[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 2668 Introduced in Senate (IS)]

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118th CONGRESS
  1st Session
                                S. 2668

To amend the Consolidated Farm and Rural Development Act to reform farm 
  loans, to amend the Department of Agriculture Reorganization Act of 
  1994 to reform the National Appeals Division process, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 27, 2023

    Mrs. Gillibrand (for herself and Mr. Fetterman) introduced the 
 following bill; which was read twice and referred to the Committee on 
                  Agriculture, Nutrition, and Forestry

_______________________________________________________________________

                                 A BILL


 
To amend the Consolidated Farm and Rural Development Act to reform farm 
  loans, to amend the Department of Agriculture Reorganization Act of 
  1994 to reform the National Appeals Division process, 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.

    This Act may be cited as the ``Fair Credit for Farmers Act of 
2023''.

SEC. 2. DEFERMENT OF PAYMENTS FOR BORROWERS OF FARM LOANS.

    (a) Definitions.--In this section:
            (1) Economically distressed farmer or rancher.--The term 
        ``economically distressed farmer or rancher'' means a farmer or 
        rancher that is--
                    (A) delinquent, as described in the definition of 
                the term ``delinquent borrower'' in section 761.2(b) of 
                title 7, Code of Federal Regulations (or successor 
                regulations);
                    (B) financially distressed, as described in the 
                definition of the term ``financially distressed 
                borrower'' in section 761.2(b) of title 7, Code of 
                Federal Regulations (or successor regulations); or
                    (C) a borrower of a direct farm loan who is unable 
                to develop a feasible plan (as defined in section 
                761.2(b) of title 7, Code of Federal Regulations (or 
                successor regulations)) for the current or next 
                production cycle with current available rates and 
                terms.
            (2) Eligible borrower.--The term ``eligible borrower'' 
        means a borrower that--
                    (A) is an economically distressed farmer or 
                rancher; and
                    (B) did not receive assistance under section 22006 
                of Public Law 117-169 (commonly known as the 
                ``Inflation Reduction Act'').
            (3) Farm loan.--
                    (A) In general.--The term ``farm loan'' means a 
                direct or guaranteed--
                            (i) farm ownership loan under subtitle A of 
                        the Consolidated Farm and Rural Development Act 
                        (7 U.S.C. 1922 et seq.);
                            (ii) operating loan under subtitle B of 
                        that Act (7 U.S.C. 1941 et seq.); or
                            (iii) emergency loan under subtitle C of 
                        that Act (7 U.S.C. 1961 et seq.).
                    (B) Inclusion.--The term ``farm loan'' includes 
                direct microloans of any type of loan described in 
                clauses (i) through (iii) of subparagraph (A).
            (4) Historically underserved farmer or rancher.--The term 
        ``historically underserved farmer or rancher'' means--
                    (A) a limited resource farmer or rancher, as 
                determined by the Secretary;
                    (B) a socially disadvantaged farmer or rancher (as 
                defined in section 2501(a) of the Food, Agriculture, 
                Conservation, and Trade Act of 1990 (7 U.S.C. 
                2279(a)));
                    (C) a beginning farmer or rancher (as defined in 
                that section); and
                    (D) a veteran farmer or rancher (as defined in that 
                section).
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Agriculture.
    (b) Deferment of Payments on Direct Farm Loans.--The Secretary 
shall--
            (1) defer payments of principal and interest due on direct 
        farm loans by eligible borrowers during the 2-year period 
        beginning on the date of enactment of this Act; and
            (2) extend the date required for repayment of direct farm 
        loans by eligible borrowers subject to deferment under 
        paragraph (1) by not less than 2 years after the end of the 
        period described in that paragraph.
    (c) Zero Percent Interest.--The Secretary shall modify each direct 
farm loan of an eligible borrower that is outstanding as of the date of 
enactment of this Act such that the interest rate on the farm loan is 
zero percent during the 2-year period beginning on that date of 
enactment.
    (d) Waiver of Guaranteed Farm Loan Fees for Historically 
Underserved Farmers and Ranchers.--The Secretary shall require lenders 
of guaranteed farm loans to historically underserved farmers or 
ranchers to waive borrower fees on those loans during the period--
            (1) beginning on the date of enactment of this Act; and
            (2) ending not earlier than 2 years after that date of 
        enactment.

