[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2590 Introduced in House (IH)]


104th CONGRESS
  1st Session
                                H. R. 2590

     To better target loans to family farmers and income-producing 
activities, to provide for the improved management of the portfolio of 
 loans made under the Consolidated Farm and Rural Development Act, to 
 assure the prompt repayment of such loans, and to consolidate Federal 
  rural development programs into a single program of capitalization 
    grants to States for rural development, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            November 7, 1995

Mr. Allard (for himself and Mr. Roberts) introduced the following bill; 
           which was referred to the Committee on Agriculture

_______________________________________________________________________

                                 A BILL


 
     To better target loans to family farmers and income-producing 
activities, to provide for the improved management of the portfolio of 
 loans made under the Consolidated Farm and Rural Development Act, to 
 assure the prompt repayment of such loans, and to consolidate Federal 
  rural development programs into a single program of capitalization 
    grants to States for rural development, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION. 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Farm Credit and 
Rural Development Reform Act of 1995''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                    Subtitle A--Agricultural Credit

 CHAPTER 1--AMENDMENTS TO THE CONSOLIDATED FARM AND RURAL DEVELOPMENT 
                                  ACT

Sec. 101. References.
Sec. 102. Redirection of resources to family farmers.
Sec. 103. Redirection of resources to income-producing activities.
Sec. 104. Improvement of loan portfolio management.
Sec. 105. Assuring prompt repayment of loans.
Sec. 106. Modification of programs for beginning farmers.
Sec. 107. Elimination of target participation rates.
Sec. 108. Miscellaneous and conforming amendments.
          CHAPTER 2--AMENDMENTS TO THE FARM CREDIT ACT OF 1971

Sec. 151. References.
Sec. 152. Repeal of requirements relating to review of decisions to 
                            deny or reduce the amount of a loan.
Sec. 153. Prohibition against restructuring of restructured loans or 
                            loans involved in bankruptcy proceedings.
Sec. 154. Repeal of rules governing effect of restructuring on borrower 
                            stock.
Sec. 155. Repeal of rules governing review of restructuring denials.
Sec. 156. Elimination of certain requirements relating to loans placed 
                            in nonaccrual status.
Sec. 157. Limitations on the right of first refusal.
                     Subtitle B--Rural Development

Sec. 201. Capitalization grants to States for rural development.
Sec. 202. Elimination of other rural development programs.
Sec. 203. Conforming amendments.
Sec. 204. Savings provision.
Sec. 205. Effective date.

                    Subtitle A--Agricultural Credit

 CHAPTER 1--AMENDMENTS TO THE CONSOLIDATED FARM AND RURAL DEVELOPMENT 
                                  ACT

SEC. 101. REFERENCES.

    Except as otherwise expressly provided, wherever in this chapter an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Consolidated Farm and 
Rural Development Act.

SEC. 102. REDIRECTION OF RESOURCES TO FAMILY FARMERS.

    (a) Ownership Loans.--
            (1) Targeting to family farmers.--
                    (A) In general.--Section 302(a) (7 U.S.C. 1922(a)) 
                is amended to read as follows:
    ``(a)(1) The Secretary may make loans under this subtitle to any 
eligible applicant for such a loan.
    ``(2) For purposes of paragraph (1), an individual who has applied 
for a loan under this subtitle is an eligible applicant if the 
individual--
            ``(A) is a citizen of the United States;
            ``(B) has training or farming experience that the Secretary 
        determines is sufficient to assure reasonable prospects of 
        success in the proposed farming operation;
            ``(C) is or will become an owner-operator of a not larger 
        than family farm in the United States; and
            ``(D) is unable to obtain sufficient credit elsewhere to 
        finance the needs of the individual relating to the proposed 
        farming operation at reasonable rates and terms, taking into 
        consideration prevailing private and cooperative rates and 
        terms in the community in or near which the individual resides 
        for loans for similar purposes and periods of time.
    ``(3) For purposes of paragraph (1), a person (other than an 
individual) who has applied for a loan under this subtitle is an 
eligible applicant if--
            ``(A) the person--
                    ``(i) is controlled by farmers and ranchers;
                    ``(ii) is engaged primarily and directly in farming 
                or ranching in the United States;
                    ``(iii) is or will become an owner-operator of a 
                not larger than family farm; and
                    ``(iv) is unable to obtain sufficient credit 
                elsewhere to finance the needs of the person relating 
                to the proposed farming operation at reasonable rates 
                and terms, taking into consideration prevailing private 
                and cooperative rates and terms in the community in or 
                near which the person is located for loans for similar 
                purposes and periods of time; and
            ``(B) each individual who has greater than a 5 percent 
        ownership interest in the person meets the requirements of 
        paragraph (2).
    ``(4) As used in this subsection, the term `person' means an 
individual, a corporation, a partnership, a joint venture, or any 
combination thereof.''.
                    (B) Conforming amendments.--
                            (i) Section 304(b) (7 U.S.C. 1924(b)) is 
                        amended by striking ``clauses (2) and (3) of 
                        section 302'' and inserting ``subparagraphs (B) 
                        and (C) of section 302(a)(2)''.
                            (ii) Section 310D(a) (7 U.S.C. 1934(a)) is 
                        amended by striking ``paragraphs (2) through 
                        (4) of section 302'' and inserting 
                        ``subparagraphs (B), (C), and (D) of section 
                        302(a)(2)''.
                            (iii) Section 359(c)(2) (7 U.S.C. 
                        2006a(c)(2)) is amended by striking 
                        ``302(a)(2)'' and inserting ``302(a)(2)(B)''.
            (2) Elimination of loans for recreational uses and 
        facilities.--
                    (A) In general.--Section 303(a) (7 U.S.C. 1923(a)) 
                is amended by striking clause (2) and redesignating 
                clauses (3), (4), and (5) as clauses (2), (3), and (4), 
                respectively.
                    (B) Conforming amendments.--Section 307(a)(6)(B) (7 
                U.S.C. 1927(a)(6)(B)) is amended in each of clauses (i) 
                and (vii) by striking ``clauses (2) and (3) of section 
                303(a)'' and inserting ``section 303(a)(2)''.
            (3) Refinancing limited to loans related to farm 
        operations.--Section 303(a)(3) (7 U.S.C. 1923(a)(3)), as so 
        redesignated by paragraph (2)(A) of this subsection, is amended 
        by inserting ``with respect to farming, ranching, or 
        aquaculture operations if such refinancing enhances 
        significantly the likelihood of repayment of such 
        indebtedness'' before the comma.
    (b) Operating Loans.--
            (1) Targeting to family farmers.--
                    (A) In general.--Section 311(a) (7 U.S.C. 1941(a)) 
                is amended to read as follows:
    ``(a)(1) The Secretary may make loans under this subtitle to any 
eligible applicant for such a loan.
    ``(2) For purposes of paragraph (1), an individual who has applied 
for a loan under this subtitle is an eligible applicant if the 
individual--
            ``(A) is a citizen of the United States;
            ``(B) has training or farming experience that the Secretary 
        determines is sufficient to assure reasonable prospects of 
        success in the proposed farming operation;
            ``(C) is or will become an operator of a not larger than 
        family farm in the United States; and
            ``(D) is unable to obtain sufficient credit elsewhere to 
        finance the needs of the individual relating to the farming 
        operation at reasonable rates and terms, taking into 
        consideration prevailing private and cooperative rates and 
        terms in the community in or near which the individual resides 
        for loans for similar purposes and periods of time.
    ``(3) For purposes of paragraph (1), a person (other than an 
individual) who has applied for a loan under this subtitle is an 
eligible applicant if--
            ``(A) the person--
                    ``(i) is controlled by farmers and ranchers;
                    ``(ii) is engaged primarily and directly in farming 
                or ranching in the United States;
                    ``(iii) is or will become an owner-operator of a 
                not larger than family farm; and
                    ``(iv) is unable to obtain sufficient credit 
                elsewhere to finance the needs of the person relating 
                to the proposed farming operation at reasonable rates 
                and terms, taking into consideration prevailing private 
                and cooperative rates and terms in the community in or 
                near which the person is located for loans for similar 
                purposes and periods of time; and
            ``(B) each individual who has greater than a 5 percent 
        ownership interest in the person meets the requirements of 
        paragraph (2).
    ``(4) As used in this subsection, the term `person' means an 
individual, a corporation, a partnership, a joint venture, or any 
combination thereof.''.
                    (B) Conforming amendments.--
                            (i) Section 312(a)(5) (7 U.S.C. 1924(a)(5)) 
                        is amended by striking ``section 311 (2) and 
                        (3)'' and inserting ``subparagraphs (B) and (C) 
                        of section 311(a)(2)''.
                            (ii) Section 312(b) (7 U.S.C. 1924(b)) is 
                        amended by striking ``clauses (2) and (3) of 
                        section 311(a)'' and inserting ``subparagraphs 
                        (B) and (C) of section 311(a)(2)''.
                            (iii) Section 359(c)(2) (7 U.S.C. 
                        2006a(c)(2)) is amended by striking 
                        ``311(a)(2)'' and inserting ``311(a)(2)(B)''.
            (2) Refinancing limited to loans related to farm 
        operations.--Section 312(a)(7) (7 U.S.C. 1942(a)(7)) is amended 
        by inserting ``with respect to farming, ranching, or 
        aquaculture operations if such refinancing enhances 
        significantly the likelihood of repayment of such 
        indebtedness'' before the comma.
            (3) Elimination of loans for osha compliance.--Section 
        312(a) (7 U.S.C. 1942(a)) is amended by striking clause (10) 
        and redesignating clauses (11), (12), and (13) as clauses (10), 
        (11), and (12), respectively.
    (c) Emergency Loans.--
            (1) Targeting to family farmers.--Section 321(a) (7 U.S.C. 
        1961(a)) is amended to read as follows:
    ``(a)(1) The Secretary shall make loans under this subtitle to any 
eligible applicant for such a loan.
    ``(2) For purposes of paragraph (1), an individual who has applied 
for a loan under this subtitle is an eligible applicant if--
            ``(A) the individual--
                    ``(i) is a citizen of the United States;
                    ``(ii) has training or farming experience that the 
                Secretary determines is sufficient to assure reasonable 
                prospects of success in the proposed farming operation;
                    ``(iii) is or will become an owner-operator (in the 
                case of loans for a purpose under subtitle A) or 
                operator (in the case of loans for a purpose under 
                subtitle B) of a not larger than family farm in the 
                United States; and
                    ``(iv) is unable to obtain sufficient credit 
                elsewhere to finance the needs of the individual 
                relating to the proposed farming operation at 
                reasonable rates and terms, taking into consideration 
                prevailing private and cooperative rates and terms in 
                the community in or near which the individual resides 
                for loans for similar purposes and periods of time; and
            ``(B) the Secretary finds that the farming, ranching, or 
        aquaculture operations of the individual have been 
        substantially affected by--
                    ``(i) a natural disaster in the United States; or
                    ``(ii) a major disaster or emergency designated by 
                the President under the Disaster Relief and Emergency 
                Assistance Act.
    ``(3) For purposes of paragraph (1), a person (other than an 
individual) who has applied for a loan under this subtitle is an 
eligible applicant if--
            ``(A) the person--
                    ``(i) is controlled by farmers, ranchers, and 
                persons engaged in aquaculture;
                    ``(ii) is primarily engaged in farming, ranching, 
                or aquaculture in the United States;
                    ``(iii) is or will become an owner-operator (in the 
                case of loans for a purpose under subtitle A) or 
                operator (in the case of loans for a purpose under 
                subtitle B) of a not larger than family farm in the 
                United States; and
                    ``(iv) is unable to obtain sufficient credit 
                elsewhere to finance the needs of the person relating 
                to the proposed farming operation at reasonable rates 
                and terms, taking into consideration prevailing private 
                and cooperative rates and terms in the community in or 
                near which the person is located for loans for similar 
                purposes and periods of time;
            ``(B) each individual who has greater than a 5 percent 
        ownership interest in the person meets the requirements of 
        paragraph (2)(A); and
            ``(C) the Secretary finds that the farming, ranching, or 
        aquaculture operations of the person have been substantially 
        affected by--
                    ``(i) a natural disaster in the United States; or
                    ``(ii) a major disaster or emergency designated by 
                the President under the Disaster Relief and Emergency 
                Assistance Act.
    ``(4)(A) The Secretary shall accept applications from, and make 
loans pursuant to this subtitle to, applicants otherwise eligible for 
such a loan, that conduct farming, ranching, or aquaculture operations 
in any county contiguous to a county where the Secretary has found that 
farming, ranching, or aquaculture operations have been substantially 
affected by--
            ``(i) a natural disaster in the United States; or
            ``(ii) a major disaster or emergency designated by the 
        President under the Disaster Relief and Emergency Assistance 
        Act.
    ``(B) The Secretary shall accept applications for assistance under 
this subtitle from applicants affected by a natural disaster at any 
time during the 8-month period beginning on--
            ``(i) the date on which the Secretary determines that 
        farming, ranching, or aquaculture operations have been 
        substantially affected by the natural disaster; or
            ``(ii) the date on which the President makes the major 
        disaster or emergency designation with respect to the natural 
        disaster.
    ``(5) The authority provided by this subsection shall be effective 
only to the extent or in such amounts as are provided in advance in 
appropriations Acts.
    ``(6) As used in this subsection, the term `person' means an 
individual, a corporation, a partnership, a joint venture, or any 
combination thereof.''.
            (2) Conforming amendment.--Section 329 (7 U.S.C. 1970) is 
        amended by striking ``a single enterprise which constitutes a 
        basic part of''.

