the United States in the property, including mineral rights.

“(B) CONSERVATION.—The Secretary may for conservation purposes grant or sell an easement, restriction, development right, or similar legal right to real property to a State, a political subdivision of a State, or a private nonprofit organization separately from the underlying fee or other rights to the property owned by the United States.

"(4) OTHER LAW.—The Federal Property and Administrative Services Act of 1949 (40 U.S.C. 471 et seq.) shall not apply to any exercise of authority under this title.

“(5) LEASE OF PROPERTY.

“(A) IN GENERAL.-Subject to subparagraph (B), the Secretary may not lease any real property acquired under this title.

“(B) EXCEPTION.

"(i) BEGINNING FARMER OR RANCHER.—The Secretary may lease or contract to sell to a beginning farmer or rancher a farm or ranch acquired by the Secretary under this title if the beginning farmer or rancher qualifies for a credit sale or direct farm ownership loan under subtitle A but credit sale authority for loans or direct farm ownership loan funds, respectively, are not available.

“(ii) TERM.—The term of a lease or contract to sell to a beginning farmer or rancher under clause (i) shall be until the earlier of

“(I) the date that is 18 months after the date of the lease or sale; or

“(II) the date that direct farm ownership loan funds or credit sale authority for loans becomes available to the beginning farmer or rancher.

"(iii) INCOME-PRODUCING CAPABILITY.-In determining the rental rate on real property leased under this subparagraph, the Secretary shall consider the income-producing capability of the property during the term that the property is leased.

“(6) EXPEDITED DETERMINATION.

"(A) IN GENERAL.-On the request of an applicant, not later than 30 days after denial of the applicant's application, the appropriate State director shall provide an expedited review and determination of whether the applicant is a beginning farmer or rancher for the purpose of acquiring farm inventory property.

“(B) APPEAL.—The determination of a State Director under subparagraph (A) shall be final and not administratively appealable.

“(C) EFFECTS OF DETERMINATIONS.

“(i) IN GENERAL.—The Secretary shall maintain statistical data on the number and results of determinations made under subparagraph (A) and the effect of the determinations on

“(I) selling farm inventory property to beginning farmers and ranchers; and

**(II) disposing of real property in inventory.

(ii) NOTIFICATION.—The Secretary shall notify the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate if the Secretary determines that the review process under subparagraph (A) is adversely affecting the selling of farm inventory property to beginning farmers or ranchers or the disposing of real property in inventory."?; and

(3) in subsection (e) (A) in paragraph (1)

(i) by striking subparagraphs (A) through (C):

(ii) by redesignating subparagraphs (D) through (G) as subparagraphs (A) through (D), respectively;

(iii) in subparagraph (A) (as redesignated by clause (ii)

(I) in clause (i)

(aa) in the matter preceding subclause (I), by striking "(G)" and inserting "(D)";

(bb) by striking subclause (I) and inserting the following:

"(I) the Secretary acquires property under this title that is located within an Indian reservation; and”;

(cc) in subclause (II), by striking “, and" at the end and inserting a semicolon; and

(dd) by striking subclause (III); and

(II) in clause (iii), by striking "The Secretary shall" and all that follows through “of subparagraph (A)," and inserting "Not later than 90 days after acquiring the property, the Secretary shall"; and

(iv) in subparagraph (D) (as redesignated by clause (ii))—

(I) in clause (i), by striking “(D)" in the matter following subclause (IV) and inserting “(A)”;

(II) in clause (iii)(I), by striking "subparagraphs (C)(i), (C)(ii), and (D)" and inserting "subparagraph (A)”; and

(III) by striking clause (v) and inserting the following:

“(v) FORECLOSURE PROCEDURES.

“(I) NOTICE TO BORROWER.—If an Indian borrower-owner does not voluntarily convey to the Secretary real property described in clause (i), not less than 30 days before a foreclosure sale of the property, the Secretary shall provide the Indian borrower-owner with the option of

"(aa) requiring the Secretary to assign the loan and security instruments to the Secretary of the Interior, if the Secretary of the Interior agrees to an assignment releasing the Secretary of Agriculture from all further responsibility for collection of any amounts with regard to the loan secured by the real property; or

"(bb) requiring the Secretary to assign the loan and security instruments to the tribe having jurisdiction over the reservation in which the real property is located, if the tribe agrees to the assignment.