SEC. 3. FARM LOAN REFORM.

    (a) In General.--Subtitle D of the Consolidated Farm and Rural 
Development Act is amended by inserting after section 374 (7 U.S.C. 
2008i) the following:

``SEC. 375. FARM LOAN REFORM.

    ``(a) Definitions.--In this section:
            ``(1) Adverse decision.--The term `adverse decision' has 
        the meaning given the term in section 271 of the Department of 
        Agriculture Reorganization Act of 1994 (7 U.S.C. 6991).
            ``(2) Farm loan.--The term `farm loan' means a loan 
        administered by the Farm Service Agency under subtitle A or B.
            ``(3) Principal residence.--The term `principal residence' 
        means the principal residence of a borrower of a farm loan, 
        including adjoining land of not more than 10 acres.
    ``(b) Determination Letters and Adverse Decisions.--
            ``(1) In general.--In the case of any adverse decision 
        relating to a farm loan, a Farm Service Agency program benefit, 
        or the noninsured crop disaster assistance program established 
        by section 196 of the Federal Agriculture Improvement and 
        Reform Act of 1996 (7 U.S.C. 7333), the Secretary shall include 
        in a determination letter provided to the applicant, to the 
        maximum extent practicable--
                    ``(A) a description of each reason known, or that 
                reasonably should have been known, to the Secretary for 
                that adverse decision;
                    ``(B) a reference to each regulation, and Farm Loan 
                Program handbook instruction, with the maximum 
                practicable specificity, that forms the basis for each 
                reason described in subparagraph (A); and
                    ``(C) instructions for accessing the Electronic 
                Code of Federal Regulations and Farm Loan Program 
                handbook instructions online.
            ``(2) Effect of failure to state reasons.--If the Secretary 
        issues any adverse decision relating to an application for a 
        farm loan, a Farm Service Agency program benefit, or the 
        noninsured crop disaster assistance program established by 
        section 196 of the Federal Agriculture Improvement and Reform 
        Act of 1996 (7 U.S.C. 7333) and does not include in a 
        determination letter provided to the applicant a reason known 
        to the Secretary for that adverse decision, the Secretary may 
        not subsequently issue an adverse decision to that applicant on 
        the basis of the same reason, unless the circumstances of the 
        applicant have substantially changed since the issuance of the 
        prior adverse decision.
    ``(c) Collateralization.--
            ``(1) Origination.--The Secretary may only secure a direct 
        farm loan with a principal residence if the total value of 
        other assets available to secure the farm loan does not provide 
        adequate security (as defined in section 761.2(b) of title 7, 
        Code of Federal Regulations (or successor regulations)) for the 
        loan.
            ``(2) Partial release of principal residence security.--In 
        the case of a farm loan secured in part by a principal 
        residence, the Secretary shall initiate a partial release of 
        the principal residence as security in accordance with subpart 
        H of part 765 of title 7, Code of Federal Regulations (or 
        successor regulations), without any action required by the 
        borrower, when the total value of other assets securing the 
        farm loan is equal to 100 percent of the remaining loan amount.
            ``(3) Loan servicing.--
                    ``(A) In general.--In the case of a farm loan 
                borrower who is delinquent prior to restructuring the 
                farm loan, the borrower shall execute and provide to 
                the Secretary a lien on assets necessary to achieve not 
                more than 100 percent collateralization of the loan 
                value.
                    ``(B) Best lien.--Except as provided in section 
                764.106 of title 7, Code of Federal Regulations (or 
                successor regulations), the Secretary shall take the 
                best lien obtainable on assets described in 
                subparagraph (A), subject to the condition that a 
                primary residence shall be the last option available to 
                the Secretary to achieve 100 percent collateralization 
                of the loan value.
            ``(4) Prohibition on additional security.--The Secretary 
        may not secure a direct farm loan with any property that 
        provides security in excess of the amount of security value 
        equal to the loan amount.
    ``(d) Eligibility Requirements.--The Secretary shall not impose any 
limitation relating to the number of years in which a farm loan may be 
closed by a borrower.''.
    (b) Refinancing of Debt With Farm Loans.--
            (1) Purposes of farm ownership loans.--Section 303(a)(1) of 
        the Consolidated Farm and Rural Development Act (7 U.S.C. 
        1923(a)(1)) is amended by striking subparagraph (E) and 
        inserting the following:
                    ``(E) refinancing indebtedness.''.
            (2) Purposes of operating loans.--Section 312(a) of the 
        Consolidated Farm and Rural Development Act (7 U.S.C. 1942(a)) 
        is amended by striking paragraph (9) and inserting the 
        following:
            ``(9) refinancing the indebtedness of a borrower; or''.
    (c) Removal of Eligibility Restriction Based on Previous Debt 
Write-Down or Other Loss.--Section 373 of the Consolidated Farm and 
Rural Development Act (7 U.S.C. 2008h) is amended--
            (1) in subsection (b)(2)(A)--
                    (A) by striking clause (i);
                    (B) in clause (ii), by striking ``chapters 11, 12, 
                or 13 of Title 11 of the'' and inserting ``chapter 11, 
                12, or 13 of title 11,''; and
                    (C) by redesignating clauses (ii) and (iii) as 
                clauses (i) and (ii), respectively; and
            (2) by striking subsection (c) and inserting the following:
    ``(c) Prohibition on Eligibility Restriction Based on Debt Write-
Down or Other Loss.--The Secretary shall not restrict the eligibility 
of a borrower for a farm ownership or operating loan under subtitle A 
or B based on a previous debt write-down or other loss to the 
Secretary.''.
