[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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