“(II) NOTICE TO TRIBE.-If an Indian borrower-owner does not voluntarily convey to the Secretary real property described in clause (i), not less than 30 days before a foreclosure sale of the property, the Secretary shall provide written notice to the Indian tribe that has jurisdiction over the reservation in which the real property is located of

"(aa) the sale;

“(bb) the fair market value of the property; and

"(cc) the requirements of this subparagraph.

“(III) ASSUMED LOANS.—If an Indian tribe assumes a loan under subclause (I)

“(aa) the Secretary shall not foreclose the loan because of any default that occurred prior to the date of the assumption;

“(bb) the loan shall be for the lesser of the outstanding principal and interest of the loan or the fair market value of the property; and

“(CC) the loan shall be treated as though the loan was made under Public Law 91-229 (25 U.S.C. 488 et seq.).";

(B) by striking paragraph (3);
(C) in paragraph (4)
(i) by striking subparagraph (B);
(ii) in subparagraph (A)
(I) in clause (i), by striking “(i)”; and

(II) by redesignating clause (ii) as subparagraph (B); and

(iii) in subparagraph (B) (as redesignated by clause (ii)(II)), by striking “clause (i)" and inserting "subparagraph (A)";

(D) by striking paragraphs (5), (6), and (9); and

(E) by redesignating paragraphs (4), (7), (8), and (10) as paragraphs (3), (4), (5), and (6), respectively. SEC. 639. EASEMENTS ON INVENTORIED PROP

ERTY. Section 335(g) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1985(g)) is amended

(1) in paragraph (1)

(A) by striking “(g)(1) Subject to paragraphs (2) through (5)” and inserting the following:

“(g) EASEMENTS ON INVENTORIED PROPERTY.

"(1) IN GENERAL.-Subject to paragraph (2)’’; and

(B) by striking “, as determined” and all that follows through “3801 et seq.)"?;

(2) by striking paragraph (2) and inserting the following:

“(2) LIMITATION.—The Secretary shall not establish a wetland conservation easement on an inventoried property that,

“(A) was cropland on the date the property entered the inventory of the Secretary; or

“(B) was used for farming at any time during the period beginning on the date 5 years before the property entered the inventory of the Secretary and ending on the date the property entered the inventory of the Secretary.”;

(3) by striking paragraphs (3), (4), (5), and (8):

(4) by striking “(6) The Secretary” and inserting the following:

“(3) NOTIFICATION.-The Secretary”; and

(5) by striking "(7) The appraised" and inserting the following:

“(4) APPRAISED VALUE.—The appraised". SEC. 640. DEFINITIONS.

Section 343(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1991(a)) is amended

(1) in paragraph (11)

(A) in the text preceding subparagraph (A), by striking "applicant-” and inserting "applicant, regardless of whether the applicant is participating in a program under section 310E-"; and

(B) in subparagraph (F)

(i) by striking "15 percent" and inserting “25 percent"; and

(ii) by inserting before the semicolon at the end the following: ", except that this subparagraph shall not apply to a loan made or guaranteed under subtitle B’’; and

(2) by adding at the end the following: "(12) DEBT FORGIVENESS.

"(A) IN GENERAL.-Except as provided in subparagraph (B), the term 'debt forgiveness means reducing or terminating a farmer program loan made or guaranteed under this title, in a manner that results in a loss to the Secretary, through

"(i) writing down or writing off a loan under section 353;

"(ii) compromising, adjusting, reducing, or charging-off a debt or claim under section 331;

"(iii) paying a loss on a guaranteed loan under section 357; or “ (iv) discharging a debt as a result of

a bankruptcy.

“(B) LOAN RESTRUCTURING.–The term "debt forgiveness' does not include consolidation, rescheduling, reamortization, or deferral.”. SEC. 641. AUTHORIZATION FOR LOANS.

Section 346 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1994) is amended

(1) in the second sentence of subsection (a), by striking “with or without” and all that follows through "administration"; and

(2) by striking subsection (b) and inserting the following:

“(b) AUTHORIZATION FOR LOANS.