SEC. 103. REDIRECTION OF RESOURCES TO INCOME-PRODUCING ACTIVITIES.

    (a) Elimination of Ownership Loans for the Acquisition, 
Installation, or Modification of Qualified Non-Fossil Energy Systems.--
            (1) In general.--Section 303 (7 U.S.C. 1923) is amended--
                    (A) by striking ``(a)''; and
                    (B) by striking subsection (b).
            (2) Conforming amendments.--Section 307(a)(6)(B) (7 U.S.C. 
        1927(a)(6)(B)), as amended by section 102(a)(2)(B) of this Act, 
        is amended in each of clauses (i) and (vii) by striking 
        ``section 303(a)(2)'' and inserting ``section 303(2)''.
    (b) Eliminating of Ownership Loans for the Construction of 
Conservation Structures or Non-Income-Producing Conservation 
Practices.--Section 304 (7 U.S.C. 1924) is amended--
            (1) by striking subsection (a) and inserting ``(a)(1) Loans 
        may be made to farm owners or tenants who are eligible 
        borrowers under this subtitle for--
            ``(A) the establishment of forest cover for sustained yield 
        timber management;
            ``(B) the establishment of permanent pasture; or
            ``(C) the construction of environmental structures or 
        systems required by Federal statute.
    ``(2) The Secretary shall not make a loan under this section that 
exceeds the lesser of--
            ``(A) the value of the farm or other security for such 
        loan; or
            ``(B) $50,000.''; and
            (2) by striking subsection (c).
    (c) Elimination of Operating Loans for the Development and 
Construction of Solar Energy Systems.--Section 312(a) (7 U.S.C. 
1942(a)), as amended by section 102(b)(3) of this Act, is amended--
            (1) by striking clause (10) and redesignating clauses (11) 
        and (12) as clauses (10) and (11), respectively; and
            (2) by striking the 2nd sentence.
    (d) Elimination of Authority To Acquire Easements for Conservation, 
Recreational, or Wildlife Purposes.--Section 349 (7 U.S.C. 1997) is 
repealed.
    (e) Conforming Amendments.--Section 335 (7 U.S.C. 1985) is 
amended--
            (1) in subsection (c)(1)--
                    (A) by striking ``, other than easements acquired 
                under section 349''; and
                    (B) by striking the last sentence and inserting 
                ``Notwithstanding the preceding sentence, the Secretary 
                may grant or sell an easement, restriction, development 
                rights, or the equivalent thereof, to a unit of local 
                or State government or a private nonprofit organization 
                for conservation purposes at its fair market value.'';
            (2) in subsection (e)(7), by striking ``sale or''; and
            (3) by striking subsection (g).

SEC. 104. IMPROVEMENT OF LOAN PORTFOLIO MANAGEMENT.

    (a) Expansion of Authority To Require Additional Collateral To 
Secure a Farmer Program Loan.--Section 307(e)(1) (7 U.S.C. 1927(e)(1)) 
is amended by striking ``, if the borrower is current in the payment of 
principal and interest on the loan'' and inserting ``unless the fair 
market value of the collateral securing the loan is less than 80 
percent of the total of the principal and any unpaid accrued interest 
on the loan''.
    (b) Linking of Emergency Loans for Crop or Livestock Changes to 
Natural Disasters.--Section 323 (7 U.S.C. 1963) is amended by inserting 
``which are necessitated by a natural disaster, major disaster, or 
emergency and which are'' after ``livestock changes''.
    (c) Establishment of Date Certain for Emergency Loan Asset 
Valuation.--Section 324(d) (7 U.S.C. 1962(d)) is amended in the last 
sentence by striking all that follows ``shall'' and inserting 
``establish the value of the assets as of the day before the occurrence 
of the natural disaster, major disaster, or emergency which gave rise 
to the request for assistance under this subtitle or under the Disaster 
Relief and Emergency Assistance Act.''.
    (d) Creation of Measurable Standard for Deferral of Loan Principal 
and Foregoing Foreclosure.--Section 331A (7 U.S.C. 1981a) is amended to 
read as follows:

``SEC. 331A. ADDITIONAL AUTHORITY TO DEFER PRINCIPAL PAYMENTS AND 
              FOREGO FORECLOSURE.

