[Congressional Record Volume 147, Number 116 (Monday, September 10, 2001)]
[Senate]
[Pages S9254-S9256]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LUGAR (for himself and Mr. Harkin):
  S. 1413. A bill to amend the Consolidated Farm and Rural Development 
Act to permit borrowers and grantees to use certain rural development 
loans

[[Page S9256]]

and grants for other purposes under certain circumstances; to the 
Committee on Agriculture, Nutrition, and Forestry.
  Mr. LUGAR. Mr. President, I rise to introduce legislation amending 
the Consolidated Farm and Rural Development Act to allow the Secretary 
of Agriculture to approve changes to the original purpose for which a 
USDA Rural Development grant or loan was made when requested by a 
recipient.
  The Rural Community Advancement Program, as established under the Con 
Act, consists of separate accounts to provide funding for rural 
community facilities, rural waste and water utilities, and rural 
business and cooperative development. In the 1996 Farm Bill, we 
provided State Directors of Rural Development with the authority to 
transfer up to 25 percent of funds allocated to one of those accounts 
for a State in a fiscal year to any of the other accounts for which 
funds were allocated for the State in that fiscal year. This 
flexibility allows a State to adjust funding among the accounts to meet 
changing circumstances. For example, in a given year a State may have 
greater demand for financial assistance for rural community facilities 
than for rural business development, and the authority we granted in 
1996 would allow a State the flexibility to address that change in 
demand.
  The flexibility provided by the 1996 Farm Bill, however, extended 
only to prospective funding. It did not cover changes to loan and grant 
purposes needed by a community after a loan or grant has been made. Any 
post-award change to the grant or loan purpose would require return to 
USDA of any unspent grant or loan funds, or reimbursement to the 
Federal Government for its proportionate financial interest in any 
property acquired with the loan or grant funds.
  Communities in Pennsylvania, Oregon, and Oklahoma have faced this 
dilemma when they have sought to provide space in grant-funded 
industrial parks to businesses that were too large to qualify under the 
terms of their Rural Business Enterprise Grant but that otherwise would 
have been eligible for a Rural Development Business and Industry loan. 
An Indiana community has unused property in its grant-funded industrial 
park that it now would like to use for a critically needed police 
station and water tower. USDA has no authority to allow any of these 
communities to change the authorized use for the land for which the 
grant or loan originally was made.
  The measure I offer today would allow the Secretary to approve these 
types of requests. Under the bill, a community could request the 
Secretary to approve a change in the rural development purpose for 
previously awarded grants and loans to another rural development 
purpose authorized under the Con Act. A change in purpose could be 
requested only for property acquired with such funds, or for the 
proceeds from sale of property acquired with such funds.
  This measure would not require the Secretary to approve requests. It 
simply allows the Secretary to be fair and reasonable in considering 
requests by communities to alter the original purpose of the grant or 
loan. The beneficiary of such a change would not reap any financial 
windfall from such a change at the expense of the Federal government. 
The Federal government would retain its financial interest in any 
property used for the new purpose approved by the Secretary.
  We all know how the needs of communities change over time due to 
economic development and demographic change. This measure allows the 
Secretary to be fair and reasonable in considering requests by 
communities to alter the original purpose of a grant or loan in 
response to such changes. I am hopeful my colleagues will join me in 
supporting this legislation.
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