“(1) IN GENERAL.-The Secretary may make or guarantee loans under subtitles A and B from the Agricultural Credit Insurance Fund provided for in section 309 in not more than the following amounts:

“(A) FISCAL YEAR 1996.—For fiscal year 1996, $3,085,000,000, of which

"(i) $585,000,000 shall be for direct loans, of which

“(I) $85,000,000 shall be for farm ownership loans under subtitle A; and

"(II) $500,000,000 shall be for operating loans under subtitle B; and

“(ii) $2,500,000,000 shall be for guaranteed loans, of which

“(I) $600,000,000 shall be for guarantees of farm ownership loans under subtitle A; and

“(II) $1,900,000,000 shall be for guarantees of operating loans under subtitle B.

“(B) FISCAL YEAR 1997.-For fiscal year 1997, $3,165,000,000, of which

"(i) $585,000,000 shall be for direct loans, of which

“(I) $85,000,000 shall be for farm ownership loans under subtitle A; and

“)

**(II) $500,000,000 shall be for operating loans under subtitle B; and

"(ii) $2,580,000,000 shall be for guaranteed loans, of which

"(I) $630,000,000 shall be for guarantees of farm ownership loans under subtitle A; and

“(II) $1,950,000,000 shall be for guarantees of operating loans under subtitle B.

"(C) FISCAL YEAR 1998.–For fiscal year 1998, $3,245,000,000, of which

“(i) $585,000,000 shall be for direct loans, of which,

“(I) $85,000,000 shall be for farm ownership loans under subtitle A; and

"(II) $500,000,000 shall be for operating loans under subtitle B; and

“(ii) $2,660,000,000 shall be for guaranteed loans, of which

“(I) $660,000,000 shall be for guarantees of farm ownership loans under subtitle A; and

“(II) $2,000,000,000 shall be for guarantees of operating loans under subtitle B.

“(D) FISCAL YEAR 1999.–For fiscal year 1999, $3,325,000,000, of which

"(i) $585,000,000 shall be for direct loans, of which

"(I) $85,000,000 shall be for farm ownership loans under subtitle A; and

“(II) $500,000,000 shall be for operating loans under subtitle B; and

"(ii) $2,740,000,000 shall be for guaranteed loans, of which

“(I) $690,000,000 shall be for guarantees of farm ownership loans under subtitle A; and

“(II) $2,050,000,000 shall be for guarantees of operating loans under subtitle B.

“(E) FISCAL YEAR 2000.-For fiscal year 2000, $3,435,000,000, of which

"(i) $585,000,000 shall be for direct loans, of which

"(I) $85,000,000 shall be for farm ownership loans under subtitle A; and

"(II) $500,000,000 shall be for operating loans under subtitle B; and

“(ii) $2,850,000,000 shall be for guaranteed loans, of which

"(I) $750,000,000 shall be for guarantees of farm ownership loans under subtitle A; and

“(II) $2,100,000,000 shall be for guarantees of operating loans under subtitle B.

“(F) FISCAL YEAR 2001.-For fiscal year 2001, $3,435,000,000, of which

“(i) $585,000,000 shall be for direct loans, of which

(I) $85,000,000 shall be for farm ownership loans under subtitle A; and

"(II) $500,000,000 shall be for operating loans under subtitle B; and

“(ii) $2,850,000,000 shall be for guaranteed loans, of which

“(I) $750,000,000 shall be for guarantees of farm ownership loans under subtitle A; and

“(II) $2,100,000,000 shall be for guarantees of operating loans under subtitle B.

“(G) FISCAL YEAR 2002.–For fiscal year 2002, $3,435,000,000, of which

“(i) $585,000,000 shall be for direct loans, of which

"(I) $85,000,000 shall be for farm ownership loans under subtitle A; and

"(II) $500,000,000 shall be for operating loans under subtitle B; and

"(ii) $2,850,000,000 shall be for guaranteed loans, of which

"(I) $750,000,000 shall be for guarantees of farm ownership loans under subtitle A; and

“(II) $2,100,000,000 shall be for guarantees of operating loans under subtitle B.

“(2) BEGINNING FARMERS AND RANCHERS.-
“(A) DIRECT LOANS.-
“(i) FARM OWNERSHIP LOANS.-

“(I) IN GENERAL.-Of the amounts made available under paragraph (1) for direct farm ownership loans, the Secretary shall reserve 70 percent for qualified beginning farmers and ranchers.

"(II) DOWN PAYMENT LOANS.—Of the amounts reserved for a fiscal year under subclause (I), the Secretary shall reserve 60 percent for the down payment loan program under section 310E until April 1 of the fiscal year.