    ``In addition to any other authority that the Secretary may have to 
defer principal and forego foreclosure, the Secretary may, at the 
request of the borrower, permit the deferral of principal only on any 
outstanding loan made, insured, or held by the Secretary under this 
title or under any other law administered by the Consolidated Farm 
Services Agency, and may forego foreclosure on any such loan for such 
period as the Secretary deems necessary, upon a showing by the borrower 
that--
            ``(1) due to circumstances beyond the borrower's control 
        that could not have been anticipated by the borrower, the 
        borrower is temporarily unable to continue making payments of 
        such principal when due without using funds needed to provide 
for the basic family needs of the borrower and the immediate family of 
the borrower; and
            ``(2) the borrower has the ability to continue making 
        interest payments on such loan when due throughout the 
        anticipated deferral period.''.
    (e) Elimination of Notification of Loan Servicing Programs.--
            (1) In general.--Section 331D (7 U.S.C. 1981d) is repealed.
            (2) Conforming amendment.--Section 343(b) (7 U.S.C. 
        1991(b)) is amended by striking ``331D,''.
    (f) Providing an Annual Review of the Credit History, Business 
Operation and Continued Eligibility of a Borrower.--
            (1) In general.--Section 333 (7 U.S.C. 1983) is amended by 
        redesignating paragraphs (2), (3), and (4) as paragraphs (3), 
        (4), and (5), respectively, and by inserting after paragraph 
        (1) the following:
            ``(2) the county or area committee, as appropriate, under 
        section 8(b) of the Soil Conservation and Domestic Allotment 
        Act (16 U.S.C. 590h(b)) to certify in writing that it has 
        performed an annual review of the credit history and business 
        operation of a borrower (other than a borrower under section 
        306, 310B, or 314), and its opinion as to the continued 
        eligibility of that borrower for such a loan;''.
            (2) Conforming amendment.--Section 310B(a) (7 U.S.C. 
        1932(a)) is amended in the 3rd sentence by striking ``(3)'' and 
        inserting ``(4)''.
    (g) Elimination of the Sales Restrictions on Inventory Property.--
            (1) In general.--Section 335 (7 U.S.C. 1985), as amended by 
        sections 103(e)(2) and 108(f)(33) of this Act, is amended--
                    (A) in subsection (b), by striking ``Except as 
                provided in subsection (e), real'' and inserting 
                ``Real'';
                    (B) in subsection (c)--
                            (i) by striking ``(1) Except as provided in 
                        subsection (e), the'' and inserting ``The'';
                            (ii) by striking the 2nd sentence; and
                            (iii) by striking paragraph (2); and
                    (C) by striking subsections (e) and (f).
            (2) Conforming amendments.--
                    (A) Section 602(5) of the Agricultural Act of 1949 
                (7 U.S.C. 1471(5)) is amended by inserting ``(as in 
                effect before the date of the enactment of the Farm 
                Credit and Rural Development Reform Act of 1995)'' 
                before the last close parenthesis.
                    (B) Section 343(b) (7 U.S.C. 1991(b)) is amended by 
                striking ``335 (e) and (f),''.
    (h) Elimination of Debt Restructuring and Loan Servicing.--
            (1) General provisions.--Section 353 (7 U.S.C. 2001) is 
        repealed.
            (2) Provisions applicable to community facility loans.--
        Section 353A (7 U.S.C. 2001a) is repealed.
            (3) Conforming amendments.--
                    (A) Section 343(b) (7 U.S.C. 1991(b)) is amended by 
                striking ``353,''.
                    (B) Section 357(b) (7 U.S.C. 2005(b)) is amended by 
                striking paragraph (3).
    (i) Short Form Certification of Program Compliance.--Subtitle D (7 
U.S.C. 1981-2008f) is amended by adding at the end the following:

``SEC. 372. SHORT FORM CERTIFICATION OF FARM PROGRAM BORROWER 
              COMPLIANCE.

    ``The Secretary shall develop and utilize a consolidated short form 
for farm program borrowers to use in certifying compliance with any and 
all applicable statutes and regulations which serve as eligibility 
prerequisites for loans made under this title.''.
    (j) Effect of Prior Default, Deferral, Debt Restructuring, or Loan 
Servicing on Eligibility for Loans.--Subtitle D (7 U.S.C. 1981-2008f), 
as amended by subsection (i) of this section, is amended by adding at 
the end the following:

``SEC. 373. EFFECT OF PRIOR DEFAULT, DEFERRAL, DEBT RESTRUCTURING, OR 
              LOAN SERVICING ON ELIGIBILITY FOR LOANS.

    ``Notwithstanding any other section of this title, the Secretary 
shall not make any loan under this title to an applicant if the 
applicant (or, in the case of a legal entity which is an applicant, an 
individual who has greater than a 5 percent ownership interest in the 
applicant) has defaulted on a loan made or insured under this title, 
had the principal or interest on a loan made or insured under this 
title deferred under section 331A, or had a loan made or insured under 
this title restructured or serviced under section 353, unless the 
default, deferral, restructuring, or servicing resulted from 
circumstances that were beyond the control of the applicant or 
individual, and that could not have been reasonably anticipated by the 
applicant or individual.''.

SEC. 105. ASSURING PROMPT REPAYMENT OF LOANS.

    (a) Narrowing of Use of Nonsupervised Bank Accounts.--Section 
312(e) (7 U.S.C. 1942(e)) is amended to read as follows:
    ``(e)(1) Notwithstanding any other provision of this title, the 
Secretary shall reserve a portion of any loan made under this subtitle 
to be placed in a nonsupervised bank account which may be used at the 
discretion of the borrower for the basic family needs of the borrower 
and the immediate family of the borrower.
    ``(2) The size of any such reserve shall be limited to the least 
of--
            ``(A) 10 percent of the loan;
            ``(B) $5,000; or
            ``(C) the amount needed to provide for the basic family 
        needs of the borrower and the borrower's immediate family for 3 
        calendar months.''.
    (b) Reduction of the Limit on Emergency Loans.--Section 324(a) (7 
U.S.C. 1964(a)) is amended by striking ``$500,000'' and inserting 
``$300,000''.
    (c) Elimination of Authority To Waive Application of the Credit 
Elsewhere Test.--Section 322(b) (7 U.S.C. 1962(b)) is amended by 
striking ``: Provided further, That for loans of $300,000 or less, the 
Secretary may waive the requirement of this subsection if the Secretary 
determines that it would impose an undue burden on the applicant''.

SEC. 106. MODIFICATION OF PROGRAMS FOR BEGINNING FARMERS.

    (a) Establishment of Loan Guarantee Program.--Section 309(h)(1) (7 
U.S.C. 1929(a)(1)) is amended by adding at the end the following: ``In 
the case of a loan made to a beginning farmer (as defined by the 
Secretary in regulations), the guarantee shall be for the payment of 98 
percent of loan principal and interest.''.
    (b) Enhancement of Interest Rate Buydown Program.--Section 351(c) 
(7 U.S.C. 1999(c)) is amended by inserting ``(or 6 percent, in the case 
of a loan made to a beginning farmer, as defined by the Secretary)'' 
before the period.
    (c) Elimination of Down Payment Loan Program.--Section 310E (7 
U.S.C. 1935) is repealed.
    (d) Elimination of Limitations on the Availability of Farm 
Ownership Loans and Loan Guarantees.--Section 310F (7 U.S.C. 1936) is 
repealed.
    (e) Elimination of Special Assistance Program.--Section 318 (7 
U.S.C. 1948) is repealed.
    (f) Conforming Amendments.--
            (1) Section 305 (7 U.S.C. 1925) is amended by striking 
        ``310D, and 310E'' and inserting ``or 310D''.
            (2) Section 309 (7 U.S.C. 1929) is amended by striking 
        subsections (h)(3) and (i).
            (3) Section 346(b) (7 U.S.C. 1994(b)) is amended--
                    (A) in paragraph (3), by striking subparagraphs (E) 
                and (F) and redesignating subparagraph (G) as 
                subparagraph (E); and
                    (B) by striking paragraphs (5) and (6).

SEC. 107. ELIMINATION OF TARGET PARTICIPATION RATES.

    (a) Repeal.--Section 355 (7 U.S.C. 2003) is repealed.
    (b) Conforming Amendments.--
            (1) Section 346(b)(3)(D) (7 U.S.C. 1994(b)(3)(D)) is 
        amended by striking ``To the extent that it is not inconsistent 
        with an exercise of authority under section 355, in'' and 
        inserting ``In''.
            (2) Section 2501(c)(2)(D) of the Food, Agriculture, 
        Conservation, and Trade Act of 1990 (7 U.S.C. 2279(c)(2)(D)) is 
        amended by striking ``compared to the target participation 
        rates established pursuant to sections 355(a)(1) and 355(c) of 
        the Consolidated Farm and Rural Development Act (7 U.S.C. 
        2003(a)(1)),''.
            (3) Section 8(b)(5)(B)(iv) of the Soil Conservation and 
        Domestic Allotment Act (16 U.S.C. 590h(b)(5)(B)(iv)) is amended 
        by striking ``groups'' and all that follows and inserting 
        ``groups. For purposes of the preceding sentence, the term 
        `socially disadvantaged groups' means groups whose members have 
        been subjected to racial, ethnic, or gender prejudice because 
        of their identity as members of a group without regard to their 
        individual qualities.''.

SEC. 108. MISCELLANEOUS AND CONFORMING AMENDMENTS.