    (d) Equitable Relief.--Section 366 of the Consolidated Farm and 
Rural Development Act (7 U.S.C. 2008a) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1), by striking ``(1) received'' 
                and inserting ``(1)(A) received'';
                    (B) in paragraph (2)--
                            (i) by striking the period at the end and 
                        inserting ``; or''; and
                            (ii) by striking ``(2) the Secretary'' and 
                        inserting ``(B) the Secretary''; and
                    (C) by adding at the end the following:
            ``(2)(A) received a benefit under any other program 
        administered by an agency (as defined in section 271 of the 
        Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 
        6991)); and
            ``(B) the Secretary determines is not in compliance with 
        the requirements of the provisions of law that authorize that 
        program.'';
            (2) in subsection (b)(2), by inserting ``, including having 
        made management or financial decisions for the farming or 
        ranching operation of the farmer or rancher that were 
        detrimental due to the erroneous nature of an official 
        communication from the Department of Agriculture, regardless of 
        whether a financial benefit was received or only promised'' 
        before the period at the end;
            (3) in subsection (c)(1), by striking ``(a)(2)'' and 
        inserting ``(a)(1)(B)'';
            (4) in subsection (e), by striking ``section'' in the 
        matter preceding paragraph (1) and all that follows through 
        ``shall not be'' in paragraph (2) and inserting ``section shall 
        be''; and
            (5) by adding at the end the following:
    ``(f) Authority of National Appeals Division Administrative 
Judges.--
            ``(1) In general.--An Administrative Judge of the National 
        Appeals Division may provide equitable relief under this 
        section.
            ``(2) Review.--The Secretary may review a decision of an 
        Administrative Judge to grant equitable relief pursuant to 
        paragraph (1).
    ``(g) Cases in Which an Applicant Is Eligible.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Adverse decision.--The term `adverse 
                decision' has the meaning given the term in section 271 
                of the Department of Agriculture Reorganization Act of 
                1994 (7 U.S.C. 6991).
                    ``(B) Applicant.--The term `applicant' means a 
                person who submitted to the Farm Service Agency an 
                application for--
                            ``(i) a direct farm ownership, operating, 
                        or emergency loan under this title;
                            ``(ii) a Farm Service Agency program 
                        benefit; or
                            ``(iii) the noninsured crop disaster 
                        assistance program established by section 196 
                        of the Federal Agriculture Improvement and 
                        Reform Act of 1996 (7 U.S.C. 7333).
            ``(2) Denial based on feasibility.--
                    ``(A) In general.--A loan applicant shall be 
                eligible for equitable relief under this section if--
                            ``(i) the National Appeals Division 
                        determines that the Farm Service Agency was in 
                        error in denying the loan, benefit, or payment 
                        based on feasibility;
                            ``(ii) the National Appeals Division has 
                        confirmed the accuracy of the projected income 
                        and projected expenses described in the 
                        original application submitted by the 
                        applicant; and
                            ``(iii) the original application submitted 
                        by the applicant is no longer feasible due to 
                        the delay caused by the erroneous denial by the 
                        Farm Service Agency and the length of the 
                        appeals process.
                    ``(B) Amount.--The amount of equitable relief under 
                subparagraph (A) shall be the amount equal to the 
                difference between--
                            ``(i) the projected income described in the 
                        application; and
                            ``(ii) the projected expenses described in 
                        the application.
            ``(3) Denial based on eligibility.--A loan applicant shall 
        be eligible for equitable relief under this section if--
                    ``(A) feasibility was not listed as a reason for an 
                adverse decision in the determination letter provided 
                to the applicant;
                    ``(B) eligibility was listed as a reason for an 
                adverse decision in the determination letter provided 
                to the applicant;
                    ``(C) the National Appeals Division determines that 
                the Farm Service Agency was in error in denying the 
                loan based on eligibility; and
                    ``(D) the original application submitted by the 
                applicant is no longer feasible due to the delay caused 
                by the erroneous denial by the Farm Service Agency and 
                the length of the appeals process.
            ``(4) Subsequently withdrawn adverse decision.--An 
        applicant shall be eligible for equitable relief under this 
        section if--
                    ``(A) the Farm Service Agency issued an adverse 
                decision on an application that the Farm Service Agency 
                subsequently withdrew; and
                    ``(B) the original application submitted by the 
                applicant is no longer feasible due to the delay caused 
                by the adverse decision.
            ``(5) Promised program benefits not received.--An applicant 
        shall be eligible for equitable relief under this section if--
                    ``(A) the Farm Service Agency indicated in an 
                official communication made after the date of enactment 
                of this subsection that the applicant could expect the 
                loan, benefit, or payment, and then reversed its 
                decision; and
                    ``(B) the applicant acted in good faith.''.

