7 U.S.C. § 1923 — Purposes of loans

Page 1060 TITLE 7—AGRICULTURE § 1923 (2) ‘‘, partnerships, and joint operations’’ for ‘‘, and partnerships’’ wherever appearing after ‘‘corpora- tions’’; and (3) ‘‘individuals’’ for ‘‘members, stockholders, or partners, as applicable,’’ wherever appearing. Pub. L. 99–198, § 1303, in cl. (3) parenthetical, inserted provision treating blood or marriage related owner-op- erators of the entire farm interest as separate interest holders of not larger than family farms though collec- tive ownership constitutes a larger than a family farm. Subsec. (b). Pub. L. 99–198, § 1302(a)(2), added subsec. (b). 1981—Pub. L. 97–98 substituted ‘‘corporations and partnerships, the family farm’’ for ‘‘cooperatives, cor- porations, and partnerships, the family farm’’, and in- serted ‘‘in the case of cooperatives, corporations, and partnerships’’ at end. 1978—Pub. L. 95–334 substituted provisions setting forth eligibility criteria for loans to farmers and ranch- ers in the United States, and to farm cooperatives and private domestic corporations and partnerships con- trolled by farmers and ranchers and engaged primarily and directly in farming or ranching in the United States, for provisions setting forth eligibility criteria for loans to farmers and ranchers in the United States, Puerto Rico, and the Virgin Islands. 1970—Pub. L. 91–620 provided that with respect to vet- erans as defined in section 1983(e) of this title, a farm background shall not be required as a condition prece- dent to obtaining any loan. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2008 AMENDMENT Amendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of this title. EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–127, title VI, § 663, Apr. 4, 1996, 110 Stat. 1108, provided that: ‘‘(a) IN GENERAL.—Except as provided in subsection (b), the amendments made by this title [enacting sec- tions 2008g to 2008i of this title, amending this section and sections 1631, 1923, 1924, 1927, 1928, 1929, 1929a, 1932, 1934, 1941, 1942, 1946, 1949, 1961 to 1964, 1981, 1981d, 1983, 1983a, 1985, 1991, 1992, 1994, 1997, 1999, 2000, 2001, 2002, and 2003 of this title, repealing sections 1936, 1945, 1947, 1948, and 1968 of this title, and repealing provisions set out as a note under section 1999 of this title] shall become effective on the date of enactment of this Act [Apr. 4, 1996]. ‘‘(b) DELAYED EFFECTIVE DATES.—The amendments made by sections 601, 606, 611, 612, 622, 623, 625, 633, 640(1), 642, 645(1), 648(a), and 649 [enacting sections 2008g and 2008i of this title and amending this section and sections 1929, 1941, 1942, 1962, 1963, 1964, 1981d, 1991, 1997, and 2001 of this title] shall become effective 90 days after the date of enactment of this Act [Apr. 4, 1996]. ‘‘(c) TRANSITION PROVISION.—The amendments made by sections 638 and 644 [amending sections 1985 and 2000 of this title] shall not apply with respect to a complete application to acquire inventory property submitted prior to the date of enactment of this Act [Apr. 4, 1996]. ‘‘(d) REGULATIONS.—Notwithstanding any other provi- sion of law, regulations to implement the amendments made by this title shall be published as interim final rules with request for comments and may be made ef- fective immediately on publication.’’ EFFECTIVE DATE OF 1981 AMENDMENT Amendment by Pub. L. 97–98 effective Dec. 22, 1981, see section 1801 of Pub. L. 97–98, set out as an Effective Date note under section 4301 of this title. EVALUATIONS OF DIRECT AND GUARANTEED LOAN PROGRAMS Pub. L. 107–171, title V, § 5301, May 13, 2002, 116 Stat. 344, directed the Secretary of Agriculture to conduct two 1-year studies of the direct and guaranteed loan programs under this section and section 1941 of this title, with each study examining the number, average principal amount, and delinquency and default rates of loans provided or guaranteed during the periods begin- ning 1 year after May 13, 2002, and 3 years after that date, and to submit a final evaluation report at the end of each study. § 1923. Purposes of loans (a) Allowed purposes (1) Direct loans A farmer or rancher may use a direct loan made under this subchapter only for— (A) acquiring or enlarging a farm or ranch; (B) making capital improvements to a farm or ranch; (C) paying loan closing costs related to ac- quiring, enlarging, or improving a farm or ranch; (D) paying for activities to promote soil and water conservation and protection de- scribed in section 1924 of this title on a farm or ranch; or (E) refinancing a temporary bridge loan made by a commercial or cooperative lender to a farmer or rancher for the acquisition of land for a farm or ranch, if— (i) the Secretary approved an application for a direct farm ownership loan to the farmer or rancher for acquisition of the land; and (ii) funds for direct farm ownership loans under section 1994(b) of this title were not available at the time at which the applica- tion was approved. (2) Guaranteed loans A farmer or rancher may use a loan guaran- teed under this subchapter only for— (A) acquiring or enlarging a farm or ranch; (B) making capital improvements to a farm or ranch; (C) paying loan closing costs related to ac- quiring, enlarging, or improving a farm or ranch; (D) paying for activities to promote soil and water conservation and protection de- scribed in section 1924 of this title on a farm or ranch; or (E) refinancing indebtedness. (b) Preferences In making or guaranteeing a loan under this subchapter for purchase of a farm or ranch, the Secretary shall give preference to a person who— (1) has a dependent