    (a) Clarification of Written Statement Required of Borrowers.--
Section 333(1) (7 U.S.C. 1983(1)) is amended by striking ``a written 
statement showing the applicant's net worth'' and inserting ``an 
appropriate written financial statement''.
    (b) Extension of Veterans Preference To Veterans of the Gulf War.--
Section 333(5) (7 U.S.C. 1983(5)), as so redesignated by section 
104(f)(1) of this Act, is amended by striking ``or the Vietnam era'' 
and inserting ``, during the Vietnam era, or during the liberation of 
Kuwait under Project Desert Shield or Project Desert Storm,''.
    (c) Verification of the Credit Elsewhere Test.--Section 333A(e)(4) 
(7 U.S.C. 1983a(e)(4)) is amended by striking ``With the approval of 
the borrower, the'' and inserting ``The''.
    (d) Elimination of Requirement To Testify and Report on Budget 
Request.--Section 345 (7 U.S.C. 1993) is repealed.
    (e) Elimination of Requirement To Develop and Report on Long-Term 
Cost Projections.--Section 346(c) (7 U.S.C. 1994(c)) is repealed.
    (f) Elimination of Authority To Insure Loans.--
            (1) Section 302(b) (7 U.S.C. 1922(b)) is amended by 
        striking ``or insured''.
            (2) Section 303 (7 U.S.C. 1923), as amended by section 
        103(a)(1) of this Act, is amended by striking ``or insured''.
            (3) Section 304(b) (7 U.S.C. 1924(b)) is amended by 
        striking ``or insured''.
            (4) Section 305 (7 U.S.C. 1925) is amended by striking ``or 
        insure''.
            (5) Section 306(a)(1) (7 U.S.C. 1926(a)(1)) is amended--
                    (A) by striking ``or insure''; and
                    (B) by striking ``or insured''.
            (6) Section 306(a)(15)(A) (7 U.S.C. 1926(a)(15)(A)) is 
        amended--
                    (A) by striking ``or insure''; and
                    (B) by striking ``or insured''.
            (7) Section 306C(a)(1) (7 U.S.C. 1926c(a)(1)) is amended by 
        striking ``or insure''.
            (8) Section 306C(b)(1) (7 U.S.C. 1926c(b)(1)) is amended by 
        striking ``or insure''.
            (9) Section 307(a)(6)(A) (7 U.S.C. 1927(a)(6)(A)) is 
        amended by striking ``or insured''.
            (10) Section 307(c) (7 U.S.C. 1927(c)) is amended by 
        striking ``, insured,''.
            (11) Section 308 (7 U.S.C. 1928) is amended by striking the 
        1st sentence.
            (12) Section 309(f)(1) (7 U.S.C. 1929(f)(1)) is amended--
                    (A) by striking ``could be'' and inserting 
                ``(before the date of the enactment of the Farm Credit 
                and Rural Development Reform Act of 1995) could have 
                been''; and
                    (B) by striking ``and insure''.
            (13) Section 309(f)(2) (7 U.S.C. 1929(f)(2)) is amended by 
        striking ``or hereafter''.
            (14) Section 309A (7 U.S.C. 1929a) is amended in each of 
        subsections (d) and (e) by striking ``, guaranteed, or 
        insured'' and inserting ``or guaranteed''.
            (15) Section 309A(g)(1) (7 U.S.C. 1929a(g)(1)) is amended--
                    (A) by striking ``could be'' and inserting 
                ``(before the date of the enactment of the Farm Credit 
                and Rural Development Reform Act of 1995) could have 
                been''; and
                    (B) by striking ``and insure''.
            (16) Section 309A(g) (7 U.S.C. 1929a(g)) is amended in each 
        of paragraphs (2) and (7) by striking ``or hereafter''.
            (17) Section 310A (7 U.S.C. 1931) is repealed.
            (18) Section 310B(a) (7 U.S.C. 1932(a)) is amended--
                    (A) by striking ``and insure''; and
                    (B) by striking ``, insured,''.
            (19) Section 310B(e)(1) (7 U.S.C. 1932(e)(1)) is amended by 
        striking ``insure and''.
            (20) Section 310B(e)(2) (7 U.S.C. 1932(e)(2)) is amended by 
        striking ``insure or''.
            (21) Section 310D(a) (7 U.S.C. 1934(a)) is amended by 
        striking ``and insure''.
            (22) Section 311(c) (7 U.S.C. 1941(c)) is amended by 
        striking ``or insured''.
            (23) Section 313 (7 U.S.C. 1943) is amended by striking 
        ``or insure''.
            (24) Section 316(a)(3) (7 U.S.C. 1946(a)(3)) is amended by 
        striking ``or insured''.
            (25) Section 317 (7 U.S.C. 1947) is repealed.
            (26) Section 322(a) (7 U.S.C. 1962(a)) is amended by 
        striking ``or insure''.
            (27) Section 323 (7 U.S.C. 1963) is amended by striking 
        ``or insured''.
            (28) Section 324(a) (7 U.S.C. 1964(a)) is amended by 
        striking ``or insured''.
            (29) Section 324(b)(2) (7 U.S.C. 1964(b)(2)) is amended--
                    (A) by striking clause (A); and
                    (B) by striking ``(B)''.
            (30) Section 328 (7 U.S.C. 1968) is repealed.
            (31) Section 333A (7 U.S.C. 1983a) is amended by striking 
        subsection (b).
            (32) Section 333A(f) (7 U.S.C. 1983a(f)) is amended in each 
        of paragraphs (4) and (5) by striking ``an insured'' and 
        inserting ``a''.
            (33) Section 335(e)(5)(A) (7 U.S.C. 1985(e)(5)(A)) is 
        amended by striking ``made or insured''.
            (34) Section 343(a)(4) (7 U.S.C. 1991(a)(4)) is amended by 
        striking ``word `insure' as used in this title includes 
        guarantee, which means'' and inserting ``term `guarantee' 
        means''.
            (35) Section 343(a)(9) (7 U.S.C. 1991(a)(9)) is amended by 
        striking ``or insured''.
            (36) Section 344 (7 U.S.C. 1992) is amended by striking 
        ``insured, or made to be sold and insured,''.
            (37) Section 346(a) (7 U.S.C. 1994(a)) is amended by 
        striking ``and insured''.
            (38) Section 346(b)(1) (7 U.S.C. 1994(b)(1)) is amended by 
        striking ``insured, made to be sold and insured, or''.
            (39) Section 346(b)(3) (7 U.S.C. 1994(b)(3)), as amended by 
        sections 106(f)(3) and 107(b)(1) of this Act, is amended by 
        striking subparagraphs (B) and (D) and redesignating 
        subparagraphs (C) and (E) as subparagraphs (B) and (C), 
        respectively.
            (40) Section 346(d)(1) (7 U.S.C. 1994(d)(1)) is amended by 
        striking ``authorized to be insured, or made to be sold and 
        insured,'' and inserting ``made''.
            (41) Section 348 (7 U.S.C. 1996) is amended--
                    (A) by striking ``and insuring'';
                    (B) by striking ``and insure''; and
                    (C) by striking ``or insured''.
            (42) Section 351(h)(8)(C) (7 U.S.C. 1999(h)(8)(C)) is 
        amended by striking ``, insured, ''.
            (43) Section 358 (7 U.S.C. 2006) is amended by striking ``, 
        insure,''.

          CHAPTER 2--AMENDMENTS TO THE FARM CREDIT ACT OF 1971

SEC. 151. REFERENCES.

    Except as otherwise expressly provided, wherever in this chapter an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Farm Credit Act of 1971.

SEC. 152. REPEAL OF REQUIREMENTS RELATING TO REVIEW OF DECISIONS TO 
              DENY OR REDUCE THE AMOUNT OF A LOAN.

    (a) Repeal.--Section 4.14 (12 U.S.C. 2202) is repealed.
    (b) Conforming Amendments.--
            (1) Section 4.13B (12 U.S.C. 2201) is amended in each of 
        subsections (a) and (b)--
                    (A) by adding ``and'' at the end of paragraph (1);
                    (B) by striking ``; and'' at the end of paragraph 
                (2) and inserting a period; and
                    (C) by striking paragraph (3).
            (2) Section 8.9 (12 U.S.C. 2279aa-9) is amended by striking 
        ``4.14,'' each place such term appears.

SEC. 153. PROHIBITION AGAINST RESTRUCTURING OF RESTRUCTURED LOANS OR 
              LOANS INVOLVED IN BANKRUPTCY PROCEEDINGS.

    (a) In General.--Section 4.14A(a)(5) (12 U.S.C. 2202a(a)(5)) is 
amended by inserting ``, which has not been restructured under this 
section and with respect to which the borrower has not filed a petition 
for bankruptcy under title 11, United States Code'' before the period.
    (b) Elimination of Required Reports to the Farm Credit 
Administration.--Section 4.14A (12 U.S.C. 2202a) is amended by striking 
subsections (g) and (h) and inserting the following:
    ``(g) Restructuring Policy.--
            ``(1) Establishment.--Within 60 days after the date of the 
        enactment of this paragraph, the board of directors of each 
        qualified lender shall develop a policy that is consistent with 
        this section, to govern the restructuring of distressed loans.
            ``(2) Contents of policy.--The policy established under 
        paragraph (1) shall include an explanation of the procedure for 
        submitting an application for restructuring.''.
    (c) Related Amendments.--Section 4.14A (12 U.S.C. 2202a) is amended 
by striking subsections (k) and (l).
    (d) Conforming Amendments.--
            (1) Section 4.14A (12 U.S.C. 2202a) is amended by 
        redesignating subsections (i) and (j) as subsections (h) and 
        (i), respectively.
            (2) Section 5.31 (12 U.S.C. 2267) is amended by striking 
        ``4.14A(i)'' and inserting ``4.14A(h)''.
            (3) Section 5.32(h) (12 U.S.C. 2268(h)) is amended by 
        striking ``4.14A(i)'' and inserting ``4.14A(h)''.

SEC. 154. REPEAL OF RULES GOVERNING EFFECT OF RESTRUCTURING ON BORROWER 
              STOCK.

    (a) Repeal.--Section 4.14B (12 U.S.C. 2202b) is repealed.
    (b) Conforming Amendments.--
            (1) Section 4.9A(b) (12 U.S.C. 2162(b)) is amended--
                    (A) by adding ``or'' at the end of paragraph (1);
                    (B) by striking paragraph (2); and
                    (C) by redesignating paragraph (3) as paragraph 
                (2).
            (2) Section 8.9 (12 U.S.C. 2279aa-9) is amended by striking 
        ``4.14B,'' each place such term appears.

SEC. 155. REPEAL OF RULES GOVERNING REVIEW OF RESTRUCTURING DENIALS.

    (a) Repeal.--Section 4.14C (12 U.S.C. 2202c) is repealed.
    (b) Conforming Amendments.--Section 8.9 (12 U.S.C. 2279aa-9) is 
amended by striking ``4.14C,'' each place such term appears.

SEC. 156. ELIMINATION OF CERTAIN REQUIREMENTS RELATING TO LOANS PLACED 
              IN NONACCRUAL STATUS.

    Section 4.14D (12 U.S.C. 2202d) is amended by striking subsection 
(d).

SEC. 157. LIMITATIONS ON THE RIGHT OF FIRST REFUSAL.