“(ii) OPERATING LOANS.—Of the amounts made available under paragraph (1) for direct operating loans, the Secretary shall reserve for qualified beginning farmers

and ranchers

"(I) for each of fiscal years 1996 through 1998, 25 percent;

“(II) for fiscal year 1999, 30 percent; and

“(III) for each of fiscal years 2000 through 2002, 35 percent.

“(iii) FUNDS RESERVED UNTIL SEPTEMBER 1.-Except as provided in clause (i)(II), funds reserved for qualified beginning farmers or ranchers under this subparagraph for a fiscal year shall be reserved only until September 1 of the fiscal year.

“(B) GUARANTEED LOANS.

“(i) FARM OWNERSHIP LOANS.–Of the amounts made available under paragraph (1) for guarantees of farm ownership loans, the

Secretary shall reserve 25 percent for qualified beginning farmers and ranchers.

“(ii) OPERATING LOANS.-Of the amounts made available under paragraph (1) for guarantees of operating loans, the Secretary shall reserve 40 percent for qualified beginning farmers and ranchers.

“(iii) FUNDS RESERVED UNTIL APRIL 1.Funds reserved for qualified beginning farmers or ranchers under this subparagraph for a fiscal year shall be reserved only until April 1 of the fiscal year.

“(C) RESERVED FUNDS FOR ALL QUALIFIED BEGINNING FARMERS AND RANCHERS.-If a qualified beginning farmer or rancher meets the eligibility criteria for receiving a direct or guaranteed loan under section 302, 310E, or 311, the Secretary shall make or guarantee the loan if sufficient funds reserved under this paragraph are available to make or guarantee the loan.

“(3) TRANSFER FOR DOWN PAYMENT LOANS.

“(A) IN GENERAL.-Notwithstanding subsection (a), subject to subparagraph (B)

“(i) beginning on August 1 of each fiscal year, the Secretary shall use available unsubsidized guaranteed farm operating loan funds to provide direct farm ownership loans approved by the Secretary to qualified beginning farmers and ranchers under the down payment loan program established under section 310E, if sufficient direct farm ownership loan funds are not otherwise available; and

"(ii) beginning on September 1 of each fiscal year, the Secretary shall use available unsubsidized guaranteed farm operating loan funds to provide direct farm ownership loans approved by the Secretary to qualified beginning farmers and ranchers, if sufficient direct farm ownership loan funds are not otherwise available.

“(B) LIMITATION.-The Secretary shall limit the transfer of funds under subparagraph (A) so that all guaranteed farm operating loans that have been approved, or will be approved, by the Secretary during the fiscal year will be made to the extent of available amounts.

“(4) TRANSFER FOR CREDIT SALES OF FARM INVENTORY PROPERTY.

"(A) IN GENERAL.-Notwithstanding subsection (a), subject to subparagraphs (B) and (C), beginning on September 1 of each fiscal year, the Secretary may use available funds made available under subtitle C for the fiscal year to fund the credit sale of farm real estate in the inventory of the Secretary.

“(B) SUPPLEMENTAL APPROPRIATIONS.—The transfer authority provided under subparagraph (A) shall not apply to any funds made available to the Secretary for any fiscal year under an Act making supplemental appropriations.

"(C) LIMITATION.—The Secretary shall limit the transfer of funds under subparagraph (A) so that all emergency disaster loans that have been approved, or will be approved, by the Secretary during the fiscal year will be made to the extent of available amounts.". SEC. 642. CONTRACTS ON LOAN SECURITY PROP

ERTIES. Section 349 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1997) is amended

(1) by striking subsection (b) and inserting the following:

“(b) CONTRACTS ON LOAN SECURITY PROPERTIES.-Subject to subsection (c), the Secretary may enter into a contract related to real property for conservation, recreation, or wildlife purposes.";

(2) in subsection (c)

(A) by striking “(c) Such easement” and all that follows through "if" and inserting the following:

"(c) LIMITATIONS.—The Secretary may enter into a contract under subsection (b) if";

(B) in paragraph (2), by adding "and" at the end;

(C) in paragraph (3)
(i) by striking subparagraph (B);

(ii) by striking "(3)(A)(i)" and inserting "(3)(A)':

(iii) by striking "Farmers Home Administration” and inserting “Secretary”;