family; (2) to the extent practicable, is able to make an initial down payment on the farm or ranch; or (3) is an owner of livestock or farm or ranch equipment that is necessary to successfully carry out farming or ranching operations. (c) Hazard insurance requirement (1) In general After the Secretary makes the determina- tion required by paragraph (2), the Secretary may not make a loan to a farmer or rancher under this subchapter unless the farmer or rancher has, or agrees to obtain, hazard insur- Page 1061 TITLE 7—AGRICULTURE § 1924 ance on any real property to be acquired or improved with the loan. (2) Determination Not later than 180 days after April 4, 1996, the Secretary shall determine the appropriate level of insurance to be required under para- graph (1). (Pub. L. 87–128, title III, § 303, Aug. 8, 1961, 75 Stat. 307; Pub. L. 87–703, title IV, § 401(1), Sept. 27, 1962, 76 Stat. 631; Pub. L. 90–488, § 1, Aug. 15, 1968, 82 Stat. 770; Pub. L. 95–113, title XIV, § 1448(a), Sept. 29, 1977, 91 Stat. 1011; Pub. L. 96–438, § 1(1), Oct. 13, 1980, 94 Stat. 1871; Pub. L. 97–98, title XVI, § 1602, Dec. 22, 1981, 95 Stat. 1346; Pub. L. 104–127, title VI, § 602(a), Apr. 4, 1996, 110 Stat. 1085; Pub. L. 107–171, title V, § 5002, May 13, 2002, 116 Stat. 341.) Editorial Notes AMENDMENTS 2002—Subsec. (a)(1)(E). Pub. L. 107–171 added subpar. (E). 1996—Pub. L. 104–127 amended section generally, sub- stituting present provisions for provisions outlining preferences for loans made or insured under this sub- chapter and defining terms ‘‘improving farms’’ and ‘‘qualified non-fossil energy system’’. 1981—Subsec. (a). Pub. L. 97–98 substituted ‘‘who have dependent families’’ for ‘‘who are married or have de- pendent families’’. 1980—Subsec. (b)(1). Pub. L. 96–438 substituted ‘‘the acquisition, installation, and modification’’ for ‘‘the acquisition and installation’’ and struck out ‘‘in any residential structure’’ after ‘‘energy system’’. 1977—Pub. L. 95–113 designated existing provisions as subsec. (a) and added subsec. (b). 1968—Pub. L. 90–488 designated existing provisions as cls. (1), (2), (4), (5), and added cl. (3). 1962—Pub. L. 87–703 authorized loans to be made or in- sured for recreational uses and facilities. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–127, title VI, § 602(b), Apr. 4, 1996, 110 Stat. 1085, provided that: ‘‘Section 303(c)(1) of the Consoli- dated Farm and Rural Development Act [7 U.S.C. 1923(c)(1)] shall not apply until the Secretary of Agri- culture makes the determination required by section 303(c)(2) of the Act.’’ [The Secretary’s determination relating to hazard insurance under this provision was contained in interim rules published Mar. 3, 1997, and effective Mar. 24, 1997, see 62 F.R. 9351.] EFFECTIVE DATE OF 1981 AMENDMENT Amendment by Pub. L. 97–98 effective Dec. 22, 1981, see section 1801 of Pub. L. 97–98, set out as an Effective Date note under section 4301 of this title. EFFECTIVE DATE OF 1977 AMENDMENT Amendment by Pub. L. 95–113 effective Oct. 1, 1977, see section 1901 of Pub. L. 95–113, set out as a note under section 1307 of this title. TRANSFER OF FUNCTIONS Powers, duties, and assets of agencies, offices, and other entities within Department of Agriculture relat- ing to rural development functions transferred to Rural Development Administration by section 2302(b) of Pub. L. 101–624. § 1924. Conservation loan and loan guarantee program (a) In general The Secretary may make or guarantee quali- fied conservation loans to eligible borrowers under this section. (b) Definitions In this section: (1) Qualified conservation loan The term ‘‘qualified conservation loan’’ means a loan, the proceeds of which are used to cover the costs to the borrower of carrying out a qualified conservation project. (2) Qualified conservation project The term ‘‘qualified conservation project’’ means conservation measures that address provisions of a conservation plan of the eligi- ble borrower. (3) Conservation plan The term ‘‘conservation plan’’ means a plan, approved by the Secretary, that, for a farming or ranching operation, identifies the conserva- tion activities that will be addressed with loan funds provided under this section, including— (A) the installation of conservation struc- tures to address soil, water, and related re- sources; (B) the establishment of forest cover for sustained yield timber management, erosion control, or shelter belt purposes; (C) the installation of water conservation measures; (D) the installation of waste management systems; (E) the establishment or improvement of permanent pasture; (F) compliance with section 3812 of title 16; and (G) other purposes consistent with the plan, including the adoption of any other emerging or existing conservation practices, techniques, or technologies approved by the Secretary. (c) Eligibility (1) In general The Secretary may make or guarantee loans to farmers or ranchers in the United States, farm cooperatives, private domestic corpora- tions, partnerships, joint operations, trusts, limited liability companies, or such other legal entities as the Secretary considers ap- propriate that are controlled by farmers or ranchers and engaged primarily and directly in agricultural production in the United States. (2) Requirements To be eligible for a loan under this section, applicants shall meet the requirements in sub- paragraphs (A) and (B) of section 1922(a)(1) of this title. (d) Priority In making or guaranteeing loans under this section, the Secretary shall give priority to— (1) qualified beginning farmers or ranchers and socially disadvantaged farmers or ranch- ers;