    Section 4.36 (12 U.S.C. 2219a) is amended--
            (1) in subsection (a), by striking ``or lease'';
            (2) in subsection (b)(1)--
                    (A) by striking ``Within'' and inserting ``Except 
                as otherwise provided in subsection (c), within''; and
                    (B) by inserting ``by private sale,'' after ``such 
                real estate,'';
            (3) by striking subsection (c) and redesignating 
        subsections (d) through (g) as subsections (c) through (f), 
        respectively;
            (4) by redesignating subsections (h) and (i) as subsections 
        (j) and (k), respectively; and
            (5) by inserting after subsection (f) (as so redesignated 
        by paragraph (3) of this section) the following:
    ``(g) Previous Owner Defined.--As used in this section, the term 
`previous owner' does not include a mortgagor or grantor of an 
equivalent lien interest in agricultural real estate unless such person 
is also a borrower in the transaction.
    ``(h) Personal and Nonassignable Right.--The right of first refusal 
arising under this section is personal to, and not assignable by, the 
previous owner.
    ``(i) Rule of Interpretation.--This section shall not be 
interpreted to preclude a borrower from voluntarily waiving the right 
of first refusal arising under this section in connection with a 
voluntary conveyance of agricultural real estate in lieu of 
foreclosure.''.

                     Subtitle B--Rural Development

SEC. 201. CAPITALIZATION GRANTS TO STATES FOR RURAL DEVELOPMENT.

    The Rural Development Act of 1972 is amended by adding at the end 
the following:

   ``TITLE VII--CAPITALIZATION GRANTS TO STATES FOR RURAL DEVELOPMENT

``SEC. 701. PURPOSES.

    ``The purpose of this title is to provide eligible States and 
territories with a consolidated source of funding for rural 
development, and to encourage States to establish revolving funds 
through which rural development may be financed permanently.

``SEC. 702. GRANTS.

    ``(a) Grant Authority.--
            ``(1) In general.--
                    ``(A) Grants to eligible states.--Each eligible 
                State shall be entitled to receive from the Secretary 
                for each fiscal year a grant in an amount equal to the 
                applicable share of 99.25 percent of the amount (if 
                any) appropriated pursuant to this title for the fiscal 
                year.
                    ``(B) Grants to eligible territories.--Each 
                eligible territory shall be entitled to receive from 
                the Secretary for each fiscal year a grant in an amount 
                equal to the applicable share of 0.75 percent of the 
                amount (if any) appropriated pursuant to this title for 
                the fiscal year.
                    ``(C) Special rules for fiscal years 1997 and 
                1998.--In lieu of any grant under subparagraph (A) or 
                (B) for fiscal year 1997 or 1998, each eligible State 
                and each eligible territory shall be entitled to 
                receive from the Secretary for each of such fiscal 
                years a grant in an amount equal to the applicable 
                share of the amount (if any) appropriated pursuant to 
                this title for the fiscal year.
            ``(2) Schedule of payments.--On the 1st day of each 
        calendar quarter in a fiscal year, the Secretary shall pay each 
        jurisdiction to which a grant is payable under paragraph (1) 
        for the fiscal year an amount equal to \1/4\ of the amount of 
        the grant.
            ``(3) Subject to appropriations.--The authority provided by 
        this title shall be effective only to such extent or in such 
        amounts as are provided in advance in appropriations Acts.
            ``(4) Limitations on authorization of appropriations.--For 
        grants under paragraph (1), there are authorized to be 
        appropriated to the Secretary not more than $836,025,000 for 
        each fiscal year.
    ``(b) Limitation on Federal Authority.--A jurisdiction to which 
funds are provided under subsection (a) shall have sole discretion to 
determine how such funds are to be expended and the entities to which 
such funds are to be provided, subject to this title.
    ``(c) Definitions.--As used in this title:
            ``(1) Eligible state.--The term `eligible State' means a 
        State that meets the following requirements:
                    ``(A) The State has established a rural development 
                revolving fund.
                    ``(B) The State has established to the satisfaction 
                of the Secretary that the revolving fund will be 
                operated and administered in accordance with section 
                703(a).
                    ``(C) The State has agreed that the State agency 
                responsible for administering the revolving fund 
                shall--
                            ``(i) consult with representatives of local 
                        governments, businesses, nonprofit 
                        organizations, and with the State agency with 
                        expertise in rural development and agriculture, 
                        in implementing this title; and
                            ``(ii) consult with general purpose local 
                        governments in developing priorities for 
                        funding activities from the revolving fund, 
                        criteria for selecting recipients of assistance 
                        from the revolving fund, and the method of 
                        distributing funds from the revolving fund.
                    ``(D)(i) The State has agreed to submit to the 
                Secretary biennial reports which describe the manner in 
                which the amounts paid to the State under subsection 
                (a) are used, and include evidence that, in each fiscal 
                year covered by the report, the State has expended for 
                rural development from State sources an amount equal to 
                not less than 20 percent of the total amount paid to 
                the State under subsection (a) during the fiscal year.
                    ``(ii) As used in clause (i), the term `rural 
                development' includes--
                            ``(I) rural infrastructure, including water 
                        and sewer systems, highways, roads, and 
                        bridges;
                            ``(II) rural education and job training, 
                        including vocational and technical training;
                            ``(III) rural health services; and
                            ``(IV) rural housing assistance.
            ``(2) Eligible territory.--The term `eligible territory' 
        means a territory that meets the following requirements:
                    ``(A) The territory has agreed to use the funds 
                provided to the territory under subsection (a) only for 
                qualified rural development purposes.
                    ``(B) The territory has agreed to submit to the 
                Secretary biennial reports which describe the manner in 
                which the amounts paid to the territory under 
                subsection (a) are used, and include evidence that, in 
                each fiscal year covered by the report, the territory 
                has expended for rural development from territory 
                sources an amount equal to not less than 20 percent of 
                the total amount paid to the territory under subsection 
                (a) during the fiscal year.
            ``(3) State.--The term `State' means the 50 States.
            ``(4) Territory.--The term `territory' means the 
        Commonwealth of Puerto Rico, the United States Virgin Islands, 
        the Commonwealth of the Northern Mariana Islands, Guam, 
        American Samoa, and the Trust Territory of the Pacific Islands.
            ``(5) Secretary.--The term `Secretary' means the Secretary 
        of Agriculture.
            ``(6) Applicable share.--
                    ``(A) In general.--The term `applicable share' 
                means, with respect to a jurisdiction, the sum of--
                            ``(i) \1/2\ of the rural population 
                        percentage of the jurisdiction;
                            ``(ii) \1/4\ of the rural poverty 
                        percentage of the jurisdiction; and
                            ``(iii) \1/4\ of the rural unemployment 
                        percentage of the jurisdiction.
                    ``(B) Special rule for fiscal years 1997 and 
                1998.--Notwithstanding subparagraph (A), for purposes 
                of grants under this title for fiscal years 1997 and 
                1998, the term `applicable share' means, with respect 
                to a jurisdiction--
                            ``(i) the total amount paid to the 
                        jurisdiction for fiscal year 1995 under the 
                        provisions of law stricken or repealed by 
                        sections 104(h)(2), 108(f)(25), and 202 of the 
                        Farm Credit and Rural Development Reform Act of 
                        1995; divided by
                            ``(ii) the total amount paid to all States 
                        and territories for fiscal year 1995 under such 
                        provisions of law.
            ``(7) Rural population percentage.--
                    ``(A) For states.--The term `rural population 
                percentage' means, with respect to a State--
                            ``(i) the number of individuals who reside 
                        in a rural area in the State (as determined by 
                        the Secretary on the basis of the latest census 
                        data available); divided by
                            ``(ii) the total number of individuals who 
                        reside in a rural area in the States (as 
                        determined by the Secretary on the basis of the 
                        latest census data available).
                    ``(B) For territories.--The term `rural population 
                percentage' means, with respect to a territory--
                            ``(i) the number of individuals who reside 
                        in a rural area in the territory (as determined 
                        by the Secretary on the basis of the latest 
                        census data available); divided by
                            ``(ii) the total number of individuals who 
                        reside in a rural area in the territories (as 
                        determined by the Secretary on the basis of the 
                        latest census data available).
            ``(8) Rural poverty percentage.--
                    ``(A) For states.--The term `rural poverty 
                percentage' means, with respect to a State--
                            ``(i) the number of individuals residing in 
                        a rural area in the State whose income is at or 
                        below the poverty line (as determined by the 
                        Secretary on the basis of the latest census 
                        data available); divided by
                            ``(ii) the total number of individuals 
                        residing in a rural area in the States whose 
                        income is at or below the poverty line (as 
                        determined by the Secretary on the basis of the 
                        latest census data available).
                    ``(B) For territories.--The term `rural poverty 
                percentage' means, with respect to a territory--
                            ``(i) the number of individuals residing in 
                        a rural area in the territory whose income is 
                        at or below the poverty line (as determined by 
                        the Secretary on the basis of the latest census 
                        data available); divided by
                            ``(ii) the total number of individuals 
                        residing in a rural area in the territories 
                        whose income is at or below the poverty line 
                        (as determined by the Secretary on the basis of 
                        the latest census data available).
            ``(9) Rural unemployment percentage.--
                    ``(A) For states.--The term `rural unemployment 
                percentage' means, with respect to a State--
                            ``(i) the number of individuals residing in 
                        a rural area in the State who are unemployed 
                        (as determined by the Secretary on the basis of 
                        the latest census data available); divided by
                            ``(ii) the total number of individuals 
                        residing in a rural area in the States who are 
                        unemployed (as determined by the Secretary on 
                        the basis of the latest census data available).
                    ``(B) For territories.--The term `rural 
                unemployment percentage' means, with respect to a 
                territory--
                            ``(i) the number of individuals residing in 
                        a rural area in the territory who are 
                        unemployed (as determined by the Secretary on 
                        the basis of the latest census data available); 
                        divided by
                            ``(ii) the total number of individuals 
                        residing in a rural area in the territories who 
                        are unemployed (as determined by the Secretary 
                        on the basis of the latest census data 
                        available).

``SEC. 703. STATE RURAL DEVELOPMENT REVOLVING FUNDS.