SEC. 4. NATIONAL APPEALS DIVISION REFORM.

    (a) Burden of Proof.--Section 277(c)(4) of the Department of 
Agriculture Reorganization Act of 1994 (7 U.S.C. 6997(c)(4)) is 
amended--
            (1) by striking ``The appellant'' and inserting the 
        following:
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the appellant''; and
            (2) by adding at the end the following:
                    ``(B) Appellants below income threshold.--
                            ``(i) In general.--In the case of an 
                        appellant described in clause (ii), the agency 
                        shall bear the burden of proving by substantial 
                        evidence that the adverse decision of the 
                        agency was not erroneous.
                            ``(ii) Appellants described.--An appellant 
                        referred to in clause (i) is an appellant--
                                    ``(I) the adjusted gross income of 
                                which for the previous year is not more 
                                than $300,000; or
                                    ``(II) the average annual adjusted 
                                gross income of which for the previous 
                                5-year period is not more than 
                                $300,000.''.
    (b) Implementation.--Section 280 of the Department of Agriculture 
Reorganization Act of 1994 (7 U.S.C. 7000) is amended--
            (1) by redesignating subsection (b) as subsection (c); and
            (2) by inserting after subsection (a) the following:
    ``(b) Requirement.--In implementing a final determination in 
accordance with subsection (a), the head of an agency shall use the 
information used by the Division to make the final determination, 
without requiring additional information, except as otherwise provided 
in the decision letter relating to the final determination.''.
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