(iv) by striking “(ii) such easement” and inserting "(B) such contract"; and

(v) by striking "; or” and inserting a period; and

(D) by striking paragraph (4);

(3) in subsection (d), by striking "easement” each place it appears and inserting “contract'';

(4) in subsection (e) (A) in paragraph (1)

(i) in the matter preceding subparagraph (A), by striking “purchase any such easement from the borrower—" and inserting “reduce or forgive the outstanding debt of a borrower—";

(ii) by striking "easement" each place it appears and inserting contract"; and

(iii) by striking "Farmers Home Administration” each place it appears and inserting "Secretary''; and

(B) in paragraph (2)(A), by striking "easement is acquired" and inserting "contract is entered into”;

(5) in subsection (f)

(A) in paragraph (1), by striking "acquire easements” and inserting “enter into contracts”; and

(B) in paragraphs (2) and (3), by striking “easements” each place it appears and inserting contracts"; and

(6) in subsection (g), by striking "an easement acquired" and inserting "a contract entered into”. SEC. 643. LIST OF CERTIFIED LENDERS AND IN

VENTORY PROPERTY DEMONSTRA

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

(1) in subsection (f)—

(A) by striking "Each Farmers Home Administration county supervisor" and inserting "The Secretary'';

(B) by striking “approved lenders” and inserting “lenders’’; and

(C) by striking "the Farmers Home Administration”; and

(2) by striking subsection (h).

(b) TECHNICAL AMENDMENT.-Section 1320 of the Food Security Act of 1985 (Public Law 99-198; 7 U.S.C. 1999 note) is amended by striking "Effective only” and all that follows through “1995, the” and inserting “The". SEC. 644. HOMESTEAD PROPERTY.

Section 352(c) of the Consolidated Farm and Rural Development Act (7 U.S.C. 2000(c) is amended

(1) in paragraph (1)(A), by striking "90" each place it appears and inserting "30"'; and

(2) in paragraph (6)

(A) in the first sentence, by striking "Within 30" and all that follows through "title,” and insert “Not later than the date of acquisition of the property securing a loan made under this title (or, in the case of real property in inventory on the date of enactment of the Federal Agriculture Improvement and Reform Act of 1996, not later than 5 days after the date of enactment of the Act),”; and

(B) by striking the second sentence. SEC. 645. RESTRUCTURING.

Section 353 of the Consolidated Farm and Rural Development Act (7 U.S.C. 2001) is amended

(1) in subsection (c)

(A) in paragraph (3), by striking subparagraph (C) and inserting the following:

"(C) CASH FLOW MARGIN.–For the purpose of assessing under subparagraph (A) the abil

ity of a borrower to meet debt obligations and continue farming operations, the Secretary shall assume that the borrower needs up to 110 percent of the amount indicated for payment of farm operating expenses, debt service obligations, and family living expenses."'; and

(B) by striking paragraph (6) and inserting the following:

“(6) TERMINATION OF LOAN OBLIGATIONS.The obligations of a borrower to the Secretary under a loan shall terminate if

"(A) the borrower satisfies the requirements of paragraphs (1) and (2) of subsection (b);

“(B) the value of the restructured loan is less than the recovery value; and

"(C) not later than 90 days after receipt of the notification described in paragraph (4)(B), the borrower pays (or obtains thirdparty financing to pay) the Secretary an amount equal to the current market value.”;

(2) by striking subsection (k); and

(3) by redesignating subsections (1) through (p) as subsections (k) through (0), respectively. SEC. 646. TRANSFER OF INVENTORY LAND FOR

CONSERVATION PURPOSES. Section 354 of the Consolidated Farm and Rural Development Act (7 U.S.C. 2002) is amended

(1) in the matter preceding paragraph (1), by striking "The Secretary, without reimbursement," and inserting the following:

“(a) IN GENERAL.-Subject to subsection (b), the Secretary’’;

(2) by striking paragraph (2) and inserting the following:

“(2) that is eligible to be disposed of in accordance with section 335; and"; and

(3) by adding at the end the following:

“(b) CONDITIONS.— The Secretary may not transfer any property or interest in property under subsection (a) unless

"(1) at least 2 public notices are given of the transfer;

“(2) if requested, at least 1 public meeting is held prior to the transfer; and

“(3) the Governor and at least 1 elected county official of the State and county where the property is located are consulted prior to the transfer.". SEC. 647. IMPLEMENTATION OF TARGET PARTICI

PATION RATES. Section 355 of the Consolidated Farm and Rural Development Act (7 U.S.C. 2003) is amended by adding at the end the following:

“(f) IMPLEMENTATION CONSISTENT WITH SUPREME COURT HOLDING.–Not later than 180 days after the date of enactment of this subsection, the Secretary shall ensure that the implementation of this section is consistent with the holding of the Supreme Court in Adarand Constructors, Inc. v. Federico Pena, Secretary of Transportation, 115 S. Ct. 2097 (1995).". SEC. 648. DELINQUENT BORROWERS.