    ``(a) Requirements.--A State rural development revolving fund shall 
be operated and administered in accordance with the following 
requirements:
            ``(1) Grants to be deposited into the fund.--Any amount 
        paid to the State under section 702(a) shall be immediately 
        deposited into the fund.
            ``(2) Use of amounts.--The amounts in the fund may be used 
        only for qualified rural development purposes, except that 
        amounts not immediately to be so used may be invested in 
        interest-bearing securities.
            ``(3) Limitations on term of loans.--Loans may be made from 
        the fund at or below market interest rates (including interest-
        free), and shall not be made for a period that exceeds the 
        lesser of--
                    ``(A) the life of the activities so financed; or
                    ``(B) 40 years.
            ``(4) Crediting of repayments.--The fund will be credited 
        with all repayments of principal and interest on loans and 
        investments made by the fund.
            ``(5) Limit on percentage of federal funds used for 
        grants.--During any fiscal year, not more than 30 percent of 
        the total amount paid to the State under section 702(a) during 
        the fiscal year may be used to make grants.
            ``(6) Minimum percentage of funds used for small 
        communities.--Not less than 60 percent of the amounts in the 
        fund shall be used for the benefit of communities with a 
        population of fewer than 10,000 individuals.
            ``(7) Limit on percentage of funds used for large 
        communities.--Not more than 40 percent of the amounts in the 
        fund may be used for the benefit of communities with a 
        population of more than 10,000 but fewer than 25,000 
        individuals.
            ``(8) Minimum percentage of federal funds used for 
        technical assistance related to water and waste disposal.--Not 
        less than 1 percent of the amounts paid to the State under 
        section 702(a) during the fiscal year shall be used to provide 
        financing for technical assistance pursuant to subsection 
        (b)(2) of this section.
            ``(9) Accounting for funds by recipients.--An amount in the 
        fund shall not be provided to any entity unless, as a condition 
        of providing the amount, the entity agrees to account for the 
        amount in accordance with generally accepted accounting 
        principles.
            ``(10) Reasonable assurance of loan repayment.--A loan 
        shall not be made to an entity from the fund unless the entity 
        provides reasonable assurance of a source of funds for 
        repayment of the loan.
            ``(11) Certification by local governments of direct benefit 
        to local residents.--An amount in the fund shall not be 
        provided to any entity for any activity to be conducted in an 
        area unless the entity has provided the State with a 
        certification from the unit of local government for the area 
        that the activity will directly benefit the residents of the 
        area.
            ``(12) Powers of fund administrator.--The fund shall be 
        administered by an instrumentality of the State with such 
        powers as may be required to operate the fund in accordance 
        with this title.
    ``(b) Qualified Rural Development Purpose.--As used in this title, 
the term `qualified rural development purpose' means any of the 
following:
            ``(1) Water and waste disposal programs.--To make loans or 
        grants to associations, including corporations not operated for 
        profit, Indian tribes on Federal and State reservations and 
        other federally recognized Indian tribes, and public and quasi-
        public agencies, all primarily serving farmers, ranchers, farm 
        tenants, farm laborers, rural businesses, and other rural 
        residents--
                    ``(A) to provide for the conservation, development, 
                use, and control of water, and the installation or 
                improvement of drainage or waste disposal facilities, 
                and essential community facilities including necessary 
                related equipment, and to furnish financial assistance 
                or other aid in planning projects for such purposes; or
                    ``(B) to finance specific projects for works for 
                the development, storage, treatment, purification, or 
                distribution of water or the collection, treatment, or 
                disposal of waste in rural areas.
            ``(2) Rural water and waste disposal circuit rider 
        technical assistance and training program.--To make grants to 
        associations described in paragraph (1) for technical 
        assistance and training--
                    ``(A) to identify, and evaluate alternative 
                solutions to, problems relating to the obtaining, 
                storage, treatment, purification, or distribution of 
                water or the collection, treatment, or disposal of 
                waste in rural areas;
                    ``(B) to prepare applications to receive financial 
                assistance for any purpose specified in paragraph (1) 
                from any public or private source; or
                    ``(C) to improve the operation and maintenance 
                practices at any existing works for the storage, 
                treatment, purification, or distribution of water or 
                the collection, treatment, or disposal of waste in 
                rural areas.
            ``(3) Rural business and industry.--
                    ``(A) In general.--To make loans or grants to 
                public, private, or cooperative organizations organized 
                not for profit, to Indian tribes on Federal and State 
                reservations or other federally recognized Indian 
                tribal groups, or to guarantee the repayment of 
                principal or interest on loans made to private or 
                cooperative organizations organized for profit, for the 
                purposes of--
                            ``(i) improving, developing, or financing 
                        business, industry, and employment and 
                        improving the economic climate in rural 
                        communities; or
                            ``(ii) the conservation, development, and 
                        use of water for aquaculture purposes in rural 
                        areas.
                    ``(B) Intermediary relending.--To make loans to 
                nonprofit organizations for the purpose of funding 
                revolving loan funds operated in accordance with rules 
                similar to the rules governing the operation of the 
                State rural development revolving fund established 
                pursuant to section 702(c)(1)(A), or to guarantee the 
                repayment of principal or interest on loans made by 
                such revolving loan funds to organizations organized 
                for profit for the purposes described in subparagraph 
                (A) of this paragraph.
            ``(4) Solid waste management.--To make loans or grants to 
        nonprofit organizations for the provision of regional technical 
        assistance to local and regional governments and related 
        agencies for the purpose of improving the planning and 
        management of solid waste disposal facilities.
            ``(5) Rural business enterprise.--To make loans or grants 
        to public bodies and private nonprofit corporations for 
        measures designed to finance and facilitate development of 
        small and emerging private business enterprises or the 
        creation, expansion, and operation of rural distance learning 
        networks or rural learning programs that provide educational 
        instruction or job training instruction related to potential 
        employment or job advancement to adult students, including the 
        development, construction or acquisition of land, buildings, 
        plants, equipment, access streets and roads, parking areas, 
        utility extensions, necessary water supply and waste disposal 
        facilities, refinancing, services and fees, or for the purpose 
        of demonstrating the effectiveness of statewide nonprofit 
        public television systems whose coverage area is primarily 
        rural in providing information on agriculture and other issues 
        of importance to farmers and other rural residents.
            ``(6) Rural technology and cooperative development.--To 
        make loans or grants to any organization or institution, 
        including an accredited institution of higher education, no 
        part of the net earnings of which inures, or may lawfully 
        inure, to the benefit of any private shareholder or individual, 
        for the purpose of enabling the organization or institution to 
        establish and operate centers for rural technology or 
        cooperative development--
                    ``(A) the primary objective of which may be to 
                improve the economic condition of rural areas by 
                promoting the development (through technological 
                innovation, cooperative development, and adaptation of 
                existing technology) and commercialization of--
                            ``(i) new services and products that can be 
                        produced or provided in rural areas;
                            ``(ii) new processes that can be utilized 
                        in the production of products in rural areas; 
                        and
                            ``(iii) new enterprises that can add value 
                        to on-farm production through processing or 
                        marketing; and
                    ``(B) the activities of which may include--
                            ``(i) programs for technology research, 
                        investigations, and basic feasibility studies 
                        in any field or discipline for the purpose of 
                        generating principles, facts, technical 
                        knowledge, new technology, or other information 
                        that may be useful to rural industries, 
                        cooperatives, agribusinesses, and other persons 
                        or entities in rural areas served by such 
                        centers in the development and 
                        commercialization of new products, processes, 
                        or services;
                            ``(ii) programs for the collection, 
                        interpretation, and dissemination of 
                        principles, facts, technical knowledge, new 
                        technology, or other information that may be 
                        useful to rural industries, cooperatives, 
                        agribusinesses, and other persons in rural 
                        areas served by the center in the development 
                        and commercialization of new products, 
                        processes, or services;
                            ``(iii) programs providing training and 
                        instruction for individuals residing in rural 
                        areas served by the center with respect to the 
                        development (through technological innovation, 
                        cooperative development, and adaptation of 
                        existing technology) and commercialization of 
                        new products, processes, or services;
                            ``(iv) programs providing loans and grants 
                        to individuals, small businesses, and 
                        cooperatives in rural areas served by the 
                        center for purposes of generating, evaluating, 
                        developing, and commercializing new products, 
                        processes, or services;
                            ``(v) programs providing technical 
                        assistance and advisory services to 
                        individuals, small businesses, cooperatives, 
                        and industries in rural areas served by the 
                        center for purposes of developing and 
                        commercializing new products, processes, or 
                        services; or
                            ``(vi) programs providing research and 
                        support to individuals, small businesses, 
                        cooperatives, and industries in rural areas 
                        served by the center for purposes of developing 
                        new agricultural enterprises to add value to 
                        on-farm production through processing or 
                        marketing.
            ``(7) Distance learning and medical links.--To make loans 
        or grants to encourage and improve the use of 
        telecommunications, computer networks, and related advanced 
        technologies, by persons associated with end users of such 
        facilities, including students and teachers, medical 
        professionals, small businesses, and other residents living in 
        rural areas associated with rural community facilities in rural 
        areas.
            ``(8) Provision of security for certain state obligations 
        used to raise funds for rural development.--To provide security 
        for, or to make principal or interest payments on revenue or 
        general obligation bonds issued by the State if the proceeds 
        from the sale of such bonds is deposited in the State rural 
        development revolving fund established pursuant to section 
        702(c)(1)(A).
            ``(9) Rural community fire protection.--To make loans or 
        grants to public or nonprofit associations to organize, train, 
        and equip local firefighting forces.
            ``(10) General technical assistance.--To provide loans or 
        grants to enable any entity (other than a State or territory) 
        receiving funds provided under section 702(a) to obtain 
        technical assistance.
            ``(11) Limited administrative costs.--To pay the costs of 
        administering the State rural development revolving fund 
        established pursuant to section 702(c)(1)(A), except that 
        amounts expended from the fund during any fiscal year for this 
        purpose may not exceed 3 percent of the total amount paid to 
        the State under section 702(a) for the fiscal year.
            ``(12) Financial support for local financing of rural 
        development.--To guarantee, or purchase insurance for, local 
        obligations the proceeds of which shall be used for another 
        qualified rural development purpose.
            ``(13) Local share requirements of other federal grant-in-
        aid programs related to rural development.--To pay the local 
        share requirements of another Federal grant-in-aid program 
        related to rural development to the extent not expressly 
        prohibited by the law providing for the grant-in-aid program.
            ``(14) Interstate rural development activities.--To 
        participate with other States or territories in arrangements 
        for the financing of a qualified rural development purpose 
        which is of interstate character.
            ``(15) Assistance to other states for rural development.--
        To make loans to another State or territory for a qualified 
        rural development purpose.
    ``(c) Other Definitions.--
            ``(1) Aquaculture.--The term `aquaculture' means the 
        culture or husbandry of aquatic animals or plants by private 
        industry for commercial purposes including the culture and 
        growing of fish by private industry for the purpose of creating 
        or augmenting publicly owned and regulated stocks of fish.
            ``(2) Rural; rural area.--
                    ``(A) In general.--The terms `rural' and `rural 
                area' means all area of a State or territory that is 
                not within the outer boundary of any city having a 
                population of 50,000 or more individuals and its 
                immediately adjacent urbanized and urbanizing areas 
                with a population density of more than 100 individuals 
                per square mile, according to the latest census data 
                available.
                    ``(B) Colonias included.--The terms `rural' and 
                `rural area' include any identifiable community that--
                            ``(i) is in the State of Arizona, 
                        California, New Mexico, or Texas;
                            ``(ii) is in the United States-Mexico 
                        border region;
                            ``(iii) is determined to be a colonia on 
                        the basis of objective criteria, including lack 
                        of potable water supply, lack of adequate 
                        sewage systems, and lack of decent, safe, and 
                        sanitary housing; and
                            ``(iv) was in existence as a colonia before 
                        October 1, 1989.

``SEC. 704. ENFORCEMENT PROVISIONS.

    ``(a) Review and Monitoring.--The Rural Economic and Community 
Development Director of a jurisdiction to which a payment is made under 
section 702(a) shall review and monitor compliance by the jurisdiction 
with this title.
    ``(b) Enforcement Recommendations.--If the Rural Economic and 
Community Development Director of a jurisdiction, after reasonable 
notice to the jurisdiction, finds that there has been a failure by the 
jurisdiction to comply substantially with any provision or requirement 
of this title, the Director shall notify the Secretary of the 
noncompliance and recommend that the Secretary take 1 or more of the 
following actions:
            ``(1) Suspend payments to the jurisdiction under section 
        702(a) until the Director is satisfied that the noncompliance 
        has ceased or that the noncompliance will be corrected 
        promptly.
            ``(2) Recover any funds expended in violation of this 
        title.
            ``(3) Limit further payment to the jurisdiction under 
        section 702(a) to activities not affected by the noncompliance, 
        until the Director is satisfied that the noncompliance has 
        ceased or that the noncompliance will be corrected promptly.
            ``(4) Offset the amounts improperly expended against any 
        other amount that is or will be payable to the jurisdiction 
        under section 702(a).
            ``(5) Refer the matter to the Attorney General of the 
        United States.
            ``(6) Disqualify the jurisdiction from the receipt of 
        payments under section 702(a) for 12 months.
            ``(7) Reduce payments to the jurisdiction under section 
        702(a) for 12 months.
    ``(c) Imposition of Penalties.--Within 90 days after receiving 
notice and a recommendation from the Rural Economic and Community 
Development Director of a jurisdiction pursuant to subsection (b) and 
after providing reasonable notice to the jurisdiction and opportunity 
for a hearing, the Secretary shall, pursuant to a written ruling which 
shall be based on the recommendation of the Director and the hearing, 
take any action described in subsection (b) as the Secretary deems 
appropriate.
    ``(d) Rural Economic and Community Development Director.--As used 
in this section, the term `Rural Economic and Community Development 
Director' means, with respect to a jurisdiction, the officer or 
employee of the United States Department of Agriculture who is holding 
such position with respect to the jurisdiction.''.

SEC. 202. ELIMINATION OF OTHER RURAL DEVELOPMENT PROGRAMS.

    (a) Under the Consolidated Farm and Rural Development Act.--
            (1) Section 304 of the Consolidated Farm and Rural 
        Development Act (7 U.S.C. 1924), as amended by sections 
        102(a)(1)(B)(i) and 108(f)(3) of this Act, is amended by 
        striking subsection (b) and redesignating subsection (c) as 
        subsection (b).
            (2) Section 306 of such Act (7 U.S.C. 1926), as amended by 
        sections 108(f)(5) and 108(f)(6) of this Act, is repealed.
            (3) Section 306A of such Act (7 U.S.C. 1926a) is repealed.
            (4) Section 306B of such Act (7 U.S.C. 1926b) is repealed.
            (5) Section 306C of such Act (7 U.S.C. 1926c), as amended 
        by sections 108(f)(7) and 108(f)(8) of this Act, is repealed.
            (6) Section 310A of such Act (7 U.S.C. 1931), as amended by 
        section 108(f)(17) of this Act, is repealed.
            (7) Section 310B of such Act (7 U.S.C. 1932), as amended by 
        section 103(f)(2) and paragraphs (18), (19), and (20) of 
        section 108(f) of this Act, is repealed.
            (8) Section 312 of such Act (7 U.S.C. 1942), as amended by 
        sections 102(b)(1)(B)(i), 102(b)(1)(B)(ii), 102(b)(3), 
        103(c)(1), and 105(a) of this Act, is amended--
                    (A) in the 1st sentence of subsection (a)--
                            (i) by striking clauses (5), (6), (10), and 
                        (11);
                            (ii) by adding ``or'' at the end of clause 
                        (8);
                            (iii) by striking the comma at the end of 
                        clause (9) and inserting a period; and
                            (iv) by redesignating clauses (7), (8), and 
                        (9) as clauses (5), (6), and (7), respectively; 
                        and
                    (B) by striking subsections (b), (c), and (d) and 
                redesignating subsection (e) as subsection (b).
            (9) Section 365 of such Act (7 U.S.C. 2008) is repealed.
            (10) Section 366 of such Act (7 U.S.C. 2008a) is repealed.
            (11) Section 367 of such Act (7 U.S.C. 2008b) is repealed.
            (12) Section 368 of such Act (7 U.S.C. 2008c) is repealed.
    (b) Under the Food, Agriculture, Conservation, and Trade Act of 
1990.--
            (1) Section 2281 of the Food, Agriculture, Conservation, 
        and Trade Act of 1990 (42 U.S.C. 5177a) is repealed.
            (2) Subtitle B of title XXIII of such Act (7 U.S.C. 2007-
        2007e) is repealed.
            (3) Section 2322 of such Act (7 U.S.C. 1926-1) is repealed.
            (4) Section 2324 of such Act (7 U.S.C. 1926 note) is 
        repealed.
            (5) Section 2348 of such Act (7 U.S.C. 2662a) is repealed.
            (6) Section 2381 of such Act (7 U.S.C. 3125b) is repealed.
            (7) Section 2382 of such Act (13 U.S.C. 141 note) is 
        repealed.
            (8) Section 2385 of such Act (7 U.S.C. 950aaa-4 note) is 
        repealed.
            (9) Section 2391 of such Act (7 U.S.C. 2662 note) is 
        repealed.
            (10) Section 2392 of such Act (13 U.S.C. 141 note) is 
        repealed.
            (11) Section 2517 of such Act (104 Stat. 4077) is repealed.
    (c) Indian Subsistence Farming Demonstration Grant Program.--
Subtitle C of title IX of the Food, Agriculture, Conservation, and 
Trade Act Amendments of 1991 (7 U.S.C. 5930 note) is repealed.
    (d) Intermediary Relending Program.--Section 407 of the Human 
Services Reauthorization Act of 1986 (42 U.S.C. 9812a) is repealed.
    (e) Under the Food Security Act of 1985.--Section 1323 of the Food 
Security Act of 1985 (7 U.S.C. 1932 note) is repealed.
    (f) Under the Rural Development Act of 1972.--
            (1) Title V of the Rural Development Act of 1972 (7 U.S.C. 
        2661-2669) is repealed.
            (2) Section 603 of such Act (7 U.S.C. 2204a) is amended by 
        striking subsection (c).
    (g) Under the Rural Electrification Act of 1936.--
            (1) Section 3 of the Rural Electrification Act of 1936 (7 
        U.S.C. 903) is repealed.
            (2) Section 5 of such Act (7 U.S.C. 905) is repealed.
            (3) Section 311 of such Act (7 U.S.C. 940a) is repealed.
            (4) Title V of such Act (7 U.S.C. 950aa-950aa-1) is 
        repealed.

SEC. 203. CONFORMING AMENDMENTS.