(a) PAYMENT OF INTEREST AS A CONDITION OF LOAN SERVICING FOR BORROWERS.—The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) is amended by adding at the end the following: “SEC. 372. PAYMENT OF INTEREST AS A CONDI

TION OF LOAN SERVICING FOR BOR

ROWERS. “The Secretary may not reschedule or reamortize a loan for a borrower under this title who has not requested consideration under section 331D(e) unless the borrower pays a portion, as determined by the Secretary, of the interest due on the loan.”.

(b) LOAN AND LOAN SERVICING LIMITATIONS.—The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) (as amended by subsection (a)) is amended by adding at the end the following:

“SEC. 373. LOAN AND LOAN SERVICING LIMITA

TIONS. “(a) DELINQUENT BORROWERS PROHIBITED FROM OBTAINING DIRECT OPERATING LOANS.— The Secretary may not make a direct operating loan under subtitle B to a borrower who is delinquent on any loan made or guaranteed under this title.

“(b) LOANS PROHIBITED FOR BORROWERS THAT HAVE RECEIVED DEBT FORGIVENESS.

“(1) IN GENERAL.-Except as provided in paragraph (2), the Secretary may not make or guarantee a loan under this title to a borrower who received debt forgiveness on a loan made or guaranteed under this title.

“(2) EXCEPTION.—The Secretary may make a direct or guaranteed farm operating loan for paying annual farm or ranch operating expenses of a borrower who was restructured with a write-down under section 353.

"(c) No MORE THAN 1 DEBT FORGIVENESS FOR A BORROWER ON A DIRECT LOAN.—The Secretary may not provide to a borrower debt forgiveness on a direct loan made under this title if the borrower has received debt forgiveness on another direct loan made under this title.”. SEC. 649. SHORT FORM CERTIFICATION OF FARM

PROGRAM BORROWER COMPLI

ANCE. The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) (as amended by section 648) is amended by adding at the end the following: “SEC. 374. SHORT FORM CERTIFICATION OF

FARM PROGRAM BORROWER COM

PLIANCE "The Secretary shall develop and utilize a consolidated short form for farm program borrowers to use in certifying compliance with any applicable provision of law (including a regulation) that serves as an eligibility prerequisite for a loan made under this title.”. SEC. 650. CREDIT STUDY.

(a) IN GENERAL.-The Secretary of Agriculture shall conduct a study and report to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate on the demand for and availability of credit in rural areas for agriculture, housing, and rural development.

(b) PURPOSE.—The purpose of the study shall be to ensure that Congress has current and comprehensive information to consider as Congress deliberates on rural credit needs and the availability of credit to satisfy the needs of rural areas of the United States.

(c) ITEMS IN STUDY.-In conducting the study, the Secretary shall base the study on the most current available data and analyze

(1) rural demand for credit from the Farm Credit System, the ability of the Farm Credit System to meet the demand, and the extent to which the Farm Credit System provides loans to satisfy the demand;

(2) rural demand for credit from the United States banking system, the ability of banks to meet the demand, and the extent to which banks provide loans to satisfy the demand;

(3) rural demand for credit from the Secretary, the ability of the Secretary to meet the demand, and the extent to which the Secretary provides loans to satisfy the demand;

(4) rural demand for credit from other Federal agencies, the ability of the agencies to meet the demand, and the extent to which the agencies provide loans to satisfy the demand;

(5) what measure or measures exist to gauge the overall demand for rural credit, the extent to which rural demand for credit is satisfied, and what the measures have demonstrated;

(6) a comparison of the interest rates and terms charged by the Farm Credit System Farm Credit Banks, production credit associations, and banks for cooperatives with the rates and terms charged by the banks of the United States for credit of comparable risk and maturity:

(7) the advantages and disadvantages of the modernization and expansion proposals of the Farm Credit System on the Farm Credit System, the United States banking system, rural users of credit, local rural communities, and the Federal Government, including

(A) any added risk to the safety and soundness of the Farm Credit System that may result from approval of a proposal; and

(B) any positive or adverse impacts on competition between the Farm Credit System and the banks of the United States in providing credit to rural users;

(8) the nature and extent of the unsatisfied rural credit need that the Farm Credit System proposals are supposed to address and what aspects of the present Farm Credit System prevent the Farm Credit System from meeting the need;

(9) the advantages and disadvantages of the proposal by commercial bankers to allow banks access to the Farm Credit System as a funding source on the Farm Credit System, the United States banking system, rural users of credit, local rural communities, and the Federal Government, including

(A) any added risk to the safety and soundness of the Farm Credit System that may result from approval of the proposal; and

(B) any positive or adverse impacts on competition between the Farm Credit System and the banks of the United States in providing credit to rural users; and

(10) problems that commercial banks have in obtaining capital for lending in rural areas, how access to Farm Credit System funds would improve the availability of capital in rural areas in ways that cannot be achieved in the system in existence on the date of enactment of this Act, and the possible effects on the viability of the Farm Credit System of granting banks access to Farm Credit System funds.

(d) INTERAGENCY TASK FORCE.—In completing the study, the Secretary shall use, among other things, data and information obtained by the interagency task force on rural credit.

Subtitle E-General Provisions SEC. 661. CONFORMING AMENDMENTS.

(a) Section 307(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1927(a)) is amended

(1) in paragraph (4), by striking"304(b), 306(a)(1), and 310B" and inserting "306(a)(1) and 310B''; and

(2) in paragraph (6)(B)

(A) by striking clauses (i), (ii), (iv), and (vii);

(B) in clause (v), by adding "and" at the end;

(C) in clause (vi), by striking ", and" at the end and inserting a period; and

(D) by redesignating clauses (iii), (v), and (vi) as clauses (i), (ii), and (iii), respectively.

(b) The second sentence of section 309(g)(1) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1929(g)(1is amended by striking section 308,".

(c) Section 309A of the Consolidated Farm and Rural Development Act (7 U.S.C. 1929a) is amended

(1) in the second sentence of subsection (a), by striking “304(b), 306(a)(1), 306(a)(14), 310B, and 312(b)” and inserting “306(a)(1), 306(a)(14), and 310B"; and

(2) in the first sentence of subsection (b), by striking “and section 308”.

(d) Section 310B(d) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1932(d)) is amended

(1) by striking “sections 304(b), 310B, and 312(b)” each place it appears in paragraphs

(2), (3), and (4) and inserting "this section"; and

(2) in paragraph (6), by striking "this section, section 304, or section 312” and inserting "this section".

(e) The first sentence of section 310D(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1934(a)) is amended by striking "paragraphs (1) through (5) of section 303(a), or subparagraphs (A) through (E) of section 304(a)(1)” and inserting “section 303(a), or paragraphs (1) through (5) of section 304(a)”.

(f) Section 311(b)(1) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1941(b)(1) is amended by striking "and for the purposes specified in section 312”.

(g) Section 316(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1946(a)) is amended by striking paragraph (3).

(h) Section 343 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1991) is amended

(1) in subsection (a)(10), by striking “recreation loan (RL) under section 304,"; and

(2) in subsection (b)

(A) in the matter preceding paragraph (1), by striking "351(h),"; and

(B) by striking paragraph (4) and inserting the following:

“(4) PRESERVATION LOAN SERVICE PROGRAM.—The term “preservation loan service program” means homestead retention as authorized under section 352.”.

(i) The first sentence of section 344 of the Consolidated Farm and Rural Development Act (7 U.S.C. 1992) is amended by striking “304(b), 306(a)(1), 310B, 312(b), or 312(c)” and inserting "306(a)(1), 310B, or 312(c)”.

(j) Section 353(1) of the Consolidated Farm and Rural Development Act (as redesignated by section 645(3)) is amended by striking "and subparagraphs (A)(i) and (C)(i) of section 335(e)(1),”.

TITLE VII-RURAL DEVELOPMENT Subtitle A-Amendments to the Food, Agriculture, Conservation, and Trade Act of 1990

CHAPTER 1-GENERAL PROVISIONS SEC. 701. RURAL INVESTMENT PARTNERSHIPS.