    (a) Consolidated Farm and Rural Development Act Amendments.--
            (1) Section 307(a)(3) of the Consolidated Farm and Rural 
        Development Act (7 U.S.C. 1927(a)(3)) is amended--
                    (A) by striking subparagraphs (A) and (C); and
                    (B) in subparagraph (B)--
                            (i) by striking ``(B)'';
                            (ii) by redesignating clauses (i) and (ii) 
                        as subparagraphs (A) and (B), respectively; and
                            (iii) by redesignating subclauses (I) and 
                        (II) of subparagraph (A) (as so redesignated by 
                        clause (ii) of this subparagraph) as clauses 
                        (i) and (ii), respectively.
            (2) Section 307(a) of such Act (7 U.S.C. 1927(a)) is 
        amended by striking paragraph (4).
            (3) Section 307(a)(5) of such Act (7 U.S.C. 1927(a)(5)) is 
        amended--
                    (A) by striking ``(A) Except as provided in 
                subparagraph (B), the'' and inserting ``The''; and
                    (B) by striking subparagraph (B).
            (4) Section 307(a)(6)(B) of such Act (7 U.S.C. 
        1927(a)(6)(B)) is amended--
                    (A) by adding ``and'' at the end of clause (i); and
                    (B) by striking clauses (ii), (iii), (iv), (v), and 
                (vi) and redesignating clause (vii) as clause (ii).
            (5) Section 307(c) of such Act (7 U.S.C. 1927(c)) is 
        amended by striking ``, and for obligations in connection with 
        loans to associations under section 306, shall take liens on 
        the facility or such other security as he may determine to be 
        necessary''.
            (6) Section 309(g)(1) of such Act (7 U.S.C. 1929(g)(1)) is 
        amended by striking ``the last sentence of section 
        306(a)(1),''.
            (7) Section 309A(a) of such Act (7 U.S.C. 1929a(a)) is 
        amended by inserting ``(as in effect before the effective date 
        of subtitle B of the Farm Credit and Rural Development Reform 
        Act of 1995)'' after each of ``304(b)'', ``306(a)(1)'', 
        ``306(a)(14)'', ``310B'', and ``312(b)''.
            (8) Section 309A(a) of such Act (7 U.S.C. 1929a(a)) is 
        amended by inserting ``prior to the repeal of such sections by 
        the Farm Credit and Rural Development Reform Act of 1995,'' 
        after ``312(b),''.
            (9) Section 309A(g)(8) of such Act (7 U.S.C. 1929a(g)(8)) 
        is amended--
                    (A) by striking ``make grants under sections 306(a) 
                and 310B of this title,''; and
                    (B) by striking ``including costs of the Secretary 
                incidental to guaranteeing rural development loans 
                under this title,''.
            (10) Section 310C(a) of such Act (7 U.S.C. 1933(a)) is 
        amended--
                    (A) by redesignating clauses (1), (2), and (3) as 
                clauses (A), (B), and (C), respectively;
                    (B) by inserting ``(1)'' after ``(a)''; and
                    (C) by adding after and below the end the 
                following:
    ``(2) As used in paragraph (1), the terms `rural' and `rural area' 
shall not include any area in any city or town which has a population 
in excess of 10,000 inhabitants.''.
            (11) Section 316(a) of such Act (7 U.S.C. 1946(a)), as 
        amended by section 108(f)(24) of this Act, is amended by 
        striking paragraph (3).
            (12) Section 331(b) of such Act (7 U.S.C. 1981(b)) is 
        amended--
                    (A) by adding ``and'' at the end of paragraph (7);
                    (B) in paragraph (8), by striking ``; and'' and 
                inserting a period; and
                    (C) by striking paragraph (9).
            (13) Section 333A(a) of such Act (7 U.S.C. 1983a(a)) is 
        amended by striking paragraph (4).
            (14) Section 344 of such Act (7 U.S.C. 1992), as amended by 
        section 108(f)(36) of this Act, is repealed.
    (b) Department of Agriculture Reorganization Act of 1994 
Amendments.--
            (1) Section 232(c) of the Department of Agriculture 
        Reorganization Act of 1994 (7 U.S.C. 6942(c)) is amended by 
        striking paragraphs (1) and (2) and inserting the following:
            ``(1) Electric and telephone loan programs and water and 
        waste facility activities authorized by law, including the 
        Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.).
            ``(2) Water and waste facility programs and activities 
        authorized by law, including the provisions of sections 309 and 
        309A of the Consolidated Farm and Rural Development Act (7 
        U.S.C. 1929 and 1929a) relating to assets, terms, and 
        conditions of water and sewer programs, and section 35 of the 
        Bankhead-Jones Farm Tenant Act (7 U.S.C. 1013a).''.
            (2) Section 233(b) of such Act (7 U.S.C. 6943(b)) is 
        amended--
                    (A) by striking paragraph (2); and
                    (B) in paragraph (3)--
                            (i) by striking ``(3)'' and inserting 
                        ``(2)''; and
                            (ii) by striking ``programs authorized by 
                        sections 365 through'' and inserting 
                        ``activities under section''.
            (3) Section 234(b) of such Act (7 U.S.C. 6944(b)) is 
        amended--
                    (A) in paragraph (1)--
                            (i) by striking ``and title V of''; and
                            (ii) by striking ``and 950aa et seq.''; and
                    (B) by striking paragraph (3).
    (c) North American Free Trade Agreement Implementation Act 
Amendment.--Section 321(h)(2) of the North American Free Trade 
Agreement Implementation Act (19 U.S.C. 3391(h)(2)) is amended by 
inserting ``(as in effect before the effective date of subtitle B of 
the Farm Credit and Rural Development Reform Act of 1995)'' before the 
period.
    (d) Food, Agriculture, Conservation, and Trade Act of 1990 
Amendments.--
            (1) Section 2375(e) of the Food, Agriculture, Conservation, 
        and Trade Act of 1990 (7 U.S.C. 6613(e)) is amended by 
        inserting ``(as in effect before the effective date of subtitle 
        B of the Farm Credit and Rural Development Reform Act of 
        1995)'' before the comma.
            (2) Effective 5 years after the effective date of this 
        subtitle, section 2375 of the Food, Agriculture, Conservation, 
        and Trade Act of 1990 (7 U.S.C. 6613) is amended by striking 
        subsection (e).
    (e) Cooperative Forestry Assistance Act of 1978 Amendment.--Section 
10(b)(3) of the Cooperative Forestry Assistance Act of 1978 (7 U.S.C. 
2106(b)(3)) is amended by striking ``the first clause of section 
306(a)(7)'' and inserting ``section 310C(a)(2)''.
    (f) The Robert T. Stafford Disaster Relief and Emergency Assistance 
Act Amendment.--Section 310(a) of The Robert T. Stafford Disaster 
Relief and Emergency Assistance Act (42 U.S.C. 5153(a)) is amended by 
striking paragraph (4) and redesignating paragraphs (5) through (7) as 
paragraphs (4) through (6), respectively.
    (g) Community Economic Development Act of 1981 Amendments.--Section 
628 of the Community Economic Development Act of 1981 (42 U.S.C. 9817) 
is amended--
            (1) by striking ``, as amended'' and all that follows 
        through ``1972'' and inserting ``and the Consolidated Farm and 
        Rural Development Act''; and
            (2) by redesignating paragraph (3) as paragraph (2).
    (h) Agricultural Act of 1970 Amendment.--Section 901(b) of the 
Agricultural Act of 1970 (42 U.S.C. 3122(b)) is amended by striking 
``as defined in the private business enterprise exception in section 
306(a)(7) of the Consolidated Farmers Home Administration Act of 1961, 
as amended (7 U.S.C. 1926)'' and inserting ``(as defined in section 
703(c)(2)(A) of the Rural Development Act of 1972)''.
    (i) Rural Electrification Act of 1936 Amendments.--
            (1) Section 4 of the Rural Electrification Act of 1936 (7 
        U.S.C. 904) is amended--
                    (A) by inserting ``(as in effect before the 
                effective date of subtitle B of the Farm Credit and 
                Rural Development Reform Act of 1995)'' after ``3(d) 
                and 3(e)''; and
                    (B) by striking ``and section 5''.
            (2) Section 7 of such Act (7 U.S.C. 907) is amended by 
        striking ``authorized in section 3 of'' and inserting 
        ``appropriated to carry out''.
            (3) Section 12 of such Act (7 U.S.C. 912) is amended--
                    (A) in subsection (a)--
                            (i) by inserting ``(as in effect before the 
                        effective date of subtitle B of the Farm Credit 
                        and Rural Development Reform Act of 1995)'' 
                        after ``section 5''; and
                            (ii) by inserting ``(as in effect before 
                        the effective date of subtitle B of the Farm 
                        Credit and Rural Development Reform Act of 
                        1995)'' before the period; and
                    (B) in subsection (b)(3)(D), by striking the 3rd 
                sentence.
            (4) Section 201 of such Act (7 U.S.C. 922) is amended by 
        striking ``pursuant to section 3 of the Rural Electrification 
        Act of 1936, as amended,''.
            (5) Section 301(a) of such Act (7 U.S.C. 931(a)) is 
        amended--
                    (A) in paragraph (2), by inserting ``(as in effect 
                before the effective date of subtitle B of the Farm 
                Credit and Rural Development Reform Act of 1995)'' 
                after ``5''; and
                    (B) in paragraph (3), by striking ``notwithstanding 
                section 3(a) of title I,''.
            (6) Section 302 of such Act (7 U.S.C. 932) is amended--
                    (A) in each of subsections (a) and (b)(1), by 
                inserting ``(before the effective date of subtitle B of 
                the Farm Credit and Rural Development Reform Act of 
                1995)'' after ``5''; and
                    (B) in subsection (b)(2), by striking ``pursuant to 
                section 3(a) of this Act'' and inserting ``before the 
                effective date of subtitle B of the Farm Credit and 
                Rural Development Reform Act of 1995''.
            (7) Section 406(a) of such Act (7 U.S.C. 946(a)) is amended 
        in the 2nd sentence by inserting ``(as in effect before the 
        effective date of subtitle B of the Farm Credit and Rural 
        Development Reform Act of 1995)'' before the period.

SEC. 204. SAVINGS PROVISION.

    This subtitle and the amendments made by this subtitle shall not be 
construed to affect any obligation entered into before the effective 
date of this subtitle.

SEC. 205. EFFECTIVE DATE.

    This subtitle and the amendments made by this subtitle shall take 
effect on October 1, 1996.
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