Subtitle B of title XXIII of the Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 2007 et seq.) is repealed. SEC. 702. WATER AND WASTE FACILITY FINANC

ING. Section 2322 of the Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 1926-1) is repealed. SEC. 703. RURAL WASTEWATER CIRCUIT RIDER

PROGRAM. Section 2324 of the Food, Agriculture, Conservation, and Trade Act of 1990 (Public Law 101-624; 7 U.S.C. 1926 note) is repealed. SEC. 704. TELEMEDICINE AND DISTANCE LEARN

ING SERVICES IN RURAL AREAS. Chapter 1 of subtitle D of title XXIII of the Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 950aaa et seq.) is amended to read as follows: “CHAPTER 1-TELEMEDICINE AND DIS

TANCE LEARNING SERVICES IN RURAL

AREAS “SEC. 2331. PURPOSE.

“The purpose of this chapter is to encourage and improve telemedicine services and distance learning services in rural areas through the use of telecommunications, computer networks, and related advanced technologies by students, teachers, medical professionals, and rural residents. "SEC. 2332. DEFINITIONS.

"In this chapter:

“(1) CONSTRUCT.-The term 'construct means to construct, acquire, install, improve, or extend a facility or system.

“(2) COST OF MONEY LOAN.—The term "cost of money loan' means a loan made under this chapter bearing interest at a rate equal to the then current cost to the Federal Government of loans of similar maturity.

“(3) SECRETARY.—The term "Secretary means the Secretary of Agriculture. "SEC. 2333. TELEMEDICINE AND DISTANCE

LEARNING SERVICES IN RURAL

AREAS. “(a) SERVICES TO RURAL AREAS.—The Secretary may provide financial assistance for the purpose of financing the construction of facilities and systems to provide telemedicine services and distance learning services in rural areas.

“(b) FINANCIAL ASSISTANCE.

“(1) IN GENERAL.–Financial assistance shall consist of grants or cost of money loans, or both.

“(2) FORM.—The Secretary shall determine the portion of the financial assistance provided to a recipient that consists of grants and the portion that consists of cost of money loans so as to result in the maximum feasible repayment to the Federal Government of the financial assistance, based on the ability to repay of the recipient and full utilization of funds made available to carry out this chapter.

"(c) RECIPIENTS.

“(1) IN GENERAL.-The Secretary may provide financial assistance under this chapter to

(A) entities using telemedicine services or distance learning services; and

“(B) entities providing or proposing to provide telemedicine service or distance learning service to other persons at rates calculated to ensure that the benefit of the financial assistance is passed through to the other persons.

“(2) ELECTRIC OR TELECOMMUNICATIONS BORROWERS.

“(A) LOANS TO BORROWERS.-Subject to subparagraph (B), the Secretary may provide

SEC. 662. ELECTRONIC FILING OF EFFECTIVE FI

NANCING STATEMENTS UNDER THE
CLEAR TITLE PROVISIONS OF THE
FOOD SECURITY ACT OF 1985.

Section 1324(c)(4) of the Food Security Act of 1985 (7 U.S.C. 1631(c)(4)) is amended

(1) in subparagraph (A), by striking "thereof” and inserting “of the statement, or, in the case of a State which (under the applicable State law provisions of the Uniform Commercial Code) allows the electronic filing of financing statements without the signature of the debtor, is an electronically reproduced copy of the statement”; and

(2) in each of subparagraphs (B) and (C), by inserting “other than in the case of an electronically reproduced copy of the statement,” before “is”.

SEC. 663. EFFECTIVE DATE.

(a) IN GENERAL.-Except as provided in subsection (b), the amendments ade by this title shall become effective on the date of enactment of this Act.

(b) DELAYED EFFECTIVE DATES.—The amendments made by sections 601, 606, 611, 612, 622, 623, 625, 633, 640(1), 642, 645(1), 648(a), and 649 shall become effective 90 days after the date of enactment of this Act.

(c) TRANSITION PROVISION.—The amendments made by sections 638 and 644 shall not apply with respect to a complete application to acquire inventory property submitted prior to the date of enactment of this Act.

(d) REGULATIONS.—Notwithstanding any other provision of law, regulations to implement the amendments made by this title shall be published as interim final rules with request for comments and may be made effective immediately on publication.

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